Document:

Exhibit 10.1

TWELFTH AMENDMENT TO AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

TWELFTH AMENDMENT,
dated as of August 3, 2007 to the Amended and Restated Loan and Security
Agreement, dated as of May 22, 2000, among HWC Wire & Cable Company
(formerly known as Houston Wire & Cable Company) (“Borrower”), the lenders
named therein (“Lenders”) and Bank of America, N.A. (“Bank of America”) as
successor-in-interest to Fleet Capital Corporation, as agent for
said Lenders (Bank of America, in such capacity, “Agent”).  Said Amended and Restated Loan and Security
Agreement, as amended by a certain First Amendment to Amended and Restated Loan
and Security Agreement by and among Borrower, Lenders and Agent dated as of
July 13, 2000, by a certain Second Amendment to Amended and Restated Loan and
Security Agreement by and among Borrower, Lenders and Agent dated May 30,
2001, by a certain Third Amendment to Amended and Restated Loan and Security
Agreement by and among Borrower, Lenders and Agent dated October 22, 2001,
by a certain Fourth Amendment to Amended and Restated Loan and Security
Agreement by and among Borrower, Lenders and Agent dated December 31, 2002, by
a certain Fifth Amendment to Amended and Restated Loan and Security Agreement
by and among Borrower, Lenders and Agent dated November 19, 2003, by a certain
Sixth Amended to Amended and Restated Loan and Security Agreement dated as of
May 26, 2005 by and among Borrower, Lenders and Agent, by a certain Seventh
Amendment to Amended and Restated Loan and Security Agreement dated December
14, 2005 by and among Borrower, Agent and Lenders, by a certain Eighth
Amendment to Amended and Restated Loan and Security Agreement dated December
30, 2005 by and among Borrower, Agent and Lenders, by a certain Ninth Amendment
to Amended and Restated Loan and Security Agreement dated May 23, 2006 by and
among Borrower, Agent and Lenders, by a certain Tenth Amendment to Amended and
Restated Loan and Security Agreement dated as of November 3, 2006 by and among
Borrower, Agent and Lenders and by a certain Eleventh Amendment to Amendment of
Restated Loan and Security Agreement dated as of July 31, 2007 by and among
Borrower, Agent and Lenders and as it may be further amended, is hereinafter
referred to as the “Loan Agreement.”  The
terms used herein and not otherwise defined shall have the meanings attributed
to them in the Loan Agreement. 
References to Agent and/or any Lender shall include Agent’s or such
Lender’s predecessor(s)-in-interest.

WHEREAS, Lenders,
Agent and Borrower desire to make certain amendments and modifications to the
Loan Agreement.

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

1.             Additional and
Amended Definitions.  The following
definitions of “Twelfth Amendment” and “Twelfth Amendment Effective Date” are
hereby inserted into Exhibit A to the Loan Agreement.  The definitions of Maximum “Revolving Loan”
and “Total Credit Facility” are hereby deleted from Exhibit A to the Loan
Agreement and the following are restated in their stead:

*      *      *

“Maximum Revolving Loan — Fifty-Five
Million Dollars $55,000,000).

*      *     
*

Total Credit Facility — Fifty-Five
Million Dollars ($55,000,000).

*      *     
*

Twelfth Amendment
— that certain Twelfth Amendment to Amended and Restated Loan and Security
Agreement dated as of August 3, 2007 by and among Borrower, Agent and Lenders.

*      *     
*

Twelfth Amendment
Effective Date — the date on which the conditions precedent
to the effectiveness of the Twelfth Amendment are satisfied.”

2.             Total Credit
Facility.  The first paragraph of Section
1 of the Loan Agreement is hereby deleted and the following is inserted in its
stead:

“1.           CREDIT
FACILITY.

Subject to the terms and conditions of, and in
reliance upon the representations and warranties made in, this Agreement and
the other Loan Documents, Lenders agree to make a credit facility of up to
Fifty-Five Million Dollars ($55,000,000) available upon Borrower’s request
therefor, as follows:”

*      *     
*

3.             Revolving Loans.  Section 1.1.1(A) of the Loan Agreement is
hereby deleted and the following is inserted in its stead:

“1.1         Revolving
Credit Loans.

1.1.1        Loans
and Reserves.  (A) Loans and Reserves.  The aggregate amount of the Revolving Credit
Loans to be made by each Lender (such Lender’s “Revolving Credit Loan
Commitment”), pursuant to the terms hereof, shall be the amount set below such
Lender’s name on the signature pages hereof. 
The aggregate principal amount of the Revolving Credit Loan Commitments
is Fifty-Five Million Dollars ($55,000,000).  The percentage equal to the quotient of (x)
each Lender’s Revolving Credit Loan Commitment, divided by (y) the aggregate of
all Revolving Credit Loan Commitments, is that Lender’s “Revolving Credit
Percentage”.  Subject to all of the terms
and conditions of this Agreement, each Lender agrees, for so long as no Default
or Event of Default exists, to make Revolving Credit Loans to Borrower from
time to time, as requested by Borrower in accordance with the terms of Section
3.1 hereof, up to a maximum principal amount at any time outstanding equal to
the product of (A) the Borrowing Base at such time multiplied by (B) such
Lender’s Revolving

 2 
 

Credit Percentage.  It is
expressly understood and agreed that Agent and Lenders may use the Borrowing
Base as a maximum ceiling on Revolving Credit Loans outstanding to Borrower at
any time.  If the unpaid balance of the
Revolving Credit Loans should exceed the ceiling so determined or any other
limitation set forth in this Agreement, such Revolving Credit Loans shall
nevertheless constitute Obligations that are secured by the Collateral and
entitled to all the benefits thereof.  In
no event shall Lenders be required to make a Revolving Credit Loan at any time
that there exists a Default or an Event of Default.  Agent shall have the right to establish
reserves in such amounts, and with respect to such matters, as Agent shall deem
necessary or appropriate in the reasonable exercise of Agent’s credit judgment,
against the amount of Revolving Credit Loans which Borrower may otherwise
request under this Section 1.1.1., including, without limitation, with respect
to (i) price adjustments, damages, unearned discounts, returned products or
other matters for which credit memoranda are issued in the ordinary course of
Borrower’s business; (ii) shrinkage, spoilage and obsolescence of Inventory;
(iii) slow moving Inventory; (iv) other sums chargeable against Borrower’s Loan
Account as Revolving Credit Loans under any section of this Agreement; (v)
amounts owing by Borrower to any Person to the extent secured by a Lien on, or
trust over, any Property of Borrower; and (vi) such other matters, events,
conditions or contingencies from time to time hereunder as to which Agent, in
its reasonable credit judgment, determines reserves should be established from
time to time hereunder.”

4.             Distribution.  Subsection 8.2.7 of the Loan Agreement is
hereby deleted and the following is inserted in its stead:

“8.2.7      Distributions.  Declare or make, or permit any Subsidiary of
Borrower to declare or make, any Distributions, except that:

(a)           Subsidiaries of Borrower may make
Distributions to Borrower with respect to their common Stock;

(b)           Borrower may pay dividends to
Guarantor in an amount sufficient to maintain the corporate existence of
Guarantor, to pay income taxes and to pay the reasonable out-of-pocket
expenses of Guarantor and audit fees and expenses, not to exceed $100,000 per
annum in the aggregate;

(c)           Borrower may pay dividends to
Guarantor for further distribution to its stockholders in an amount not to
exceed the lesser of (x) income taxes on phantom income incurred on the
issuance of payment-in-kind notes with respect to the Guarantor
Subordinated Debt or (y) $125,000 per year;

(d)           Borrower may pay dividends to
Guarantor of up to $100,000 in each Fiscal Year to repurchase the capital stock
of employees who die or terminate their employment with Borrower; and

(e)           Borrower may make Distributions to
Guarantor to permit Guarantor to pay dividends on Guarantor’s common Stock so
long as after giving

 3 
 

effect
to any such Distribution, (i) no Event of Default shall have occurred and is
continuing, (ii) the aggregate amount of all such Distributions made within the
most recently ended twelve month period plus the amount of the proposed
Distribution does not exceed, within any twelve month period, $10,000,000, and
(iii) Availability was or will not be less than $15,000,000 at any time within
the 90 days immediately prior to the date of such Distribution or after giving
effect to such Distribution and any pending Distribution for declared but
unpaid dividends or common Stock repurchases.

(f)            On or prior to August 30, 2009,
Borrower may make Distributions to Guarantor to permit Guarantor to make
repurchases of, Guarantor’s common Stock so long as after giving
Guarantors  effect to any such
Distribution, (i) no Event of Default shall have occurred and is continuing,
(ii) the aggregate amount of all such Distributions does not exceed
$30,000,000, and (iii) Availability was or will not be less than $15,000,000 at
any time within the 90 days immediately prior to the date of such Distribution
or after giving effect to such Distribution and any pending Distributions for
declared but unpaid dividends or common Stock repurchases.

5.             Financial
Covenant.  Exhibit O to the
Loan Agreement is hereby deleted and Exhibit O attached to this Twelfth
Amendment is hereby inserted in its stead. 
The financial covenant contained in Exhibit Q to the Loan
Agreement is hereby deleted and the following is inserted in its stead:

“EXHIBIT Q

FINANCIAL COVENANTS

*     *      *

COVENANT

Fixed Charge
Coverage Ratio- If Availability at any time within the
most recently ended 90 day period is less than Ten Million Dollars
($10,000,000), Borrower shall not permit the Fixed Charge Coverage Ratio for
the most recently ended twelve month period ending on a March 31, June 30,
September 30 or December 31 to be less than 1.10 to 1.”

6.             Conditions Precedent.  This Twelfth Amendment shall become effective
upon satisfaction of each of the following conditions precedent:

(a)           Agent shall have
received each of the following documents, each in form and substance acceptable
to Agent:

(i)            Copy
of this Twelfth Amendment, duly executed by Borrower, Guarantor, Agent and each
Lender;

 4 
 

(ii)           Amended
and Restated Revolving Credit Notes in the forms attached hereto and
incorporated herein as Exhibits A-1 and A-2 attached to this Twelfth Amendment
executed by Borrower; and

(iii)          Copies
of resolutions of the Board of Directors of Borrower authorizing this Twelfth
Amendment certified as true and correct by the Secretary of Borrower.

The date on which
all of the conditions precedent listed above are satisfied or waived is hereinafter
referred to as the “Twelfth Amendment Effective Date.”  After the Twelfth Amendment Effective Date,
Lenders shall deliver to Borrower the Revolving Credit Notes and Term Notes
previously executed and delivered by Borrower to Lenders, which Notes shall be
marked “Amended and Superceded.”

7.             Signature Block.  The signature block to the Loan Agreement is
hereby amended to read as the signature block to this Twelfth Amendment.

8.             Continuing
Effect.  Except as otherwise
specifically set out herein, the provisions of the Loan Agreement shall remain
in full force and effect.

9.             Governing Law.  This Twelfth Amendment and the obligations
arising hereunder shall be governed by, and construed and enforced in
accordance with, the laws of the State of Illinois applicable to contracts made
and performed in such state, without regard to the principles thereof regarding
conflict of laws.

10.           Counterparts.  This Twelfth Amendment may be executed in any
number of separate counterparts, each of which shall, collectively and
separately, constitute one agreement.

11.           No Novation.  The amended and restated Revolving Credit
Notes to be delivered pursuant to this Twelfth Amendment replace and supercede
those certain promissory notes in the principal amount of $25,000,000 and
$20,000,000, respectively, each dated November 3, 2006 (the “Original Notes”)
and the execution and delivery of such amended and restated Revolving Credit
Notes shall not constitute (a) an extinguishment of the indebtedness of
Borrower to the applicable Lender evidenced by the Original Notes or (b) a
novation of any such indebtedness or any of the Original Notes.

(Signature Page Follows)

 5 
 

(Signature Page to Twelfth Amendment to Amended and Restated

Loan and Security Agreement)

IN WITNESS WHEREOF, this
Twelfth Amendment has been duly executed as of the first day written above.

 

	
  HWC WIRE & CABLE COMPANY, as Borrower

  	
  HOUSTON WIRE & CABLE COMPANY, as Guarantor

  
	
   

  
	
  By:

  	
  /s/ Eric W. Davis

  	
   

  	
  By:

  	
  /s/ Charles A. Sorrentino

  
	
  Name:

  	
  Eric W. Davis

  	
  Name:

  	
  Charles A. Sorrentino

  
	
  Title:

  	
  Vice President, Controller and Assistant Secretary

  	
  Title:

  	
  President and Chief Executive Officer

  
	
   

  
	
   

  
	
  THE CIT GROUP/BUSINESS CREDIT, INC., as a Lender

  	
  BANK OF AMERICA, N.A., as Agent and a Lender

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Chad Ramsey

  	
   

  	
  By:

  	
  /s/ Alan R. Meier

  
	
  Name:

  	
  Chad Ramsey

  	
  Name:

  	
  Alan R. Meier

  
	
  Title:

  	
  Vice President

  	
  Title:

  	
  Executive Vice-President

  
	
   

  
	
  Revolving Loan Commitment: $20,000,000

  	
  Revolving Loan Commitment: $35,000,000

  
								

 

 6 

EXHIBIT
A-1

AMENDED
AND RESTATED REVOLVING CREDIT NOTE

 

	
  $35,000,000

  	
  Amended and Restated

  As of August __, 2007

  Chicago, Illinois

  

 

FOR VALUE RECEIVED, the
undersigned, (hereinafter “Borrower”), hereby PROMISES TO PAY to the order of
Bank of America, N.A., a national banking association (“Lender”), or its
registered assigns, at the principal office of Bank of America, N.A., as agent
for such Lender, or at such other place in the United States of America as the
holder of this Note may designate from time to time in writing, in lawful money
of the United States of America and in immediately available funds, the
principal amount of Thirty-Five Million Dollars ($35,000,000), or such lesser
principal amount as may be outstanding pursuant to the Loan Agreement (as
hereinafter defined) with respect to the Revolving Credit Loan, together with
interest on the unpaid principal amount of this Note outstanding from time to
time.

This Note is one of the
Revolving Credit Notes referred to in, and issued pursuant to, that certain
Amended and Restated Loan and Security Agreement dated as of May 22, 2000
by and among Borrower, the lender signatories thereto (including Lender) and
Fleet Capital Corporation, the predecessor-in-interest to Bank of
America, N.A. (“Bank of America”), as agent for such Lenders (Bank of America
in such capacity “Agent”) (hereinafter amended from time to time, the “Loan
Agreement”), and is entitled to the benefit and security of the Loan Agreement.  All of the terms, covenants and conditions of
the Loan Agreement and the Security Documents are hereby made a part of this
Note and are deemed incorporated herein in full.  All capitalized terms herein, unless
otherwise defined, unless otherwise specifically defined in this Note, shall
have the meanings ascribed to them in the Loan Agreement.

The principal amount of
the indebtedness evidenced hereby shall be payable in the amounts and on the
dates specified in the Loan Agreement and, if not sooner paid in full, on the
Commitment Termination Date, unless the term hereof is extended in accordance
with the Loan Agreement.  Interest
thereon shall be paid until such principal amount is paid in full at such
interest rates and at such times as are specified in the Loan Agreement.

Upon and after the
occurrence, and during the continuation, of an Event of Default, this Note
shall or may, as provided in the Loan Agreement, become or be declared
immediately due and payable.

The right to receive
principal of, and stated interest on, this Note may only be transferred in
accordance with the provisions of the Loan Agreement.

Demand, presentment,
protest and notice of nonpayment and protest are hereby waived by Borrower.

 A-1-1
 

This Note shall be
interpreted, governed by, and construed in accordance with, the internal laws
of the State of Illinois.

	
  

  	
  HWC WIRE & CABLE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

 A-1-2

EXHIBIT A-2

AMENDED
AND RESTATED REVOLVING CREDIT NOTE

 

	
  $20,000,000

  	
  Amended and Restated

  As of August __, 2007

  Chicago, Illinois

  

 

FOR VALUE RECEIVED, the
undersigned, (hereinafter “Borrower”), hereby PROMISES TO PAY to the order of
The CIT Group/Business Credit, Inc., a New York corporation (“Lender”), or its
registered assigns, at the principal office of Bank of America, N.A., as agent
for such Lender, or at such other place in the United States of America as the
holder of this Note may designate from time to time in writing, in lawful money
of the United States of America and in immediately available funds, the
principal amount of Twenty Million Dollars ($20,000,000), or such lesser
principal amount as may be outstanding pursuant to the Loan Agreement (as
hereinafter defined) with respect to the Revolving Credit Loan, together with
interest on the unpaid principal amount of this Note outstanding from time to
time.

This Note is one of the
Revolving Credit Notes referred to in, and issued pursuant to, that certain
Amended and Restated Loan and Security Agreement dated as of May 22, 2000
by and among Borrower, the lender signatories thereto (including Lender) and
Fleet Capital Corporation, the predecessor-in-interest to Bank of
America, N.A. (“Bank of America”), as agent for such Lenders (Bank of America
in such capacity “Agent”) (hereinafter amended from time to time, the “Loan
Agreement”), and is entitled to the benefit and security of the Loan Agreement.  All of the terms, covenants and conditions of
the Loan Agreement and the Security Documents are hereby made a part of this
Note and are deemed incorporated herein in full.  All capitalized terms herein, unless
otherwise defined, unless otherwise specifically defined in this Note, shall
have the meanings ascribed to them in the Loan Agreement.

The principal amount of
the indebtedness evidenced hereby shall be payable in the amounts and on the
dates specified in the Loan Agreement and, if not sooner paid in full, on the
Commitment Termination Date, unless the term hereof is extended in accordance
with the Loan Agreement.  Interest
thereon shall be paid until such principal amount is paid in full at such
interest rates and at such times as are specified in the Loan Agreement.

Upon and after the
occurrence, and during the continuation, of an Event of Default, this Note
shall or may, as provided in the Loan Agreement, become or be declared
immediately due and payable.

The right to receive
principal of, and stated interest on, this Note may only be transferred in
accordance with the provisions of the Loan Agreement.

Demand, presentment,
protest and notice of nonpayment and protest are hereby waived by Borrower.

 A-2-1
 

This Note shall be
interpreted, governed by, and construed in accordance with, the internal laws
of the State of Illinois.

	
  

  	
  HWC WIRE & CABLE COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  

 

 

 A-2-2
 

EXHIBIT
O

COMPLIANCE CERTIFICATE

[Letterhead of Borrower]

__________, 200_

 

	
  

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

The undersigned, the
chief financial officer of HWC Wire & Cable Company, a Delaware corporation
(“Borrower”), gives this certificate to Bank of America, N.A. in accordance
with the requirements of Section 8.1.2 of that certain Loan and Security
Agreement dated May 22, 2000, among Borrower, the lender signatories
thereto (“Lenders”) and Bank of America, N.A. (“Bank of America”), a national
banking association, as successor-in-interest to Fleet Capital
Corporation, as agent for such Lenders (Bank of America, in such capacity,
“Agent”).  Capitalized terms used in this
Certificate, unless otherwise defined herein, shall have the meanings ascribed
to them in the Loan Agreement.

1.             Based upon my review of the balance sheets and
statements of income of Borrower for the [fiscal
year] [monthly period] ending __________, 200_, copies of which
are attached hereto, I hereby certify that:

(a)           Availability for each day of the 30
day period ending __________ was [never]
less than $15,000,000;

(b)           Fixed Charge Coverage Ratio for the
period between ___________ and _________ is______ to 1 (if applicable);

(c)           Capital Expenditures during the
period and for the fiscal year to date total $__________ and $__________,
respectively.

2.             No Default exists on the date hereof, other than:  ______________________
_________________________________________ [if
none, so state]; and

3.             No Event of Default exists on the date hereof, other
than ___________________ _________________________________________ [if none, so state].

Very truly yours,

Chief Financial Officer

 

 A-2-3Exhibit 10.1

CREDIT AGREEMENT

Dated as of June 1,
2007

among

PROSPECT MEDICAL
HOLDINGS, INC.

and

PROSPECT MEDICAL GROUP,
INC.

as the Borrowers,

BANK OF AMERICA, N.A.,

as Administrative Agent and L/C Issuer,

BANC OF AMERICA CAPITAL
SOLUTIONS LLC,

as a Lender,

and

The Other Lenders Party
Hereto

 

BANC OF AMERICA
SECURITIES LLC,

as Sole Lead Arranger and
Sole Book Manager

 

   
 

TABLE OF
CONTENTS

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  Article I

  	
   

  	
  DEFINITIONS AND ACCOUNTING TERMS

  	
   

  	
  1

  
	
  1.01

  	
   

  	
  Defined Terms

  	
   

  	
  1

  
	
  1.02

  	
   

  	
  Other Interpretive
  Provisions

  	
   

  	
  29

  
	
  1.03

  	
   

  	
  Accounting Terms.

  	
   

  	
  30

  
	
  1.04

  	
   

  	
  Rounding

  	
   

  	
  30

  
	
  1.05

  	
   

  	
  Times of Day

  	
   

  	
  30

  
	
  1.06

  	
   

  	
  Letter of Credit
  Amounts

  	
   

  	
  30

  
	
  1.07

  	
   

  	
  Currency Equivalents
  Generally

  	
   

  	
  31

  
	
  Article II

  	
   

  	
  THE COMMITMENTS AND
  CREDIT EXTENSIONS

  	
   

  	
  31

  
	
  2.01

  	
   

  	
  The Loans

  	
   

  	
  31

  
	
  2.02

  	
   

  	
  Borrowings, Conversions
  and Continuations of Loans

  	
   

  	
  31

  
	
  2.03

  	
   

  	
  Letters of Credit

  	
   

  	
  33

  
	
  2.04

  	
   

  	
  [Reserved]

  	
   

  	
  41

  
	
  2.05

  	
   

  	
  Prepayments

  	
   

  	
  41

  
	
  2.06

  	
   

  	
  Termination or
  Reduction of Commitments

  	
   

  	
  43

  
	
  2.07

  	
   

  	
  Repayment of Loans

  	
   

  	
  43

  
	
  2.08

  	
   

  	
  Interest

  	
   

  	
  44

  
	
  2.09

  	
   

  	
  Fees

  	
   

  	
  45

  
	
  2.10

  	
   

  	
  Computation of Interest
  and Fees; Retroactive Adjustments of Applicable Rate

  	
   

  	
  45

  
	
  2.11

  	
   

  	
  Evidence of Debt

  	
   

  	
  46

  
	
  2.12

  	
   

  	
  Payments Generally;
  Administrative Agent’s Clawback

  	
   

  	
  46

  
	
  2.13

  	
   

  	
  Sharing of Payments by
  Lenders

  	
   

  	
  48

  
	
  Article III

  	
   

  	
  TAXES, YIELD PROTECTION
  AND ILLEGALITY

  	
   

  	
  49

  
	
  3.01

  	
   

  	
  Taxes

  	
   

  	
  49

  
	
  3.02

  	
   

  	
  Illegality

  	
   

  	
  51

  
	
  3.03

  	
   

  	
  Inability to Determine
  Rates

  	
   

  	
  52

  
	
  3.04

  	
   

  	
  Increased Costs

  	
   

  	
  52

  
	
  3.05

  	
   

  	
  Compensation for Losses

  	
   

  	
  54

  
	
  3.06

  	
   

  	
  Mitigation Obligations;
  Replacement of Lenders

  	
   

  	
  54

  

 

 

 i
 

 

 

	
  3.07

  	
   

  	
  Survival

  	
   

  	
  55

  
	
  Article IV

  	
   

  	
  CONDITIONS PRECEDENT TO
  Credit Extensions

  	
   

  	
  55

  
	
  4.01

  	
   

  	
  Conditions of Initial
  Credit Extension

  	
   

  	
  55

  
	
  4.02

  	
   

  	
  Conditions to all
  Credit Extensions

  	
   

  	
  60

  
	
  Article V

  	
   

  	
  REPRESENTATIONS AND
  WARRANTIES

  	
   

  	
  61

  
	
  5.01

  	
   

  	
  Existence,
  Qualification and Power

  	
   

  	
  61

  
	
  5.02

  	
   

  	
  Authorization; No
  Contravention

  	
   

  	
  61

  
	
  5.03

  	
   

  	
  Governmental
  Authorization; Other Consents

  	
   

  	
  61

  
	
  5.04

  	
   

  	
  Binding Effect

  	
   

  	
  62

  
	
  5.05

  	
   

  	
  Financial Statements;
  No Material Adverse Effect

  	
   

  	
  62

  
	
  5.06

  	
   

  	
  Litigation

  	
   

  	
  63

  
	
  5.07

  	
   

  	
  No Default

  	
   

  	
  63

  
	
  5.08

  	
   

  	
  Ownership of Property;
  Liens; Investments

  	
   

  	
  63

  
	
  5.09

  	
   

  	
  Environmental
  Compliance

  	
   

  	
  64

  
	
  5.10

  	
   

  	
  Insurance

  	
   

  	
  65

  
	
  5.11

  	
   

  	
  Taxes

  	
   

  	
  65

  
	
  5.12

  	
   

  	
  ERISA Compliance

  	
   

  	
  65

  
	
  5.13

  	
   

  	
  Subsidiaries; Equity
  Interests; Loan Parties

  	
   

  	
  66

  
	
  5.14

  	
   

  	
  Margin Regulations;
  Investment Company Act

  	
   

  	
  66

  
	
  5.15

  	
   

  	
  Disclosure

  	
   

  	
  66

  
	
  5.16

  	
   

  	
  Compliance with Laws

  	
   

  	
  66

  
	
  5.17

  	
   

  	
  Intellectual Property;
  Licenses, Etc

  	
   

  	
  67

  
	
  5.18

  	
   

  	
  Solvency

  	
   

  	
  67

  
	
  5.19

  	
   

  	
  Casualty, Etc

  	
   

  	
  67

  
	
  5.20

  	
   

  	
  Labor Matters

  	
   

  	
  67

  
	
  5.21

  	
   

  	
  Collateral Documents

  	
   

  	
  67

  
	
  5.22

  	
   

  	
  ProMed Acquisition

  	
   

  	
  67

  
	
  5.23

  	
   

  	
  Health Care Matters

  	
   

  	
  67

  
	
  Article VI

  	
   

  	
  AFFIRMATIVE COVENANTS

  	
   

  	
  69

  
	
  6.01

  	
   

  	
  Financial Statements

  	
   

  	
  70

  

 

 

 ii
 

 

 

	
  6.02

  	
   

  	
  Certificates; Other
  Information

  	
   

  	
  71

  
	
  6.03

  	
   

  	
  Notices

  	
   

  	
  74

  
	
  6.04

  	
   

  	
  Payment of Obligations

  	
   

  	
  75

  
	
  6.05

  	
   

  	
  Preservation of
  Existence, Etc

  	
   

  	
  75

  
	
  6.06

  	
   

  	
  Maintenance of
  Properties

  	
   

  	
  76

  
	
  6.07

  	
   

  	
  Maintenance of
  Insurance

  	
   

  	
  76

  
	
  6.08

  	
   

  	
  Compliance with Laws

  	
   

  	
  76

  
	
  6.09

  	
   

  	
  Books and Records

  	
   

  	
  76

  
	
  6.10

  	
   

  	
  Inspection Rights

  	
   

  	
  76

  
	
  6.11

  	
   

  	
  Use of Proceeds

  	
   

  	
  77

  
	
  6.12

  	
   

  	
  Covenant to Guarantee
  Obligations and Give Security

  	
   

  	
  77

  
	
  6.13

  	
   

  	
  Compliance with
  Environmental Laws

  	
   

  	
  80

  
	
  6.14

  	
   

  	
  [Reserved.]

  	
   

  	
  80

  
	
  6.15

  	
   

  	
  Further Assurances

  	
   

  	
  80

  
	
  6.16

  	
   

  	
  Compliance with Terms
  of Leaseholds

  	
   

  	
  81

  
	
  6.17

  	
   

  	
  Interest Rate Hedging

  	
   

  	
  81

  
	
  6.18

  	
   

  	
  Material Contracts

  	
   

  	
  81

  
	
  6.19

  	
   

  	
  Notices to Obligors;
  Delivery of Collections and RA/EOBs

  	
   

  	
  81

  
	
  Article VII

  	
   

  	
  NEGATIVE COVENANTS

  	
   

  	
  82

  
	
  7.01

  	
   

  	
  Liens

  	
   

  	
  82

  
	
  7.02

  	
   

  	
  Indebtedness

  	
   

  	
  83

  
	
  7.03

  	
   

  	
  Investments

  	
   

  	
  84

  
	
  7.04

  	
   

  	
  Fundamental Changes

  	
   

  	
  86

  
	
  7.05

  	
   

  	
  Dispositions

  	
   

  	
  87

  
	
  7.06

  	
   

  	
  Restricted Payments

  	
   

  	
  87

  
	
  7.07

  	
   

  	
  Change in Nature of
  Business

  	
   

  	
  88

  
	
  7.08

  	
   

  	
  Transactions with
  Affiliates

  	
   

  	
  88

  
	
  7.09

  	
   

  	
  Burdensome Agreements

  	
   

  	
  88

  
	
  7.10

  	
   

  	
  Use of Proceeds

  	
   

  	
  89

  
	
  7.11

  	
   

  	
  Financial Covenants

  	
   

  	
  89

  

 

 

 iii
 

 

 

	
  7.12

  	
   

  	
  Capital Expenditures

  	
   

  	
  90

  
	
  7.13

  	
   

  	
  Amendments of
  Organization Documents

  	
   

  	
  90

  
	
  7.14

  	
   

  	
  Accounting Changes

  	
   

  	
  90

  
	
  7.15

  	
   

  	
  Prepayments, Etc. of
  Indebtedness

  	
   

  	
  90

  
	
  7.16

  	
   

  	
  Amendment, Etc. of
  Related Documents and Indebtedness

  	
   

  	
  90

  
	
  7.17

  	
   

  	
  Holding Company

  	
   

  	
  91

  
	
  Article VIII

  	
   

  	
  EVENTS OF DEFAULT AND
  REMEDIES

  	
   

  	
  91

  
	
  8.01

  	
   

  	
  Events of Default

  	
   

  	
  91

  
	
  8.02

  	
   

  	
  Remedies upon Event of
  Default

  	
   

  	
  93

  
	
  8.03

  	
   

  	
  Application of Funds

  	
   

  	
  94

  
	
  Article IX

  	
   

  	
  ADMINISTRATIVE AGENT

  	
   

  	
  95

  
	
  9.01

  	
   

  	
  Appointment and
  Authority

  	
   

  	
  95

  
	
  9.02

  	
   

  	
  Rights as a Lender

  	
   

  	
  96

  
	
  9.03

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  96

  
	
  9.04

  	
   

  	
  Reliance by
  Administrative Agent

  	
   

  	
  97

  
	
  9.05

  	
   

  	
  Delegation of Duties

  	
   

  	
  97

  
	
  9.06

  	
   

  	
  Resignation of
  Administrative Agent

  	
   

  	
  97

  
	
  9.07

  	
   

  	
  Non-Reliance on
  Administrative Agent and Other Lenders

  	
   

  	
  98

  
	
  9.08

  	
   

  	
  No Other Duties, Etc

  	
   

  	
  98

  
	
  9.09

  	
   

  	
  Administrative Agent
  May File Proofs of Claim

  	
   

  	
  98

  
	
  9.10

  	
   

  	
  Collateral and Guaranty
  Matters

  	
   

  	
  99

  
	
  Article X

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  100

  
	
  10.01

  	
   

  	
  Amendments, Etc

  	
   

  	
  100

  
	
  10.02

  	
   

  	
  Notices; Effectiveness;
  Electronic Communications

  	
   

  	
  101

  
	
  10.03

  	
   

  	
  No Waiver; Cumulative
  Remedies

  	
   

  	
  103

  
	
  10.04

  	
   

  	
  Expenses; Indemnity;
  Damage Waiver

  	
   

  	
  104

  
	
  10.05

  	
   

  	
  Payments Set Aside

  	
   

  	
  105

  
	
  10.06

  	
   

  	
  Successors and Assigns

  	
   

  	
  106

  
	
  10.07

  	
   

  	
  Treatment of Certain
  Information; Confidentiality

  	
   

  	
  110

  
	
  10.08

  	
   

  	
  Right of Setoff

  	
   

  	
  110

  

 

 iv
 

 

 

	
  10.09

  	
   

  	
  Interest Rate
  Limitation

  	
   

  	
  111

  
	
  10.10

  	
   

  	
  Counterparts;
  Integration; Effectiveness

  	
   

  	
  111

  
	
  10.11

  	
   

  	
  Survival of
  Representations and Warranties

  	
   

  	
  111

  
	
  10.12

  	
   

  	
  Severability

  	
   

  	
  112

  
	
  10.13

  	
   

  	
  Replacement of Lenders

  	
   

  	
  112

  
	
  10.14

  	
   

  	
  Governing Law;
  Jurisdiction; Etc

  	
   

  	
  113

  
	
  10.15

  	
   

  	
  California Judicial
  Reference

  	
   

  	
  113

  
	
  10.16

  	
   

  	
  No Advisory or
  Fiduciary Responsibility

  	
   

  	
  114

  
	
  10.17

  	
   

  	
  USA PATRIOT Act Notice

  	
   

  	
  114

  

 

 v
 

 

SCHEDULES

1.01                 Capitated
Contracts

2.01                 Commitments
and Applicable Percentages

4.01(n)            Certain
Swap Contracts

5.03                 Certain Authorizations

5.08(b)            Existing
Liens

5.08(c)            Owned
Real Property

5.08(d)(i)        Leased
Real Property (Lessee)

5.08(d)(ii)       Leased
Real Property (Lessor)

5.08(e)            Existing
Investments

5.13                 Subsidiaries
and Other Equity Investments; Loan Parties

5.17                 Intellectual
Property Matters

5.23                 Filings

6.12                 Guarantors

7.02                 Existing
Indebtedness

7.06                 Management
Agreements

10.02               Administrative Agent’s Office,
Certain Addresses for Notices

EXHIBITS

Form
of

A                     Committed
Loan Notice

B                     Term
Note

C                     Revolving
Credit Note

D                     Compliance
Certificate

E                      Assignment
and Assumption

F                      Guaranty

G                     Security
Agreement

H                     Pledge
Agreement

I                       Opinion
Matters — Counsel to Loan Parties

 

 vi

CREDIT AGREEMENT

This CREDIT AGREEMENT (“Agreement”) is entered into as of
June 1, 2007, among PROSPECT MEDICAL HOLDINGS, INC., a Delaware
corporation (“Holdings”), PROSPECT MEDICAL GROUP, INC., California
professional corporation (“Group” and, together with Holdings, the “Borrowers”),
each lender from time to time party hereto (collectively, the “Lenders”
and individually, a “Lender”), and BANK OF AMERICA, N.A., as Administrative Agent
and L/C Issuer.

PRELIMINARY STATEMENTS:

The Borrowers have requested that the Lenders provide
a term loan facility and a revolving credit facility, and the Lenders have
indicated their willingness to lend and the L/C Issuer has indicated its
willingness to issue letters of credit, in each case, on the terms and subject
to the conditions set forth herein.

In consideration of the mutual covenants and
agreements herein contained, the parties hereto covenant and agree as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

1.01         Defined
Terms.  As used in this Agreement,
the following terms shall have the meanings set forth below:

“Accounts” has the
meaning set forth in the Security Agreement.

“Administrative
Agent” means Bank of America in its capacity as administrative agent
under any of the Loan Documents, or any successor administrative agent.

“Administrative
Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 11.02, or such other
address or account as the Administrative Agent may from time to time notify to
the Borrowers and the Lenders.

“Administrative
Questionnaire” means an Administrative Questionnaire in a form
supplied by the Administrative Agent.

“Affiliate”
means, with respect to any Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.

“Aggregate
Commitments” means the Commitments of all the Lenders.

“Aggregate Credit
Exposures” means, at any time, in respect of (a) the
Term Facility, the aggregate amount of the Term Loans outstanding at
such time and (b) in respect of the Revolving Credit Facility, the sum of
(i) the unused portion of the Revolving Credit Facility at such time and (ii)
the Total Revolving Credit Outstandings at such time.

“Agreement”
means this Credit Agreement.

“Applicable Fee Rate”
means, at any time, in respect of the Revolving Credit Facility, (a) from the
Closing Date through March 1, 2008, 0.25% per annum and
(b) thereafter, the applicable percentage per annum set forth below determined
by reference to the Consolidated Senior Leverage Ratio as set forth in the most
recent Compliance Certificate received by the Administrative Agent pursuant to Section 6.02(b):

	
  Applicable Fee Rate

  
	
  Pricing Level

  	
   

  	
  Consolidated Senior

  Leverage Ratio

  	
   

  	
  Commitment

  Fee

  
	
  I

  	
   

  	
  Greater than or
  equal to 2.5:1.0

  	
   

  	
  0.35%

  
	
  II

  	
   

  	
  Less than
  2.5:1.0

  	
   

  	
  0.25%

  

Any
increase or decrease in the Applicable Fee Rate resulting from a change in the
Consolidated Senior Leverage Ratio shall become effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 6.02(b); provided, however,
that if a Compliance Certificate is not delivered when due in accordance with
such Section, then Pricing Level I shall apply as of the first Business Day
after the date on which such Compliance Certificate was required to have been
delivered.

Notwithstanding anything to
the contrary contained in this definition, the determination of the Applicable
Fee Rate for any period shall be subject to the provisions of Section
2.10(b).

“Applicable Percentage”
means (a) in respect of the Term Facility, with respect to any Term Lender
at any time, the percentage (carried out to the ninth decimal place) of the
Term Facility represented by (i) on
or prior to the Closing Date, such Term Lender’s Term Commitment at such
time and (ii) thereafter, the principal amount of such Term Lender’s Term
Loans at such time, and (b) in
respect of the Revolving Credit Facility, with respect to any Revolving Credit
Lender at any time, the percentage (carried out to the ninth decimal place) of
the Revolving Credit Facility represented by such Revolving Credit Lender’s
Revolving Credit Commitment at such time.  If the commitment of each Revolving Credit Lender to make Revolving Credit Loans and the
obligation of the L/C Issuer to make L/C Credit Extensions have been terminated
pursuant to Section 8.02, or if the Revolving Credit Commitments have expired, then the Applicable
Percentage of each Revolving Credit
Lender in respect of the Revolving
Credit Facility shall be determined based on the Applicable Percentage
of such Revolving Credit Lender
in respect of the Revolving Credit
Facility most recently in effect, giving effect to any subsequent assignments.  The initial Applicable Percentage of each
Lender in respect of each Facility is set forth opposite the name of such
Lender on Schedule 2.01 or in the Assignment and Assumption pursuant to
which such Lender becomes a party hereto, as applicable.

“Applicable Rate” means
(a) from the Closing Date through March 1, 2008, (i) with respect to
Credit Extensions under the Revolving Credit Facility, 0.25% per annum for Base
Rate Loans and 3.25% per annum for Eurodollar Rate Loans and Letter of Credit
Fees, and (ii) with respect to Term Loans, 0.75% per annum for Base Rate Loans
and 3.75% per annum for Eurodollar Rate Loans, and (b) thereafter, (i) in
the case of Credit Extensions under the 

 2
 

Revolving Credit Facility the applicable percentage
per annum set forth below determined by reference to the Consolidated Senior
Leverage Ratio as set forth in the most recent Compliance Certificate received
by the Administrative Agent pursuant to Section 6.02(b) and (ii) in
the case of the Term Loans, the applicable percentage for Credit Extensions
under the Revolving Credit Facility plus 0.50% per annum:

	
  Applicable Rate

  
	
  Pricing Level

  	
   

  	
  Consolidated Senior Leverage Ratio

  	
   

  	
  Eurodollar Rate

  (Letters of Credit)

  	
   

  	
  Base Rate

  
	
  I

  	
   

  	
  Greater than or
  equal to 2.5:1.0

  	
   

  	
  3.75%

  	
   

  	
  0.75%

  
	
  II

  	
   

  	
  Greater than or
  equal to 2.0:1.0, but less than 2.5:1.0

  	
   

  	
  3.25%

  	
   

  	
  0.25%

  
	
  III

  	
   

  	
  Greater than or
  equal to 1.5:1.0, but less than 2.0:1.0

  	
   

  	
  2.75%

  	
   

  	
  0.00%

  
	
  IV

  	
   

  	
  Less than
  1.5:1.0

  	
   

  	
  2.50%

  	
   

  	
  0.00%

  

Any
increase or decrease in the Applicable Rate resulting from a change in the
Consolidated Senior Leverage Ratio shall become effective as of the first
Business Day immediately following the date a Compliance Certificate is
delivered pursuant to Section 6.02(b); provided, however,
that if a Compliance Certificate is not delivered when due in accordance with
such Section, then Pricing Level I shall apply as of the first Business Day
after the date on which such Compliance Certificate was required to have been
delivered.

Notwithstanding anything to
the contrary contained in this definition, the determination of the Applicable
Rate for any period shall be subject to the provisions of Section 2.10(b).

“Applicable Revolving
Credit Percentage” means with respect to any Revolving Credit Lender at any
time, such Revolving Credit Lender’s Applicable Percentage in respect of the
Revolving Credit Facility at such time.

“Appropriate Lender” means, at
any time, (a) with respect to any of the Term Facility or the Revolving
Credit Facility, a Lender that has a Commitment with respect to such Facility
or holds a Term Loan or a Revolving Credit Loan, respectively, at such time,
and (b) with respect to the Letter of Credit Sublimit, (i) the L/C
Issuer and (ii) if any Letters of Credit have been issued pursuant to Section
2.03(a), the Revolving Credit Lenders.

“Approved Fund”
means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

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

“Assignee Group”
means two or more Eligible Assignees that are Affiliates of one another or two
or more Approved Funds managed by the same investment advisor.

 3
 

“Assignment and
Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 10.06(b)), and accepted by the Administrative
Agent, in substantially the form of Exhibit E or any other form approved
by the Administrative Agent.

“Attributable
Indebtedness” means, on any date, (a) in respect of any Capitalized
Lease of any Person, the capitalized amount thereof that would appear on a
balance sheet of such Person prepared as of such date in accordance with GAAP,
(b) in respect of any Synthetic Lease Obligation, the capitalized amount of the
remaining lease or similar payments under the relevant lease or other
applicable agreement or instrument that would appear on a balance sheet of such
Person prepared as of such date in accordance with GAAP if such lease or other
agreement or instrument were accounted for as a Capitalized Lease and (c) all
Synthetic Debt of such Person.

“Audited Financial
Statements” means the audited consolidated balance sheet of Holdings and its Subsidiaries for the
fiscal year ended September 30, 2006,
and the related consolidated statements of income or operations, shareholders’
equity and cash flows for such fiscal year of Holdings and its Subsidiaries, including the notes thereto.

“Availability
Period” means, in respect of the Revolving Credit Facility, the
period from and including the Closing Date to the earliest of (i) the Maturity
Date for the Revolving Credit Facility, (ii) the date of termination of the
Revolving Credit Commitments pursuant to Section 2.06, and (iii) the
date of termination of the commitment of each Revolving Credit Lender to make
Revolving Credit Loans and of the obligation of the L/C Issuer to make L/C
Credit Extensions pursuant to Section 8.02.

“Bank of America”
means Bank of America, N.A. and its successors.

“Base Rate”
means for any day a fluctuating rate per annum equal to the higher of (a) the
Federal Funds Rate plus 1/2 of 1% and (b) the rate of interest in effect
for such day as publicly announced from time to time by Bank of America as its “prime
rate.”  The “prime rate” is a rate set by
Bank of America based upon various factors including Bank of America’s costs
and desired return, general economic conditions and other factors, and is used
as a reference point for pricing some loans, which may be priced at, above, or
below such announced rate.  Any change in
such rate announced by Bank of America shall take effect at the opening of
business on the day specified in the public announcement of such change.

“Base Rate Loan”
means a Revolving Credit Loan or a Term
Loan that bears interest based on the Base Rate.

“Borrowers”
has the meaning specified in the introductory paragraph hereto.

“Borrower Materials”
has the meaning specified in Section 6.02.

“Borrowing”
means a Revolving Credit Borrowing or a Term Borrowing, as the context may
require.

“Business Day”
means any day other than a Saturday, Sunday or other day on which commercial
banks are authorized to close under the Laws of, or are in fact closed in, the 

 4
 

state where the Administrative Agent’s Office is
located and, if such day relates to any Eurodollar Rate Loan, means any such
day on which dealings in Dollar deposits are conducted by and between banks in
the London interbank eurodollar market.

“Capital
Expenditures” means, with respect to any Person for any period, any
expenditure in respect of the purchase or other acquisition of any fixed or
capital asset (excluding normal replacements and maintenance which are properly
charged to current operations).

“Capitalized Leases”
means all leases that have been or should be, in accordance with GAAP, recorded
as capitalized leases.

“Capitated Contracts”
means all of the Loan Parties’ contracts whether presently existing or hereafter
executed between Loan Parties, various health maintenance organizations and all
proceeds therefrom.  A list of all
Capitated Contracts in effect on the Closing Date is attached as Schedule
1.1.

“Capitated Contract
Rights” means all of the Loan Parties’ rights to payment of any kind
arising from or out of Capitated Contracts or any other contracts or rights to
payment from health service contracts whether presently existing or hereafter
executed between Loan Parties and various health maintenance organizations.

“Cash Collateral
Account” means a blocked, non-interest bearing deposit account of
one or more of the Loan Parties at Bank of America (or another commercial bank
selected in compliance with Section 6.19) in the name of the
Administrative Agent and under the sole dominion and control of the
Administrative Agent, and otherwise established in a manner satisfactory to the
Administrative Agent.

“Cash Collateralize”
has the meaning specified in Section 2.03(g).

“Cash Equivalents” means any
of the following types of Investments, to the extent owned by any Borrower or
any of its Subsidiaries free and clear of all Liens (other than Liens created
under the Collateral Documents):

(a)           readily
marketable obligations issued or directly and fully guaranteed or insured by
the United States of America or any agency or instrumentality thereof having
maturities of not more than 360 days from the date of acquisition thereof; provided that the full faith and
credit of the United States of America is pledged in support thereof;

(b)           time
deposits with, or insured certificates of deposit or bankers’ acceptances of,
any commercial bank that (i) (A) is a Lender or (B) is organized under the laws
of the United States of America, any state thereof or the District of Columbia
or is the principal banking subsidiary of a bank holding company organized
under the laws of the United States of America, any state thereof or the
District of Columbia, and is a member of the Federal Reserve System, (ii)
issues (or the parent of which issues) commercial paper rated as described in
clause (c) of this definition and (iii) has combined capital and surplus
of at least $500,000,000, in each case with maturities of not more than 90  days
from the date of acquisition thereof;

 5
 

(c)           commercial
paper of any issuer rated at least “Prime-1” (or the then equivalent
grade) by Moody’s or at least “A-1” (or the then equivalent grade) by
S&P, in each case with maturities of not more than 180 days from the date
of acquisition thereof; and

(d)           Investments,
classified in accordance with GAAP as current assets of any Borrower or any of
its Subsidiaries, in money market investment programs registered under the
Investment Company Act of 1940, which are administered by financial
institutions that have the highest rating obtainable from either Moody’s or
S&P, and the portfolios of which are limited solely to Investments of the
character, quality and maturity described in clauses (a), (b) and
(c) of this definition.

“Cash Management
Agreement” means any agreement to provide cash management services,
including treasury, depository, overdraft, credit or debit card, electronic
funds transfer and other cash management arrangements.

“Cash Management Bank” means any
Person that, at the time it enters into a Cash Management Agreement, is a
Lender or an Affiliate of a Lender, in its capacity as a party to such Cash
Management Agreement.

“CERCLA” means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980.

“CERCLIS” means the
Comprehensive Environmental Response, Compensation and Liability Information
System maintained by the U.S. Environmental Protection Agency.

“CFC” means a
Person that is a controlled foreign corporation under Section 957 of the Code.

“Change in Law”
means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or
treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority.

“Change of Control”
means an event or series of events by which:

(a)           any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, but excluding any employee benefit plan of
such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan) other than the Equity Investors becomes the “beneficial owner” (as
defined in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934,
except that a person or group shall be deemed to have “beneficial ownership” of
all securities that such person or group has the right to acquire, whether such
right is exercisable immediately or only after the passage of time (such right,
an “option
right”)), directly or indirectly, of 25% or more of the equity securities of Holdings entitled to vote for members of the board of directors or
equivalent governing 

 6
 

body of Holdings on a fully-diluted basis (and
taking into account all such securities that such “person” or “group” has the
right to acquire pursuant to any option right); or

(b)           during
any period of 12 consecutive
months, a majority of the members of the board of directors or other equivalent
governing body of Holdings cease
for any reason other than death or disability to be composed of individuals (i)
who were members of that board or equivalent governing body on the first day of
such period, (ii) whose election or nomination to that board or equivalent
governing body was approved by individuals referred to in clause (i) above
constituting at the time of such election or nomination at least a majority of
that board or equivalent governing body or (iii) whose election or nomination
to that board or other equivalent governing body was approved by individuals
referred to in clauses (i) and (ii) above constituting at the time of such election
or nomination at least a majority of that board or equivalent governing body
(excluding, in the case of both clause (ii) and clause (iii), any individual
whose initial nomination for, or assumption of office as, a member of that
board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of
one or more directors by any person or group other than a solicitation for the
election of one or more directors by or on behalf of the board of directors);
or

(c)           any
Person or two or more Persons acting in concert shall have acquired by contract
or otherwise, or shall have entered into a contract or arrangement that, upon
consummation thereof, will result in its or their acquisition of the power to
exercise, directly or indirectly, a controlling influence over the management
or policies of Holdings, or
control over the equity securities of Holdings
entitled to vote for members of the board of directors or equivalent governing
body of Holdings on a
fully-diluted basis (and taking into account all such securities that such
Person or Persons have the right to acquire pursuant to any option right)
representing 25% or more of the
combined voting power of such securities; or

(d)           Holdings
or Group, as applicable, shall cease, directly or indirectly, to own and
control legally and beneficially all of the Equity Interests in each of its
Subsidiaries or any other Person that is, or may from time to time become, a
Loan Party, except in the case of Nuestra Familia Medical Group, in which case
a Change of Control shall have occurred if Group ceases to own and control over
50% of the outstanding stock.

“Clean-up Period” means a period
of 45 consecutive days commencing on the first Business day of each fiscal
quarter of Holdings.

“Closing Date”
means the first date all the conditions precedent in Section 4.01 are
satisfied or waived in accordance with Section 10.01.

“Code”
means the Internal Revenue Code of 1986.

 7
 

“Collateral”
means all of the “Collateral”
referred to in the Collateral Documents and all of the other property that is
or is intended under the terms of the Collateral Documents to be subject to
Liens in favor of the Administrative Agent for the benefit of the Secured
Parties.

“Collateral Assignment
of ProMed Documents” means the collateral assignment of ProMed documents
executed and delivered pursuant to Section 4.01(a)(v), as such
agreement may be amended, supplemented, restated or otherwise modified from
time to time.

“Collateral
Documents” means, collectively, the Security Agreement, the Pledge
Agreement, the Collateral Assignment of ProMed Documents, the Terner Pledge
Agreement, each of the security agreements, pledge agreements or other similar
agreements delivered to the Administrative Agent pursuant to Section 6.12,
and each of the other agreements, instruments or documents that creates or
purports to create a Lien in favor of the Administrative Agent for the benefit
of the Secured Parties.

“Collections”
means all funds received from or on behalf of Obligors in payment of any amount
owed with respect to Accounts.

“Commitment”
means a Term Commitment or a Revolving Credit Commitment, as the context
may require.

“Committed Loan
Notice” means a notice of (a) a Term Borrowing, (b) a Revolving
Credit Borrowing, (c) a conversion of Loans from one Type to the other, or (d)
a continuation of Eurodollar Rate Loans, pursuant to Section 2.02(a),
which, if in writing, shall be substantially in the form of Exhibit A.

“Compliance
Certificate” means a certificate substantially in the form of Exhibit D.

“Consolidated Adjusted
EBITDA” means, as of any date of determination, Consolidated EBITDA for the
most recently completed Measurement Period, as the same has been adjusted by
the Administrative Agent, including adjustments for excess compensation in
respect of the ProMed Entities.

“Consolidated EBITDA” means, at
any date of determination, an amount equal to Consolidated Net Income of
Holdings and its Subsidiaries (including the ProMed Entities) on a consolidated
basis for the most recently completed Measurement Period plus (a) the
following to the extent deducted in calculating such Consolidated Net
Income:  (i) Consolidated Interest
Charges, (ii) the provision for Federal, state, local and foreign income taxes
payable, (iii) depreciation and amortization expense and (iv) other
non-recurring expenses reducing such Consolidated Net Income which do not
represent a cash item in such period or any future period (in each case of or
by Holdings and its Subsidiaries (including the ProMed Entities) for such
Measurement Period) and minus (b) the following to the extent included
in calculating such Consolidated Net Income: 
(i) Federal, state, local and foreign income tax credits and (ii) all
non-cash items increasing Consolidated Net Income (in each case of or by
Holdings and its Subsidiaries (including the ProMed Entities) for such
Measurement Period).

 8
 

“Consolidated Fixed Charge Coverage Ratio” means, at any date of
determination, the ratio of (a) Consolidated EBITDA, less the aggregate
amount of all cash Capital Expenditures less the aggregate amount of all
cash Taxes to (b) the sum of Consolidated Interest Charges plus the
aggregate principal amount of all regularly scheduled principal payments or
redemptions or similar acquisitions for value of outstanding debt for borrowed
money, in each case, of or by Holdings and its Subsidiaries (including the
ProMed Entities) for the most recently completed Measurement Period.

“Consolidated Interest Charges”
means, for any Measurement Period, the sum of (a) all interest, premium
payments, debt discount, fees, charges and related expenses in connection with
borrowed money or in connection with the deferred purchase price of assets, in
each case to the extent treated as interest in accordance with GAAP, (b) all
interest paid or payable with respect to discontinued operations and (c) the
portion of rent expense under Capitalized Leases that is treated as interest in
accordance with GAAP, in each case, of or by Holdings and its Subsidiaries
(including the ProMed Entities) on a consolidated basis for the most recently
completed Measurement Period and paid in cash.

“Consolidated Net Income” means,
at any date of determination, the net income (or loss) of Holdings and its
Subsidiaries (including the ProMed Entities) on a consolidated basis for the
most recently completed Measurement Period; provided that Consolidated
Net Income shall exclude (a) extraordinary gains and extraordinary losses for
such Measurement Period, (b) the net income of any Subsidiary during such
Measurement Period to the extent that the declaration or payment of dividends
or similar distributions by such Subsidiary of such income is not permitted by
operation of the terms of its Organization Documents or any agreement, instrument
or Law applicable to such Subsidiary during such Measurement Period, except
that Holdings’ equity in any net loss of any such Subsidiary for such
Measurement Period shall be included in determining Consolidated Net Income,
and (c) any income (or loss) for such Period of any Person if such Person is
not a Subsidiary, except that Holdings’ equity in the net income of any such
Person for such Measurement Period shall be included in Consolidated Net Income
up to the aggregate amount of cash actually distributed by such Person during
such Period to Holdings or a Subsidiary as a dividend or other distribution
(and in the case of a dividend or other distribution to a Subsidiary, such
Subsidiary is not precluded from further distributing such amount to Holdings
as described in clause (b) of this proviso).

“Consolidated Net Worth” means, as
of any date of determination, for Holdings and its Subsidiaries (including the
ProMed Entities) on a consolidated basis, Shareholders’ Equity of Holdings and
its Subsidiaries on that date.

“Consolidated Senior Indebtedness”
means, as of any date of determination, for Holdings and its Subsidiaries
(including the ProMed Entities) on a consolidated basis, the sum of (a) the
outstanding principal amount of all obligations, whether current or long-term,
for borrowed money (including Obligations hereunder) and all obligations
evidenced by bonds, debentures, notes, loan agreements or other similar
instruments, (b) all purchase money Indebtedness, (c) all direct obligations
arising under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments (other than
any Letters of Credit issued by Bank of America and cash collateralized by a
Borrower), (d) all obligations in respect of the deferred purchase price of
property or services (other than trade 

 9
 

accounts payable in the ordinary course of business),
(e) all Attributable Indebtedness, (f) without duplication, all Guarantees with
respect to outstanding Indebtedness of the types specified in clauses (a)
through (e) above of Persons other than any Borrower or any Subsidiary, and (g)
all Indebtedness of the types referred to in clauses (a) through (f) above of
any partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which a Borrower or a Subsidiary
is a general partner or joint venturer, unless such Indebtedness is
non-recourse to such Borrower or such Subsidiary minus any Indebtedness
which is subordinated to the Obligations on terms and conditions satisfactory
to the Administrative Agent.

“Consolidated Senior Leverage Ratio”
means, as of any date of determination, the ratio of (a) Consolidated Senior
Indebtedness as of such date to  (b) Consolidated Adjusted EBITDA of Holdings and its
Subsidiaries (including the ProMed Entities) on a consolidated basis for the
most recently completed Measurement Period.

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

“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise.  “Controlling” and “Controlled”
have meanings correlative thereto.

“Credit Extension”
means each of the following:  (a) a
Borrowing and (b) an L/C Credit Extension.

“Debt Rating”
means, as of any date of determination, the ratings as determined by S&P of
any Person’s non-credit-enhanced, senior unsecured long-term debt.

“Debtor Relief Laws”
means the Bankruptcy Code of the United States, and all other liquidation,
conservatorship, bankruptcy, assignment for the benefit of creditors,
moratorium, rearrangement, receivership, insolvency, reorganization, or similar
debtor relief Laws of the United States or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors generally.

“Default”
means any event or condition that constitutes an Event of Default or that, with
the giving of any notice, the passage of time, or both, would be an Event of
Default.

“Default Rate”
means (a) when used with respect to Obligations other than Letter of Credit
Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans plus (iii) 2% per
annum; provided, however, that with respect to a Eurodollar Rate
Loan, the Default Rate shall be an interest rate equal to the interest rate
(including any Applicable Rate) otherwise applicable to such Loan plus
2% per annum and (b) when used with respect to Letter of Credit Fees, a rate
equal to the Applicable Rate plus 2% per annum.

 

 10

“Defaulting Lender”
means any Lender that (a) has failed to fund any portion of the Term Loans,
Revolving Credit Loans or participations in L/C Obligations required to be
funded by it hereunder within one Business Day of the date required to be
funded by it hereunder, (b) has otherwise failed to pay over to the
Administrative Agent or any other Lender any other amount required to be paid
by it hereunder within one Business Day of the date when due, unless the
subject of a good faith dispute, or (c) has been deemed insolvent or become the
subject of a bankruptcy or insolvency proceeding.

“Disposition”
or “Dispose”
means the sale, transfer, license, lease or other disposition (including any
sale and leaseback transaction) of any property by any Person (or the granting
of any option or other right to do any of the foregoing), including any sale,
assignment, transfer or other disposal, with or without recourse, of any notes
or accounts receivable or any rights and claims associated therewith.

“DMHC” means the
Department of Managed Care of the State of California.

“Dollar”
and “$”
mean lawful money of the United States.

“Domestic
Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.

“Eligible Assignee”
means any Person that meets the requirements to be an assignee under Section 10.06(b)(iii),
(v) and (vi) (subject to such consents, if any, as may be
required under Section 10.06(b)(iii)).

“Environmental Laws”
means any and all Federal, state, local, and foreign statutes, laws,
regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

“Environmental
Liability” means any liability, contingent or otherwise (including
any liability for damages, costs of environmental remediation, fines, penalties
or indemnities), of any Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon (a)
violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

“Environmental Permit” means any
permit, approval, identification number, license or other authorization
required under any Environmental Law.

“Equity Interests” means,
with respect to any Person, all of the shares of capital stock of (or other
ownership or profit interests in) such Person, all of the warrants, options or
other rights for the purchase or acquisition from such Person of shares of
capital stock of (or other ownership or profit interests in) such Person, all
of the securities convertible into or 

 11
 

exchangeable for shares of capital stock of (or other
ownership or profit interests in) such Person or warrants, rights or options for
the purchase or acquisition from such Person of such shares (or such other
interests), and all of the other ownership or profit interests in such Person
(including partnership, member or trust interests therein), whether voting or
nonvoting.

“ERISA”
means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate”
means any trade or business (whether or not incorporated) under common control
with any Borrower within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to
Section 412 of the Code).

“ERISA Event”
means (a) a Reportable Event with respect to a Pension Plan; (b) a withdrawal
by any Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial
employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of
operations that is treated as such a withdrawal under Section 4062(e) of ERISA;
(c) a complete or partial withdrawal by any Borrower or any ERISA Affiliate
from a Multiemployer Plan or notification that a Multiemployer Plan is in
reorganization; (d) the filing of a notice of intent to terminate, the
treatment of a Plan amendment as a termination under Section 4041 or 4041A of
ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Pension Plan or Multiemployer Plan; or (f) the
imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA, upon any Borrower
or any ERISA Affiliate.

“Eurodollar Rate”
means, for any Interest Period with respect to a Eurodollar Rate Loan, the rate
per annum equal to the British Bankers Association LIBOR Rate (“BBA LIBOR”),
as published by Reuters (or other commercially available source providing
quotations of BBA LIBOR as designated by the Administrative Agent from time to
time) at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, for Dollar deposits (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period.  If such rate is not available at
such time for any reason, then the “Eurodollar Rate” for such Interest Period
shall be the rate per annum determined by the Administrative Agent to be the
rate at which deposits in Dollars for delivery on the first day of such
Interest Period in same day funds in the approximate amount of the Eurodollar
Rate Loan being made, continued or converted by Bank of America and with a term
equivalent to such Interest Period would be offered by Bank of America’s London
Branch to major banks in the London interbank eurodollar market at their
request at approximately 11:00 a.m. (London time) two Business Days prior to
the commencement of such Interest Period.

“Eurodollar Rate
Loan” means a Revolving Credit Loan or a Term Loan that bears
interest at a rate based on the Eurodollar Rate.

“Event of Default”
has the meaning specified in Section 8.01.

 12
 

“Excess
Cash Flow” means, for any fiscal year of Holdings, the excess (if any) of
(a) Consolidated EBITDA for such fiscal year over  (b) the sum (for such fiscal year) of (i)
Consolidated Interest Charges actually paid in cash by Holdings and its
Subsidiaries, (ii) scheduled principal repayments, to the extent actually made,
of Term Loans pursuant to Section 2.07, (iii) all income taxes
actually paid in cash by Holdings and its Subsidiaries and (iv) Capital
Expenditures actually made by Holdings and its Subsidiaries in such fiscal
year.

“Excluded Issuance”
by any Person means an issuance and sale of an Equity Interest in such Person
to the shareholders of Pomona Valley Medical Group, Inc., ProMed Health
Services Company and Upland Medical Group Inc., a Professional Medical
Corporation, in connection with the ProMed Acquisition or an issuance of shares
of capital stock of (or other ownership or profit interests in) such Person
upon the exercise of warrants, options or other rights for the purchase of such
capital stock (or other ownership or profit interest), including issuances to
employees, contractors, consultants, or directors of Holdings and its
Subsidiaries and Affiliates, including Group and Group’s Subsidiaries pursuant
to (A) options issued to such employees, contractors, consultants, or
directors pursuant to the Prospect Medical Holdings, Inc. 1998 Stock Option
Plan (“Current Stock Option Plan”), as such Current Stock Option Plan may be
amended from time to time to increase the number of options for such employees,
contractors, consultants or directors or to comply with tax laws, securities
laws or the rules and regulations of any stock exchange to which Holdings may
be listed, (B) options issued to such employees, contractors, consultants,
or directors outside of the Current Stock Option Plan on or before the Closing
Date or (C) Stock issuances to employees, contractors, consultants, or
directors of Holdings and its Subsidiaries and Affiliates pursuant to any other
restricted stock, stock option, or stock appreciation plan or agreement entered
into after the Closing Date to replace the Current Stock Option Plan.

“Excluded Taxes”
means, with respect to the Administrative Agent, any Lender, the L/C Issuer or
any other recipient of any payment to be made by or on account of any
obligation of any Borrower hereunder, (a) taxes imposed on or measured by its
overall net income (however denominated), and franchise taxes imposed on it (in
lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located, (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
a Borrower is located and (c) in the case of a Foreign Lender (other than an
assignee pursuant to a request by the Borrowers under Section 10.13),
any withholding tax that is imposed on amounts payable to such Foreign Lender
at the time such Foreign Lender becomes a party hereto (or designates a new
Lending Office) or is attributable to such Foreign Lender’s failure or
inability (other than as a result of a Change in Law) to comply with Section
3.01(e), except to the extent that such Foreign Lender (or its assignor, if
any) was entitled, at the time of designation of a new Lending Office (or
assignment), to receive additional amounts from the Borrowers with respect to
such withholding tax pursuant to Section 3.01(a).

“Existing Credit Agreement” means
that certain Loan and Security Agreement dated as of September 27, 2004
among the Borrowers and certain of their Affiliates and Residential Funding
Corporation, as lender, as amended.

 13
 

“Extraordinary
Receipt” means the proceeds of insurance (other than proceeds of
business interruption insurance to the extent such proceeds constitute
compensation for lost earnings and other than proceeds used to repair, replace,
restore or rebuild the Collateral) and condemnation awards.

“Facility” means the
Term Facility or the Revolving Credit Facility, as the context may
require.

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

“Fee-For-Service
Accounts” means Accounts other than Capitated Contract Rights.

“Fee Letter”
means the letter agreement, dated June 1, 2007, among the Borrowers, the
Administrative Agent and the Arranger.

“Foreign Lender”
means any Lender that is organized under the laws of a jurisdiction other than
that in which the Borrowers are resident for tax purposes.  For purposes of this definition, the United
States, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

“FRB”
means the Board of Governors of the Federal Reserve System of the United
States.

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

“GAAP”
means generally accepted accounting principles in the United States set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

“Governmental
Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and
any agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or 

 14
 

pertaining to government (including any supra-national
bodies such as the European Union or the European Central Bank).

“Guarantee”
means, as to any Person, any (a) any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other financial obligation payable or performable by another
Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or indirect,
(i) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation, (ii) to purchase or lease property,
securities or services for the purpose of assuring the obligee in respect of
such Indebtedness or other obligation of the payment or performance of such
Indebtedness or other obligation, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness or other obligation, or (iv) entered into for the
purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or financial performance
thereof or to protect such obligee against loss in respect thereof (in whole or
in part), or (b) any Lien on any assets of such Person securing any
Indebtedness or other obligation of any other Person, whether or not such
Indebtedness or other obligation is assumed by such Person (or any right,
contingent or otherwise, of any holder of such Indebtedness to obtain any such
Lien).  The amount of any Guarantee shall
be deemed to be an amount equal to the stated or determinable amount of the
related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith.  The term “Guarantee”
as a verb has a corresponding meaning.

“Guarantors”
means, collectively, the Subsidiaries of the Borrowers listed on Schedule 6.12 and each other
Subsidiary of either Borrower
that shall be required to execute and deliver a guaranty or guaranty supplement
pursuant to Section 6.12.

“Guaranty”
means, collectively, the Guaranty made by each of the Borrowers and the
Guarantors in favor of the Secured Parties, substantially in the form of Exhibit
F, together with each other guaranty and guaranty supplement delivered
pursuant to Section 6.12.

“Hazardous
Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all
other substances or wastes of any nature regulated pursuant to any
Environmental Law.

“Health Care Laws”
means (i) any and all federal, state and local fraud and abuse laws, including,
without limitation, the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7(b)),
the Stark Law (42 U.S.C. § 1395nn and §1395(q)), the civil False Claims Act (31
U.S.C. § 3729 et seq.), Sections 1320a-7 and 1320a-7a of Title 42 of the United
States Code and the regulations promulgated pursuant to such statutes; (ii) the
federal Food, Drug & Cosmetic Act (21 U.S.C. §§ 301 et seq.) and the
regulations promulgated thereunder, (iii) the Health Insurance Portability and
Accountability Act of 1996 (Pub. L. No. 104-191) and the regulations promulgated
thereunder, (iv) Medicare (Title XVIII of the Social Security Act) and the
regulations 

 15
 

promulgated thereunder; (v) Medicaid (Title XIX of the
Social Security Act) and the regulations promulgated thereunder; (vi) the
Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (Pub. L.
No. 108-173) and the regulations promulgated thereunder; (vii) quality, safety
and accreditation standards and requirements of all applicable state laws or
regulatory bodies; (viii) Laws relating to the ownership or operation of a
health care facility or business, or assets used in connection therewith, (ix)
Laws relating to the billing or submission of claims, collection of accounts
receivable, underwriting the cost of, or provision of management or administrative
services in connection with, any and all of the foregoing, by any Loan Party
and its Subsidiaries, including, but not limited to, laws and regulations
relating to practice of medicine and other health care professions,
professional fee splitting, tax-exempt organization and charitable trust law
applicable to health care organizations, certificates of need, certificates of
operations and authority, and (x) any and all other applicable health care
laws, regulations, manual provisions, policies and administrative guidance,
each of (i) through (x) as may be amended from time to time.

“Healthcare Service
Plan License” means a license issued by the California Department of
Corporation or the corresponding agency of another state and/or any other
applicable or successor state agency or body, certifying that a Loan Party is
qualified to operate as a health service plan under applicable law.

“Hedge Bank” means any
Person that, at the time it enters into a Secured Hedge Agreement, is a Lender
or an Affiliate of a Lender, in its capacity as a party to such Secured Hedge
Agreement.

“Holdings” has the meaning specified in the introductory paragraph
hereto.

“Indebtedness”
means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

(a)           all
obligations of such Person for borrowed money and all obligations of such
Person evidenced by bonds, debentures, notes, loan agreements or other similar
instruments;

(b)           the
maximum amount of all direct or contingent obligations of such Person arising
under letters of credit (including standby and commercial), bankers’
acceptances, bank guaranties, surety bonds and similar instruments;

(c)           net
obligations of such Person under any Swap Contract;

(d)           all
obligations of such Person to pay the deferred purchase price of property or
services (other than trade accounts payable in the ordinary course of business
and not past due for more than 90
days after the date on which such trade account was created);

(e)           indebtedness
(excluding prepaid interest thereon) secured by a Lien on property owned or
being purchased by such Person (including indebtedness arising under 

 16
 

conditional sales or
other title retention agreements), whether or not such indebtedness shall have
been assumed by such Person or is limited in recourse;

(f)            all
Attributable Indebtedness in respect of Capitalized Leases and Synthetic Lease
Obligations of such Person and all Synthetic Debt of such Person;

(g)           all
obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interest in such Person or any other
Person, valued, in the case of a redeemable preferred interest, at the greater
of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and

(h)           all
Guarantees of such Person in respect of any of the foregoing.

For all purposes hereof,
the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a general
partner or a joint venturer, where the Indebtedness is recourse to such
Person.  The amount of any net obligation
under any Swap Contract on any date shall be deemed to be the Swap Termination
Value thereof as of such date.

“Indemnified Taxes”  means Taxes other than Excluded Taxes.

“Indemnitees”
has the meaning specified in Section 10.04(b).

“Information” has
the meaning specified in Section 10.07.

“Intellectual
Property Security Agreement” has the meaning specified in Section 4.01(a)(v).

“Interest Payment
Date” means, (a) as to any Eurodollar Rate Loan, the last day of
each Interest Period applicable to such Loan and the Maturity Date of the
Facility under which such Loan was made; provided, however, that
if any Interest Period for a Eurodollar Rate Loan exceeds three months, the
respective dates that fall every three months after the beginning of such
Interest Period shall also be Interest Payment Dates; and (b) as to any Base
Rate Loan, the last Business Day of each March, June, September and December
and the Maturity Date of the Revolving Credit Facility.

“Interest Period”
means, as to each Eurodollar Rate Loan, the period commencing on the date such
Eurodollar Rate Loan is disbursed or converted to or continued as a Eurodollar
Rate Loan and ending on the date one, two, three or six months thereafter, as
selected by the Borrowers in their Committed Loan Notice; provided that:

(a)           any
Interest Period that would otherwise end on a day that is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day
falls in another calendar month, in which case such Interest Period shall end
on the next preceding Business Day;

 17
 

(b)           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 the
calendar month at the end of such Interest Period; and

(c)           no
Interest Period shall extend beyond the Maturity Date of the Facility under
which such Loan was made.

“Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person in another Person, whether by means of (a) the purchase or other
acquisition of Equity Interests of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or interest in, another Person, or (c) the
purchase or other acquisition (in one transaction or a series of transactions)
of assets of another Person that constitute a business unit or all or a substantial part of the business
of, such Person.  For purposes of
covenant compliance, the amount of any Investment shall be the amount actually
invested, without adjustment for subsequent increases or decreases in the value
of such Investment.

“IP Rights”
has the meaning specified in Section 5.17.

“IRS” means
the United States Internal Revenue Service.

“ISP” means, with
respect to any Letter of Credit, the “International Standby Practices 1998”
published by the Institute of International Banking Law & Practice, Inc.
(or such later version thereof as may be in effect at the time of issuance).

“Issuer Documents”
means with respect to any Letter of Credit, the Letter of Credit Application,
and any other document, agreement and instrument entered into by the L/C Issuer
and any Borrower (or any Subsidiary) or in favor of the L/C Issuer and relating
to such Letter of Credit.

“Laws”
means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses, authorizations
and permits of, and agreements with, any Governmental Authority, in each case
whether or not having the force of law.

“L/C Advance”
means, with respect to each Revolving Credit Lender, such Lender’s funding of
its participation in any L/C Borrowing in accordance with its Applicable
Revolving Credit Percentage.

“L/C Borrowing”
means an extension of credit resulting from a drawing under any Letter of
Credit which has not been reimbursed on the date when made or refinanced as a
Revolving Credit Borrowing.

 18
 

“L/C Credit
Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

“L/C Issuer”
means Bank of America in its capacity as issuer of Letters of Credit hereunder,
or any successor issuer of Letters of Credit hereunder.

“L/C Obligations”
means, as at any date of determination, the aggregate amount available to be
drawn under all outstanding Letters of Credit plus the aggregate of all
Unreimbursed Amounts, including all L/C Borrowings.  For purposes of computing the amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  For all purposes of this Agreement, if on any
date of determination a Letter of Credit has expired by its terms but any
amount may still be drawn thereunder by reason of the operation of Rule 3.14 of
the ISP, such Letter of Credit shall be deemed to be “outstanding” in the
amount so remaining available to be drawn.

“Lender”
has the meaning specified in the introductory paragraph hereto.

“Lending Office”
means, as to any Lender, the office or offices of such Lender described as such
in such Lender’s Administrative Questionnaire, or such other office or offices
as a Lender may from time to time notify the Borrowers and the Administrative
Agent.

“Letter of Credit” means any
standby letter of credit issued hereunder.

“Letter of Credit
Application” means an application and agreement for the issuance or
amendment of a Letter of Credit in the form from time to time in use by the L/C
Issuer.

“Letter of Credit
Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect for the Revolving Credit Facility (or, if such day
is not a Business Day, the next preceding Business Day).

“Letter of Credit Fee”
has the meaning specified in Section 2.03(i).

“Letter of Credit
Sublimit” means an amount equal to $2,000,000.  The Letter of Credit Sublimit is part of, and
not in addition to, the Revolving Credit Facility.

“Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or
other security interest or preferential arrangement in the nature of a security
interest of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any easement, right of way or other
encumbrance on title to real property, and any financing lease having
substantially the same economic effect as any of the foregoing).

“Loan”
means an extension of credit by a Lender to the Borrowers under Article II
in the form of a Term Loan or a Revolving Credit Loan.

“Loan Documents”
means, collectively, (a) this Agreement, (b) the Notes, (c) the Guaranty,
(d) the Collateral Documents, (e) the Fee Letter, (f) each Issuer Document,
(g) each 

 19
 

Secured Hedge Agreement, and (h) each Secured Cash
Management Agreement; provided that for purposes of the definition of “Material
Adverse Effect” and Articles IV through IX, “Loan Documents”
shall not include Secured Hedge Agreements or Secured Cash Management
Agreements.

“Loan Parties”
means, collectively, the Borrowers and the
Guarantors.

“Lockbox” and/or “Lockbox
Account” means any lockbox or deposit account into which Collections are to
be deposited pursuant to Section 6.19 of this Agreement.

“Management Agreements”
means the agreements identified on Schedule 7.06.

“Material Adverse
Effect” means (a) a material adverse change in, or a material
adverse effect upon, the operations, business, assets, properties, liabilities
(actual or contingent), condition (financial or otherwise) or prospects of the
Loan Parties taken as a whole; (b) a material impairment of the rights and
remedies of the Administrative Agent or any Lender under any Loan Document, or
of the ability of any Loan Party to perform its obligations under any Loan
Document to which it is a party; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against any Loan Party of
any Loan Document to which it is a party.

“Material Contract”
means, with respect to any Person, each contract to which such Person is a
party that is material to the business, condition (financial or otherwise),
operations, performance, properties or prospects of such Person; and, in the
case of the Borrowers and their Subsidiaries, “Material Contracts” shall
include, among other contracts, all Capitated Contracts.

“Maturity Date”
means May 31, 2010; provided, however, that, in each case,
if such date is not a Business Day, the Maturity Date shall be the next
preceding Business Day.

“Measurement Period”
means, at any date of determination, the most recently completed twelve
calendar months or, if fewer than twelve calendar months have been completed since
the Closing Date, the number of calendar months that have been completed since
the Closing Date; provided that
for purposes of determining an amount of any item included in the calculation
of a financial ratio or financial covenant in Section 7.11(a), (b)
or (e) as of the end of any month prior to May 1, 2008, such calculation
shall be based on the annualized pro forma performance of the Borrowers and
ProMed from and after the Closing Date.

“Medicaid” means
that government-sponsored entitlement program under Title XIX, P.L. 89-97
of the Social Security Act, which provides federal grants to states for medical
assistance based on specific eligibility criteria, as set forth on
Section 1396, et seq. of Title 42 of the United States Codes.

“Medicare” means that
government-sponsored insurance program under Title XVIII, P.L. 89-97,
of the Social Security Act, which provides for a health insurance system for
eligible elderly and disabled individuals, as set forth at Section 1395,
et seq. of Title 42 of the United States Code.

 20

“Membership”
means, as to either Borrower as of the end of any calendar month, the number of
Persons who are subject to Capitated Contracts with such Borrower.

“Moody’s”
means Moody’s Investors Service, Inc. and any successor thereto.

“Multiemployer Plan”
means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which any Borrower or any ERISA Affiliate
makes or is obligated to make contributions, or during the preceding five plan
years, has made or been obligated to make contributions.

“Net Cash Proceeds”
means:

(a)           with
respect to any Disposition by any Loan
Party or any of its Subsidiaries, or any Extraordinary Receipt received
or paid to the account of any Loan
Party or any of its Subsidiaries, the excess, if any, of (i) the sum of
cash and Cash Equivalents received in connection with such transaction
(including any cash or Cash Equivalents received by way of deferred payment
pursuant to, or by monetization of, a note receivable or otherwise, but only as
and when so received) over (ii) the sum of (A) the principal amount of any
Indebtedness that is secured by the applicable asset and that is required to be
repaid in connection with such transaction (other than Indebtedness under the
Loan Documents), (B) the reasonable out-of-pocket expenses incurred by such Loan Party or such Subsidiary in
connection with such transaction and (C) income taxes reasonably estimated to
be actually payable within two years of the date of the relevant transaction as
a result of any gain recognized in connection therewith; and

(b)           with
respect to the sale or issuance of any Equity Interest (other than Excluded
Issuances) by any Loan Party or
any of its Subsidiaries, or the incurrence or issuance of any Indebtedness by any Loan Party or any of its Subsidiaries,
the excess of (i) the sum of the cash and Cash Equivalents received in
connection with such transaction over (ii) the underwriting discounts and
commissions, and other reasonable out-of-pocket expenses, incurred by such Loan Party or such Subsidiary in
connection therewith.

“Note”
means a Term Note or a Revolving Credit Note, as the context may require.

“NPL” means the
National Priorities List under CERCLA.

“Obligations”
means all advances to, and debts, liabilities, obligations, covenants and duties
of, any Loan Party arising under any Loan Document or otherwise with respect to
any Loan or Letter of Credit, whether direct or indirect (including those
acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Loan Party or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed
claims in such proceeding.

“Obligor” means
any Person that is obligated to make any payment with respect to any Capitated
Contract or other Accounts.

 21
 

“Obligor Notice”
means a written notice by any Loan Party to an Obligor in for and substance
satisfactory to the Administrative Agent which, among other things, shall
direct such Obligor to make payments of Collections directly to an applicable
Lockbox (or, in the case of payments by wire transfer, the applicable Lockbox
Account), and mail all RA/EOBs directly to the applicable Lockbox.

“Organization
Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

“Other Taxes”
means 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 under any other Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other Loan
Document.

“Outstanding Amount”
means (a) with respect to Term Loans and Revolving Credit Loans on any date,
the aggregate outstanding principal amount thereof after giving effect to any
borrowings and prepayments or repayments of Term Loans and Revolving Credit
Loans, as the case may be, occurring on such date; and (b) with respect to any
L/C Obligations on any date, the amount of such L/C Obligations on such date
after giving effect to any L/C Credit Extension occurring on such date and any
other changes in the aggregate amount of the L/C Obligations as of such date,
including as a result of any reimbursements by the Borrowers of Unreimbursed
Amounts.

“Participant”
has the meaning specified in Section 10.06(d).

“PBGC”
means the Pension Benefit Guaranty Corporation.

“Pension Plan”
means any “employee pension benefit plan” (as such term is defined in Section
3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of
ERISA and is sponsored or maintained by any Borrower or any ERISA Affiliate or
to which any Borrower or any ERISA Affiliate contributes or has an obligation
to contribute, or in the case of a multiple employer or other plan described in
Section 4064(a) of ERISA, has made contributions at any time during the
immediately preceding five plan years.

“Permit” means any
permit, approval, authorization, license, registration, certification,
certificate of authority, variance, permission, franchise, qualification,
order, filing or consent required from a Governmental Authority or other Person
under an applicable Law.

“Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.

 22
 

“Plan”
means any “employee benefit plan” (as such term is defined in Section 3(3)
of ERISA) established by any Borrower or, with respect to any such plan that is
subject to Section 412 of the Code or Title IV of ERISA, any ERISA Affiliate.

“Platform” has the
meaning specified in Section 6.02.

“Pledge Agreement”
means the pledge agreement executed and delivered pursuant to Section 4.01(a)(iv),
as such agreement may be amended, supplemented, restated or otherwise modified
from time to time, which will cover all present and future shares of capital
stock of (or other ownership or profit interests in) each of the Borrowers’
present and future Subsidiaries (limited, in the case of each entity that is a “controlled
foreign corporation” under Section 957 of the Internal Revenue Code, to a
pledge of 66% of the capital stock of each such first-tier foreign Subsidiary
to the extent the pledge of any greater percentage would result in material
adverse tax consequences to the applicable Borrower) and which will be in
substantially the form of Exhibit H hereto.

“Pledged Equity” has the
meaning specified in the Pledge Agreement.

“Pomona Valley
Acquisition” means the acquisition of Pomona Valley Medical Group, Inc. by
the Borrowers pursuant to the Pomona Valley Acquisition Agreement.

“Pomona Valley
Acquisition Agreement” means that certain Agreement and Plan of Reorganization
dated as of May 21, 2007 among the Borrowers, Prospect Pomona Medical
Group, Inc., Pomona Valley Medical Group, Inc. and the other parties signatory
thereto.

“ProMed Acquisition”
means, collectively, the Pomona Valley Acquisition, the ProMed Health
Acquisition and the Upland Acquisition.

“ProMed Acquisition
Documents” means the ProMed Acquisition Agreement, the Upland Acquisition
Agreement, the Pomona Valley Acquisition Agreement and the other agreements,
instruments and documents executed by the Loan Parties in connection with the
ProMed Acquisition.

“ProMed Entities”
means collectively, ProMed Health Services Company and ProMed Health Care
Administrators.

“ProMed Health
Acquisition” means the acquisition of the ProMed Entities by the Borrowers
pursuant to the ProMed Health Acquisition Agreement.

“ProMed Health
Acquisition Agreement” means that certain Agreement and Plan of
Reorganization dated as of May 21, 2007 among Holdings, Prospect Health
Administrators, Inc., ProMed Health Services Company, ProMed Health Care
Administrators and the other parties signatory thereto.

“Public Lender”
has the meaning specified in Section 6.02.

 23
 

“RA/EOB” means any
remittance advices or explanation of benefits prepared by an Obligor for the
benefit of a Loan Party detailing amounts paid on any Fee-For-Service Account.

“Reduction Amount”
has the meaning set forth in Section 2.05(b)(ix).

“Register”
has the meaning specified in Section 10.06(c).

“Related Documents” means the ProMed Acquisition
Documents, the Second Amended and Restated Assignable Option Agreement dated as
of June 1, 2007 among Prospect Medical Systems, Inc., a Delaware
corporation, Group, and Jacob Y. Terner, M.D. and the Amended and Restated
Credit Succession Agreement, effective June 1, 2007, by and among each of
the Loan Parties and Bank of America.

“Related Parties”
means, with respect to any Person, such Person’s Affiliates and the partners,
directors, officers, employees, agents and advisors of such Person and of such
Person’s Affiliates.

“Reportable Event”
means any of the events set forth in Section 4043(c) of ERISA, other than
events for which the 30 day notice period has been waived.

“Request for Credit
Extension” means (a) with respect to a Borrowing, conversion or
continuation of Term Loans or Revolving Credit Loans, a Committed Loan Notice
and (b) with respect to an L/C Credit Extension, a Letter of Credit
Application.

“Required Lenders”
means, as of any date of determination, Lenders holding more than 50% of the sum of the (a) Total Outstandings (with the
aggregate amount of each Revolving Credit Lender’s risk participation and
funded participation in L/C Obligations being deemed “held” by such Revolving
Credit Lender for purposes of this definition) and (b) aggregate unused
Revolving Credit Commitments; provided that the unused Revolving Credit
Commitment of, and the portion of the Total Outstandings held or deemed held
by, any Defaulting Lender shall be excluded for purposes of making a
determination of Required Lenders.

“Required Revolving
Lenders” means, as of any date of determination, Revolving Credit Lenders
holding more than 50%  of the sum of the (a) Total
Revolving Credit Outstandings (with the aggregate amount of each Revolving
Credit Lender’s risk participation and funded participation in L/C Obligations
being deemed “held” by such Revolving Credit Lender for purposes of this
definition) and (b) aggregate unused Revolving Credit Commitments; provided
that the unused Revolving Credit Commitment of, and the portion of the Total
Revolving Credit Outstandings held or deemed held by, any Defaulting Lender
shall be excluded for purposes of making a determination of Required Revolving
Lenders.

“Required Term Lenders”
means, as of any date of determination, Term Lenders holding more than 50%  of the Term Facility on such date; provided
that the portion of the Term Facility held by any Defaulting Lender shall be
excluded for purposes of making a determination of Required Term Lenders.

 24
 

“Responsible
Officer” means the chief executive officer, president, chief
financial officer, treasurer, assistant treasurer or controller of a Loan Party
and any other officer of the applicable
Loan Party so designated by any of the foregoing officers in a notice to the
Administrative Agent.  Any
document delivered hereunder that is signed by a Responsible Officer of a Loan
Party shall be conclusively presumed to have been authorized by all necessary
corporate, partnership and/or other action on the part of such Loan Party and
such Responsible Officer shall be conclusively presumed to have acted on behalf
of such Loan Party.

“Restricted Payment”
means any dividend or other distribution (whether in cash, securities or other
property) with respect to any capital stock or other Equity Interest of any
Person or any of its Subsidiaries, or any payment (whether in cash, securities
or other property), including any sinking fund or similar deposit, on account
of the purchase, redemption, retirement, defeasance, acquisition, cancellation
or termination of any such capital stock or other Equity Interest, or on
account of any return of capital to any Person’s stockholders, partners or
members (or the equivalent of any thereof), or any option, warrant or other
right to acquire any such dividend or other distribution or payment.

“Revolving Credit
Borrowing” means a borrowing consisting of simultaneous Revolving
Credit Loans of the same Type and, in the case of Eurodollar Rate Loans, having
the same Interest Period made by each of the Revolving Credit Lenders pursuant
to Section 2.01(b).

“Revolving Credit
Commitment” means, as to each Revolving Credit Lender, its
obligation to (a) make Revolving Credit Loans to the Borrowers pursuant to Section 2.01(b)
and (b) purchase participations in L/C Obligations, in an aggregate principal
amount at any one time outstanding not to exceed the amount set forth opposite
such Lender’s name on Schedule 2.01 under the caption “Revolving
Credit Commitment” or opposite such caption in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable, as such
amount may be adjusted from time to time in accordance with this Agreement.

“Revolving Credit
Facility” means, at any time, the aggregate amount of the Revolving
Credit Lenders’ Revolving Credit Commitments at such time.

“Revolving Credit
Lender” means, at any time, any Lender that has a Revolving Credit
Commitment at such time.

“Revolving Credit
Loan” has the meaning specified in Section 2.01(b).

“Revolving Credit
Note”
means a promissory note made by the Borrowers in favor of a Revolving Credit
Lender evidencing Revolving Credit Loans made by such Revolving Credit Lender,
substantially in the form of Exhibit C.

“S&P”
means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., and any successor thereto.

“SEC”
means the Securities and Exchange Commission, or any Governmental Authority
succeeding to any of its principal functions.

 25
 

“Secured Cash Management Agreement” means any Cash Management Agreement
that is entered into by and between any Borrower and any Cash Management Bank.

“Secured Hedge Agreement” means any interest rate Swap
Contract required or permitted
under Article VI or VII that is entered into by and between
any Borrower and any Hedge Bank.

“Secured Parties” means,
collectively, the Administrative Agent, the Lenders, the L/C Issuer, the Hedge
Banks, the Cash Management Banks, each co-agent or sub-agent appointed by the
Administrative Agent from time to time pursuant to Section 9.05,
and the other Persons the Obligations owing to which are or are purported to be
secured by the Collateral under the terms of the Collateral Documents.

“Security Agreement” has the
meaning specified in Section 4.01(a)(iii).

“Shareholders’ Equity” means, as
of any date of determination, consolidated shareholders’ equity of the Holdings
and its Subsidiaries as of that date determined in accordance with GAAP.

“Social Security Act” means the
Social Security Act of 1965.

“Solvent”
and “Solvency” mean,
with respect to any Person on any date of determination, that on such date
(a) the fair value of the property of such Person is greater than the
total amount of liabilities, including contingent liabilities, of such Person,
(b) the present fair salable value of the assets of such Person is not
less than the amount that will be required to pay the probable liability of
such Person on its debts as they become absolute and matured, (c) such
Person does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person’s ability to pay such debts and liabilities as
they mature, (d) such Person is not engaged in business or a transaction,
and is not about to engage in business or a transaction, for which such Person’s
property would constitute an unreasonably small capital, and (e) such Person is
able to pay its debts and liabilities, contingent obligations and other
commitments as they mature in the ordinary course of business.  The amount of contingent liabilities at any
time shall be computed as the amount that, in the light of all the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.

“Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of
securities or other interests having ordinary voting power for the election of
directors or other governing body (other than securities or interests having
such power only by reason of the happening of a contingency) are at the time
beneficially owned, or the management of which is otherwise controlled,
directly, or indirectly through one or more intermediaries, or both, by such
Person.  Unless otherwise specified, all
references herein to a “Subsidiary” or to “Subsidiaries” shall
refer to a Subsidiary or Subsidiaries of Holdings or Group; provided, however, that the parties
agree that Brotman Medical Center, Inc., a California corporation, in which
Holdings’ Subsidiary, Prospect Hospital Advisory Services, Inc. holds less than
a majority of the shares, is not considered a Subsidiary.

 26
 

“Swap Contract”
means (a) any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options,
forward commodity contracts, equity or equity index swaps or options, bond or
bond price or bond index swaps or options or forward bond or forward bond price
or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement
(any such master agreement, together with any related schedules, a “Master Agreement”),
including any such obligations or liabilities under any Master Agreement.

“Swap Termination
Value” means, in respect of any one or more Swap Contracts, after
taking into account the effect of any legally enforceable netting agreement
relating to such Swap Contracts, (a) for any date on or after the date such
Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one
or more mid-market or other readily available quotations provided by any
recognized dealer in such Swap Contracts (which may include a Lender or any
Affiliate of a Lender).

“Synthetic Debt”
means, with respect to any Person as of any date of determination thereof, all
obligations of such Person in respect of transactions entered into by such
Person that are intended to function primarily as a borrowing of funds but are
not otherwise included in the definition of “Indebtedness” or as a
liability on the consolidated balance sheet of such Person and its Subsidiaries
in accordance with GAAP.

“Synthetic Lease
Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property (including sale and leaseback
transactions), in each case, creating obligations that do not appear on the
balance sheet of such Person but which, upon the application of any Debtor
Relief Laws to such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

“Taxes”
means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental
Authority, including any interest, additions to tax or penalties applicable
thereto.

“Term Borrowing”
means a borrowing consisting of simultaneous Term Loans of the same Type and,
in the case of Eurodollar Rate Loans, having the same Interest Period made by
each of the Term Lenders pursuant to Section 2.01(a).

 27
 

“Term Commitment”
means, as to each Term Lender, its obligation to make Term Loans to the
Borrowers pursuant to Section 2.01(a) in an aggregate principal amount
at any one time outstanding not to exceed the amount set forth opposite such
Term Lender’s name on Schedule 2.01 under the caption “Term
Commitment” or opposite such caption in the Assignment and Assumption pursuant
to which such Term Lender becomes a party hereto, as applicable, as such amount
may be adjusted from time to time in accordance with this Agreement.

“Term Facility”
means, at any time, (a) on or
prior to the Closing Date, the aggregate amount of the Term Commitments at such
time  and
(b) thereafter, the aggregate principal amount of the Term Loans of all
Term Lenders outstanding at such time.

“Term Lender”
means (a) at any time on or prior to the Closing Date, any Lender that has
a Term Commitment at such time and (b) at any time after the Closing Date,
any Lender that holds Term Loans at such time.

“Term Loan”
means an advance made by any Term Lender under the Term Facility.

“Term Note” means
a promissory note made by the Borrowers in favor of a Term Lender
evidencing Term Loans made by such Term Lender, substantially in the
form of Exhibit B.

“Terner Pledge
Agreement” means the pledge agreement executed and delivered pursuant to Section 4.01(a)(iv),
as such agreement may be amended, supplemented, restated or otherwise modified
from time to time.

“Threshold Amount” means
$1,000,000.

“Total Revolving
Credit Outstandings” means the aggregate Outstanding Amount of all
Revolving Credit Loans and L/C Obligations.

“Total Outstandings”
means the aggregate Outstanding Amount of all Loans and all L/C Obligations.

“Transaction”  means,
collectively, (a) the consummation of the ProMed Acquisition, (b) the entering
into by the Loan Parties and their applicable Subsidiaries of the Loan
Documents and the Related Documents to which they are or are intended to be a
party, (c) the refinancing of certain outstanding Indebtedness of the Borrowers
and their Subsidiaries and the termination of all commitments with respect
thereto, and (d) the payment of the fees and expenses incurred in connection
with the consummation of the foregoing.

“Type”
means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

“UCC” means the
Uniform Commercial Code as in effect in the State of California; provided
that, if perfection or the effect of perfection or non-perfection or the
priority of any security interest in any Collateral is governed by the Uniform
Commercial Code as in 

 28
 

effect in a jurisdiction other than the State of
California, “UCC” means the Uniform Commercial Code as in effect from
time to time in such other jurisdiction for purposes of the provisions hereof
relating to such perfection, effect of perfection or non-perfection or
priority.

“Unfunded Pension
Liability” means the excess of a Pension Plan’s benefit liabilities under
Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s
assets, determined in accordance with the assumptions used for funding the
Pension Plan pursuant to Section 412 of the Code for the applicable plan
year.

“United States”
and “U.S.”
mean the United States of America.

“Upland Acquisition”
means the acquisition by the Borrowers of Upland Medical Group, a professional
corporation, pursuant to the Upland Acquisition Agreement.

“Upland Acquisition Agreement”
means that certain Stock Purchase Agreement dated as of May 21, 2007 among
the Borrowers, Upland Medical Group, a professional corporation, and the other
parties signatory thereto.

“Unreimbursed
Amount” has the meaning specified in Section 2.03(c)(i).

“U.S. Loan Party”
means any Loan Party that is organized under the laws of one of the states of
the United States of America and that is not a CFC.

1.02         Other
Interpretive Provisions.  With
reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:

(a)           The
definitions of terms herein shall apply equally to the singular and plural
forms of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The words “include,”
“includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”  The word “will”
shall be construed to have the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (i)
any definition of or reference to any agreement, instrument or other document
(including any Organization Document) shall be construed as referring to such
agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein or in any other Loan
Document), (ii) any reference herein to any Person shall be construed to
include such Person’s successors and assigns, (iii) the words “herein,” “hereof”
and “hereunder,” and words of similar import when used in any Loan
Document, shall be construed to refer to such Loan Document in its entirety and
not to any particular provision thereof, (iv) all references in a Loan Document
to Articles, Sections, Preliminary Statements, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Preliminary Statements,
Exhibits and Schedules to, the Loan Document in which such references appear, (v)
any reference to any law shall include all statutory and regulatory provisions
consolidating, amending, replacing or interpreting such law and any reference
to any law or regulation shall, unless otherwise specified, refer to such law
or regulation as amended, modified or supplemented from time to time, and (vi)
the words “asset” and “property” shall be construed to have the
same meaning and effect and to refer to any and all 

 29
 

tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

(b)           In
the computation of periods of time from a specified date to a later specified
date, the word “from” means “from and including;” the words “to”
and “until” each mean “to but excluding;” and the word “through”
means “to and including.”

(c)           Section
headings herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Document.

1.03         Accounting
Terms.

(a)           Generally.  All accounting terms not specifically or
completely defined herein shall be construed in conformity with, and all
financial data (including financial ratios and other financial calculations)
required to be submitted pursuant to this Agreement shall be prepared in conformity
with, GAAP applied on a consistent basis, as in effect from time to time,
applied in a manner consistent with that used in preparing the Audited
Financial Statements, except as otherwise specifically prescribed
herein.

(b)           Changes
in GAAP.  If at any time any change
in GAAP would affect the computation of any financial ratio or requirement set
forth in any Loan Document, and either the Borrowers or the Required Lenders
shall so request, the Administrative Agent, the Lenders and the Borrowers shall
negotiate in good faith to amend such ratio or requirement to preserve the
original intent thereof in light of such change in GAAP (subject to the
approval of the Required Lenders); provided that, until so amended, (i)
such ratio or requirement shall continue to be computed in accordance with GAAP
prior to such change therein and (ii) the Borrowers shall provide to the
Administrative Agent and the Lenders financial statements and other documents
required under this Agreement or as reasonably requested hereunder setting
forth a reconciliation between calculations of such ratio or requirement made
before and after giving effect to such change in GAAP.

1.04         Rounding.  Any financial ratios required to be
maintained by the Borrowers pursuant to this Agreement shall be calculated by
dividing the appropriate component by the other component, carrying the result
to one place more than the number of places by which such ratio is expressed
herein and rounding the result up or down to the nearest number (with a rounding-up
if there is no nearest number).

1.05         Times
of Day.  Unless otherwise specified,
all references herein to times of day shall be references to Pacific time
(daylight or standard, as applicable).

1.06         Letter
of Credit Amounts.  Unless otherwise
specified herein, the amount of a Letter of Credit at any time shall be deemed
to be the stated amount of such Letter of Credit in effect at such time;
provided, however, that with respect to any Letter of Credit that, by its terms
or the terms of any Issuer Document related thereto, provides for one or more
automatic increases in the stated amount thereof, the amount of such Letter of
Credit shall be deemed to be the maximum stated amount of such Letter of Credit
after giving effect to all such increases, whether or not such maximum stated
amount is in effect at such time.

 30

1.07         Currency
Equivalents Generally.  Any amount
specified in this Agreement (other than in Articles II, IX and X) or any of the
other Loan Documents to be in Dollars shall also include the equivalent of such
amount in any currency other than Dollars, such equivalent amount thereof in
the applicable currency to be determined by the Administrative Agent at such
time on the basis of the Spot Rate (as defined below) for the purchase of such
currency with Dollars.  For purposes of
this Section 1.07, the “Spot Rate” for a currency means the rate
determined by the Administrative Agent to be the rate quoted by the Person
acting in such capacity as the spot rate for the purchase by such Person of
such currency with another currency through its principal foreign exchange
trading office at approximately 11:00 a.m. on the date two Business Days prior
to the date of such determination; provided that the Administrative Agent may
obtain such spot rate from another financial institution designated by the
Administrative Agent if the Person acting in such capacity does not have as of
the date of determination a spot buying rate for any such currency.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

2.01         The
Loans.  (a) The Term Borrowing.  Subject to the terms and conditions set forth
herein, each Term Lender severally agrees to make a single loan to the
Borrowers on the Closing Date in an amount not to exceed such Term Lender’s
Term Commitment Percentage of the Term Facility.  The Term Borrowing shall consist of Term
Loans made simultaneously by the Term Lenders in accordance with their
respective Applicable Percentage of the Term Facility.  Amounts borrowed under this Section 2.01(a)
and repaid or prepaid may not be reborrowed. 
Term Loans may be Base Rate Loans or Eurodollar Rate Loans, as
further provided herein.

(b)           The
Revolving Credit Borrowings.  Subject
to the terms and conditions set forth herein, each Revolving Credit Lender
severally agrees to make loans (each such loan, a “Revolving Credit Loan”) to the Borrowers from time to time,
on any Business Day during the Availability Period, in an aggregate amount not
to exceed at any time outstanding the amount of such Lender’s Revolving Credit
Commitment; provided, however, that after giving effect to any
Revolving Credit Borrowing, (i) the Total Revolving Credit Outstandings shall
not exceed the Revolving Credit Facility, and (ii) the aggregate Outstanding
Amount of the Revolving Credit Loans of any Lender, plus such Revolving
Credit Lender’s Applicable Revolving Credit Percentage of the Outstanding
Amount of all L/C Obligations shall not exceed such Revolving Credit Lender’s
Revolving Credit Commitment.  Within the
limits of each Revolving Credit Lender’s Revolving Credit Commitment, and
subject to the other terms and conditions hereof, the Borrowers may borrow
under this Section 2.01(b), prepay under Section 2.05, and
reborrow under this Section 2.01(b). 
Revolving Credit Loans may be Base Rate Loans or Eurodollar Rate Loans,
as further provided herein.

2.02         Borrowings,
Conversions and Continuations of Loans. 
(a) Each Term Borrowing, each Revolving Credit Borrowing, each
conversion of Term Loans or Revolving Credit Loans from one Type to the other,
and each continuation of Eurodollar Rate Loans shall be made upon the Borrowers’
irrevocable notice to the Administrative Agent, which may be given by
telephone.  Each such notice must be
received by the Administrative Agent not later than 11:00 a.m. (i) three
Business Days prior to the requested date of any Borrowing of, conversion to or

 31
 

continuation of Eurodollar Rate Loans or of any conversion of
Eurodollar Rate Loans to Base Rate Loans, and (ii) on the requested date of any
Borrowing of Base Rate Loans.  Each
telephonic notice by the Borrowers pursuant to this Section 2.02(a)
must be confirmed promptly by delivery to the Administrative Agent of a written
Committed Loan Notice, appropriately completed and signed by a Responsible
Officer of the Borrowers.  Each Borrowing
of, conversion to or continuation of Eurodollar Rate Loans shall be in a
principal amount of $1,000,000 or a whole multiple of $1,000,000 in excess
thereof.  Except as provided in Sections 2.03(c)
and 2.04(c), each Borrowing of or conversion to Base Rate Loans shall be
in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof.  Each Committed Loan Notice  (whether telephonic or written) shall specify
(i) whether the Borrowers are requesting a Term Borrowing, a Revolving Credit
Borrowing, a conversion of Term Loans or Revolving Credit Loans from one Type
to the other, or a continuation of Eurodollar Rate Loans, (ii) the requested
date of the Borrowing, conversion or continuation, as the case may be (which
shall be a Business Day), (iii) the principal amount of Loans to be borrowed,
converted or continued, (iv) the Type of Loans to be borrowed or to which
existing Term Loans or Revolving Credit Loans are to be converted, and (v) if
applicable, the duration of the Interest Period with respect thereto.  If the Borrowers fail to specify a Type of
Loan in a Committed Loan Notice or if the Borrowers fail to give a timely
notice requesting a conversion or continuation, then the applicable Term Loans
or Revolving Credit Loans shall be made as, or converted to, Base Rate Loans.  Any such automatic conversion to Base Rate
Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loans.  If the Borrowers request a Borrowing of,
conversion to, or continuation of Eurodollar Rate Loans in any such Committed
Loan Notice, but fails to specify an Interest Period, it will be deemed to have
specified an Interest Period of one month.

(b)           Following
receipt of a Committed Loan Notice, the Administrative Agent shall promptly
notify each Lender of the amount of its Applicable Percentage under the
applicable Facility of the applicable Term Loans or Revolving Credit
Loans, and if no timely notice of a conversion or continuation is provided by
the Borrowers, the Administrative Agent shall notify each Lender of the details
of any automatic conversion to Base Rate Loans described in Section 2.02(a).  In the case of a Term Borrowing or a
Revolving Credit Borrowing, each Appropriate Lender shall make the amount of
its Loan available to the Administrative Agent in immediately available funds
at the Administrative Agent’s Office not later than 1:00 p.m. on the Business
Day specified in the applicable Committed Loan Notice.  Upon satisfaction of the applicable
conditions set forth in Section 4.02 (and, if such Borrowing is the
initial Credit Extension, Section 4.01), the Administrative Agent
shall make all funds so received available to the Borrowers in like funds as
received by the Administrative Agent either by (i) crediting the account of the
Borrowers on the books of Bank of America with the amount of such funds or (ii)
wire transfer of such funds, in each case in accordance with instructions
provided to (and reasonably acceptable to) the Administrative Agent by the
Borrowers; provided, however, that if, on the date a Committed
Loan Notice with respect to a Revolving Credit Borrowing is given by the
Borrowers, there are L/C Borrowings outstanding, then the proceeds of such
Revolving Credit Borrowing, first, shall be applied to the payment in
full of any such L/C Borrowings, and second, shall be made available to
the Borrowers as provided above.

(c)           Except
as otherwise provided herein, a Eurodollar Rate Loan may be continued or
converted only on the last day of an Interest Period for such Eurodollar Rate
Loan.  

 32
 

During the existence of a Default, no Loans may be requested as,
converted to or continued as Eurodollar Rate Loans without the consent of the
Required Lenders.

(d)           The
Administrative Agent shall promptly notify the Borrowers and the Lenders of the
interest rate applicable to any Interest Period for Eurodollar Rate Loans upon
determination of such interest rate.  At
any time that Base Rate Loans are outstanding, the Administrative Agent shall
notify the Borrowers and the Lenders of any change in Bank of America’s prime
rate used in determining the Base Rate promptly following the public
announcement of such change.

(e)           After
giving effect to all Term Borrowings, all conversions of Term Loans from one
Type to the other, and all continuations of Term Loans as the same Type, there
shall not be more than three (3) Interest Periods in effect in respect of the
Term Facility.  After giving effect
to all Revolving Credit Borrowings, all conversions of Revolving Credit Loans
from one Type to the other, and all continuations of Revolving Credit Loans as
the same Type, there shall not be more than three (3) Interest Periods in
effect in respect of the Revolving Credit Facility.

2.03         Letters
of Credit.  (a) The Letter of
Credit Commitment.  (i) Subject to
the terms and conditions set forth herein, (A) the L/C Issuer agrees, in
reliance upon the agreements of the Revolving Credit Lenders set forth in this Section 2.03,
(1) from time to time on any Business Day during the period from the Closing
Date until the Letter of Credit Expiration Date, to issue standby Letters of
Credit for the account of the Borrowers or their Subsidiaries, and to amend
Letters of Credit previously issued by it, in accordance with Section 2.03(b),
and (2) to honor drawings under the Letters of Credit; and (B) the Revolving
Credit Lenders severally agree to participate in Letters of Credit issued for
the account of the Borrowers or their Subsidiaries and any drawings thereunder;
provided that after giving effect to any L/C Credit Extension with
respect to any Letter of Credit, (x) the Total Revolving Credit Outstandings
shall not exceed the Revolving Credit Facility, (y) the aggregate Outstanding
Amount of the Revolving Credit Loans of any Revolving Credit Lender, plus
such Lender’s Applicable Revolving Credit Percentage of the Outstanding Amount
of all L/C Obligations shall not exceed such Lender’s Revolving Credit
Commitment, and (z) the Outstanding Amount of the L/C Obligations shall not
exceed the Letter of Credit Sublimit. 
Each request by the Borrowers for the issuance or amendment of a Letter
of Credit shall be deemed to be a representation by the Borrowers that the L/C
Credit Extension so requested complies with the conditions set forth in the
proviso to the preceding sentence. 
Within the foregoing limits, and subject to the terms and conditions
hereof, the Borrowers’ ability to obtain Letters of Credit shall be fully
revolving, and accordingly the Borrowers may, during the foregoing period,
obtain Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed.

(ii)           The L/C Issuer shall not issue any
Letter of Credit if:

(A)          the expiry date of such requested
Letter of Credit would occur more than twelve months after the date of
issuance, unless the Required Revolving Lenders have approved such expiry date;
or

 33
 

(B)           the expiry date of such requested
Letter of Credit would occur after the Letter of Credit Expiration Date, unless
all the Revolving Credit Lenders have approved such expiry date.

(iii)          The L/C Issuer shall not be under any
obligation to issue any Letter of Credit if:

(A)          any order, judgment or decree of any
Governmental Authority or arbitrator shall by its terms purport to enjoin or
restrain the L/C Issuer from issuing such Letter of Credit, or any Law
applicable to the L/C Issuer or any request or directive (whether or not having
the force of law) from any Governmental Authority with jurisdiction over the
L/C Issuer shall prohibit, or request that the L/C Issuer refrain from, the
issuance of letters of credit generally or such Letter of Credit in particular
or shall impose upon the L/C Issuer with respect to such Letter of Credit any
restriction, reserve or capital requirement (for which the L/C Issuer is not
otherwise compensated hereunder) not in effect on the Closing Date, or shall
impose upon the L/C Issuer any unreimbursed loss, cost or expense which was not
applicable on the Closing Date and which the L/C Issuer in good faith deems
material to it;

(B)           the issuance of such Letter of Credit
would violate one or more policies of the L/C Issuer applicable to letters of
credit generally;

(C)           except as otherwise agreed by the
Administrative Agent and the L/C Issuer, such Letter of Credit is in an initial
stated amount less than $250,000;

(D)          such Letter of Credit is to be
denominated in a currency other than Dollars;

(E)           such Letter of Credit contains any
provisions for automatic reinstatement of the stated amount after any drawing
thereunder; or

(F)           a default of any Lender’s obligations
to fund under Section 2.03(c) exists or any Lender is at such time
a Defaulting Lender hereunder, unless the L/C Issuer has entered into
satisfactory arrangements with the Borrowers or such Lender to eliminate the
L/C Issuer’s risk with respect to such Lender.

(iv)          The L/C Issuer shall not amend any
Letter of Credit if the L/C Issuer would not be permitted at such time to issue
such Letter of Credit in its amended form under the terms hereof.

(v)           The L/C Issuer shall be under no
obligation to amend any Letter of Credit if (A) the L/C Issuer would have no
obligation at such time to issue such Letter of Credit in its amended form
under the terms hereof, or (B) the beneficiary of such Letter of Credit does
not accept the proposed amendment to such Letter of Credit.

(vi)          The L/C Issuer shall act on behalf of
the Revolving Credit Lenders with respect to any Letters of Credit issued by it
and the documents associated therewith, 

 34
 

and the L/C
Issuer shall have all of the benefits and immunities (A) provided to the
Administrative Agent in Article IX with respect to any acts taken
or omissions suffered by the L/C Issuer in connection with Letters of Credit
issued by it or proposed to be issued by it and Issuer Documents pertaining to
such Letters of Credit as fully as if the term “Administrative Agent” as used
in Article IX included the L/C Issuer with respect to such acts or
omissions, and (B) as additionally provided herein with respect to the L/C
Issuer.

(b)           Procedures
for Issuance and Amendment of Letters of Credit.  (i) Each Letter of Credit shall be issued or
amended, as the case may be, upon the request of the Borrowers delivered to the
L/C Issuer (with a copy to the Administrative Agent) in the form of a Letter of
Credit Application, appropriately completed and signed by a Responsible Officer
of the Borrowers.  Such Letter of Credit
Application must be received by the L/C Issuer and the Administrative Agent not
later than 11:00 a.m. at least two Business Days (or such later date and time
as the Administrative Agent and the L/C Issuer may agree in a particular
instance in their sole discretion) prior to the proposed issuance date or date
of amendment, as the case may be.  In the
case of a request for an initial issuance of a Letter of Credit, such Letter of
Credit Application shall specify in form and detail satisfactory to the L/C
Issuer:  (A) the proposed issuance date
of the requested Letter of Credit (which shall be a Business Day); (B) the
amount thereof; (C) the expiry date thereof; (D) the name and address of the
beneficiary thereof; (E) the documents to be presented by such beneficiary in
case of any drawing thereunder; (F) the full text of any certificate to be
presented by such beneficiary in case of any drawing thereunder; (G) the
purpose and nature of the requested Letter of Credit; and (H) such other
matters as the L/C Issuer may require. 
In the case of a request for an amendment of any outstanding Letter of
Credit, such Letter of Credit Application shall specify in form and detail
satisfactory to the L/C Issuer (1) the Letter of Credit to be amended; (2) the
proposed date of amendment thereof (which shall be a Business Day); (3) the
nature of the proposed amendment; and (4) such other matters as the L/C Issuer
may require.  Additionally, the Borrowers
shall furnish to the L/C Issuer and the Administrative Agent such other
documents and information pertaining to such requested Letter of Credit
issuance or amendment, including any Issuer Documents, as the L/C Issuer or the
Administrative Agent may require.

(ii)           Promptly after receipt of any Letter
of Credit Application, the L/C Issuer will confirm with the Administrative
Agent (by telephone or in writing) that the Administrative Agent has received a
copy of such Letter of Credit Application from the Borrowers and, if not, the
L/C Issuer will provide the Administrative Agent with a copy thereof.  Unless the L/C Issuer has received written
notice from any Revolving Credit Lender, the Administrative Agent or any Loan
Party, at least one Business Day prior to the requested date of issuance or
amendment of the applicable Letter of Credit, that one or more applicable
conditions contained in Article IV shall not then be satisfied,
then, subject to the terms and conditions hereof, the L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of the applicable
Borrower (or the applicable Subsidiary) or enter into the applicable amendment,
as the case may be, in each case in accordance with the L/C Issuer’s usual and
customary business practices.  Immediately
upon the issuance of each Letter of Credit, each Revolving Credit Lender shall
be deemed to, and hereby irrevocably and unconditionally agrees to, purchase
from the L/C Issuer a risk participation in such Letter of Credit in an amount
equal to the product of 

 35
 

such Revolving
Credit Lender’s Applicable Revolving Credit Percentage times the amount
of such Letter of Credit.

(iii)          Promptly after its delivery of any
Letter of Credit or any amendment to a Letter of Credit to an advising bank
with respect thereto or to the beneficiary thereof, the L/C Issuer will also
deliver to the Borrowers and the Administrative Agent a true and complete copy
of such Letter of Credit or amendment.

(c)           Drawings
and Reimbursements; Funding of Participations.  (i) Upon receipt from the beneficiary of any
Letter of Credit of any notice of a drawing under such Letter of Credit, the
L/C Issuer shall notify the Borrowers and the Administrative Agent
thereof.  Not later than 11:00 a.m. on
the date of any payment by the L/C Issuer under a Letter of Credit (each such
date, an “Honor Date”),
the Borrowers shall reimburse the L/C Issuer through the Administrative Agent
in an amount equal to the amount of such drawing.  If the Borrowers fail to so reimburse the L/C
Issuer by such time, the Administrative Agent shall promptly notify each
Revolving Credit Lender of the Honor Date, the amount of the unreimbursed
drawing (the “Unreimbursed Amount”),
and the amount of such Revolving Credit Lender’s Applicable Revolving Credit
Percentage thereof.  In such event, the
Borrowers shall be deemed to have requested a Revolving Credit Borrowing of
Base Rate Loans to be disbursed on the Honor Date in an amount equal to the
Unreimbursed Amount, without regard to the minimum and multiples specified in Section 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Revolving Credit Commitments and the conditions set
forth in Section 4.02 (other than the delivery of a Committed Loan
Notice).  Any notice given by the L/C
Issuer or the Administrative Agent pursuant to this Section 2.03(c)(i)
may be given by telephone if immediately confirmed in writing; provided
that the lack of such an immediate confirmation shall not affect the
conclusiveness or binding effect of such notice.

(ii)           Each Revolving Credit Lender shall
upon any notice pursuant to Section 2.03(c)(i) make funds available
to the Administrative Agent for the account of the L/C Issuer at the
Administrative Agent’s Office in an amount equal to its Applicable Revolving
Credit Percentage of the Unreimbursed Amount not later than 1:00 p.m. on the
Business Day specified in such notice by the Administrative Agent, whereupon,
subject to the provisions of Section 2.03(c)(iii), each Revolving
Credit Lender that so makes funds available shall be deemed to have made a Base
Rate Loan to the Borrowers in such amount. 
The Administrative Agent shall remit the funds so received to the L/C
Issuer.

(iii)          With respect to any Unreimbursed
Amount that is not fully refinanced by a Revolving Credit Borrowing of Base
Rate Loans because the conditions set forth in Section 4.02 cannot
be satisfied or for any other reason, the Borrowers shall be deemed to have
incurred from the L/C Issuer an L/C Borrowing in the amount of the Unreimbursed
Amount that is not so refinanced, which L/C Borrowing shall be due and payable
on demand (together with interest) and shall bear interest at the Default
Rate.  In such event, each Revolving
Credit Lender’s payment to the Administrative Agent for the account of the L/C
Issuer pursuant to Section 2.03(c)(ii) shall be deemed payment in
respect of its participation in such L/C Borrowing and shall constitute an L/C
Advance from such Lender in satisfaction of its participation obligation under
this Section 2.03.

 36
 

(iv)          Until each Revolving Credit Lender
funds its Revolving Credit Loan or L/C Advance pursuant to this Section
2.03(c) to reimburse the L/C Issuer for any amount drawn under any Letter
of Credit, interest in respect of such Lender’s Applicable Revolving Credit
Percentage of such amount shall be solely for the account of the L/C Issuer.

(v)           Each Revolving Credit Lender’s
obligation to make Revolving Credit Loans or L/C Advances to reimburse the L/C
Issuer for amounts drawn under Letters of Credit, as contemplated by this Section 2.03(c),
shall be absolute and unconditional and shall not be affected by any
circumstance, including (A) any setoff, counterclaim, recoupment, defense or
other right which such Lender may have against the L/C Issuer, any Borrower or
any other Person for any reason whatsoever; (B) the occurrence or continuance
of a Default, or (C) any other occurrence, event or condition, whether or not
similar to any of the foregoing; provided, however, that each
Revolving Credit Lender’s obligation to make Revolving Credit Loans pursuant to
this Section 2.03(c) is subject to the conditions set forth in Section 4.02
(other than delivery by the Borrowers of a Committed Loan Notice ).  No such making of an L/C Advance shall
relieve or otherwise impair the obligation of the Borrowers to reimburse the
L/C Issuer for the amount of any payment made by the L/C Issuer under any
Letter of Credit, together with interest as provided herein.

(vi)          If any Revolving Credit Lender fails
to make available to the Administrative Agent for the account of the L/C Issuer
any amount required to be paid by such Lender pursuant to the foregoing
provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii),
the L/C Issuer shall be entitled to recover from such Lender (acting through
the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to the L/C Issuer at a rate per annum equal to the
greater of the Federal Funds Rate and a rate determined by the L/C Issuer in
accordance with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the L/C
Issuer in connection with the foregoing. 
If such Lender pays such amount (with interest and fees as aforesaid),
the amount so paid shall constitute such Lender’s Committed Loan included in
the relevant Committed Borrowing or L/C Advance in respect of the relevant L/C
Borrowing, as the case may be.  A
certificate of the L/C Issuer submitted to any Revolving Credit Lender (through
the Administrative Agent) with respect to any amounts owing under this Section 2.03(c)(vi)
shall be conclusive absent manifest error.

(d)           Repayment
of Participations.  (i) At any time
after the L/C Issuer has made a payment under any Letter of Credit and has
received from any Revolving Credit Lender such Lender’s L/C Advance in respect
of such payment in accordance with Section 2.03(c), if the Administrative
Agent receives for the account of the L/C Issuer any payment in respect of the
related Unreimbursed Amount or interest thereon (whether directly from the
Borrowers or otherwise, including proceeds of Cash Collateral applied thereto
by the Administrative Agent), the Administrative Agent will distribute to such
Lender its Applicable Revolving Credit Percentage thereof in the same funds as
those received by the Administrative Agent.

 37
 

(ii)           If any payment received by the
Administrative Agent for the account of the L/C Issuer pursuant to Section 2.03(c)(i)
is required to be returned under any of the circumstances described in Section 10.05
(including pursuant to any settlement entered into by the L/C Issuer in its
discretion), each Revolving Credit Lender shall pay to the Administrative Agent
for the account of the L/C Issuer its Applicable Revolving Credit Percentage
thereof on demand of the Administrative Agent, plus interest thereon
from the date of such demand to the date such amount is returned by such
Lender, at a rate per annum equal to the Federal Funds Rate from time to time
in effect.  The obligations of the
Lenders under this clause shall survive the payment in full of the Obligations
and the termination of this Agreement.

(e)           Obligations
Absolute.  The obligation of the
Borrowers to reimburse the L/C Issuer for each drawing under each Letter of
Credit and to repay each L/C Borrowing shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this Agreement
under all circumstances, including the following:

(i)            any lack of validity or
enforceability of such Letter of Credit, this Agreement, or any other Loan
Document;

(ii)           the existence of any claim,
counterclaim, setoff, defense or other right that any Borrower or any
Subsidiary may have at any time against any beneficiary or any transferee of
such Letter of Credit (or any Person for whom any such beneficiary or any such
transferee may be acting), the L/C Issuer or any other Person, whether in
connection with this Agreement, the transactions contemplated hereby or by such
Letter of Credit or any agreement or instrument relating thereto, or any
unrelated transaction;

(iii)          any
draft, demand, certificate or other document presented under such Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect; or any loss or
delay in the transmission or otherwise of any document required in order to
make a drawing under such Letter of Credit;

(iv)          any
payment by the L/C Issuer under such Letter of Credit against presentation of a
draft or certificate that does not strictly comply with the terms of such
Letter of Credit; or any payment made by the L/C Issuer under such Letter of
Credit to any Person purporting to be a trustee in bankruptcy,
debtor-in-possession, assignee for the benefit of creditors, liquidator,
receiver or other representative of or successor to any beneficiary or any
transferee of such Letter of Credit, including any arising in connection with
any proceeding under any Debtor Relief Law; or

(v)           any
other circumstance or happening whatsoever, whether or not similar to any of
the foregoing, including any other circumstance that might otherwise constitute
a defense available to, or a discharge of, any Borrower or any of its
Subsidiaries.

The Borrowers shall promptly examine a copy of each
Letter of Credit and each amendment thereto that is delivered to it and, in the
event of any claim of noncompliance with 

 38
 

the Borrowers’
instructions or other irregularity, the Borrowers will immediately notify the
L/C Issuer.  The Borrowers shall be
conclusively deemed to have waived any such claim against the L/C Issuer and
its correspondents unless such notice is given as aforesaid.

(f)            Role of L/C Issuer.  Each Lender and each Borrower agree that, in
paying any drawing under a Letter of Credit, the L/C Issuer shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document.  None of the L/C Issuer, the Administrative
Agent, any of their respective Related Parties nor any correspondent,
participant or assignee of the L/C Issuer shall be liable to any Lender for (i)
any action taken or omitted in connection herewith at the request or with the
approval of the Revolving Credit Lenders or the Required Revolving Lenders, as
applicable; (ii) any action taken or omitted in the absence of gross negligence
or willful misconduct; or (iii) the due execution, effectiveness, validity or
enforceability of any document or instrument related to any Letter of Credit or
Issuer Document.  The Borrowers hereby
assume all risks of the acts or omissions of any beneficiary or transferee with
respect to its use of any Letter of Credit; provided, however,
that this assumption is not intended to, and shall not, preclude the Borrowers’
pursuing such rights and remedies as it may have against the beneficiary or
transferee at law or under any other agreement. 
None of the L/C Issuer, the Administrative Agent, any of their
respective Related Parties nor any correspondent, participant or assignee of
the L/C Issuer shall be liable or responsible for any of the matters described
in clauses (i) through (v) of Section 2.03(e); provided, however,
that anything in such clauses to the contrary notwithstanding, the Borrowers may
have a claim against the L/C Issuer, and the L/C Issuer may be liable to the
Borrowers, to the extent, but only to the extent, of any direct, as opposed to
consequential or exemplary, damages suffered by the Borrowers which the
Borrowers prove were caused by the L/C Issuer’s willful misconduct or gross
negligence or the L/C Issuer’s willful failure to pay under any Letter of
Credit after the presentation to it by the beneficiary of a sight draft and
certificate(s) strictly complying with the terms and conditions of a Letter of
Credit.  In furtherance and not in
limitation of the foregoing, the L/C Issuer may accept documents that appear on
their face to be in order, without responsibility for further investigation, regardless
of any notice or information to the contrary, and the L/C Issuer shall not be
responsible for the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign a Letter of Credit or the rights
or benefits thereunder or proceeds thereof, in whole or in part, which may
prove to be invalid or ineffective for any reason.

(g)           Cash Collateral. 
Upon the request of the Administrative Agent, (i) if the L/C Issuer has
honored any full or partial drawing request under any Letter of Credit and such
drawing has resulted in an L/C Borrowing, or (ii) if, as of the Letter of
Credit Expiration Date, any L/C Obligation for any reason remains outstanding,
the Borrowers shall, in each case, immediately Cash Collateralize the then
Outstanding Amount of all L/C Obligations. 
Sections 2.05 and 8.02(c) set forth certain additional
requirements to deliver Cash Collateral hereunder.  For purposes of this Section 2.03,
Section 2.05 and Section 8.02(c), “Cash Collateralize” means to
pledge and deposit with or deliver to the Administrative Agent, for the benefit
of the L/C Issuer and the Lenders, as collateral for the L/C Obligations, cash
or deposit account balances pursuant to documentation in form and substance
satisfactory to the Administrative Agent and the L/C Issuer (which documents
are hereby consented to by the Lenders). 
Derivatives of such 

 39
 

term have corresponding meanings.  The Borrowers hereby grant to the
Administrative Agent, for the benefit of the L/C Issuer and the Lenders, a
security interest in all such cash, deposit accounts and all balances therein
and all proceeds of the foregoing.  Cash
Collateral shall be maintained in blocked, non-interest bearing deposit
accounts at Bank of America.  If at any
time the Administrative Agent determines that any funds held as Cash Collateral
are subject to any valid and enforceable right or claim of any Person other
than the Administrative Agent or that the total amount of such funds is less
than the aggregate Outstanding Amount of all L/C Obligations, the Borrowers will,
forthwith upon demand by the Administrative Agent, pay to the Administrative
Agent, as additional funds to be deposited as Cash Collateral, an amount equal
to the excess of (x) such aggregate Outstanding Amount over (y) the
total amount of funds, if any, then held as Cash Collateral that the
Administrative Agent determines to be free and clear of any such right and
claim.  Upon the drawing of any Letter of
Credit for which funds are on deposit as Cash Collateral, such funds shall be
applied, to the extent permitted under applicable Laws, to reimburse the L/C
Issuer.

(h)           Applicability of ISP.  Unless otherwise expressly agreed by the L/C
Issuer and the Borrowers when a Letter of Credit is issued, the rules of the
ISP shall apply to each Letter of Credit.

(i)            Letter of Credit Fees.  The Borrowers shall pay to the Administrative
Agent for the account of each Revolving Credit Lender in accordance with its
Applicable Revolving Credit Percentage a Letter of Credit fee (the “Letter
of Credit Fee”) for each Letter of Credit equal to the Applicable Rate times
the daily amount available to be drawn under such Letter of Credit.  For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.06.  Letter of Credit Fees shall be (i) due and
payable on the first Business Day after the end of each March, June, September and December,
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Letter of Credit Expiration Date and thereafter on demand and
(ii) computed on a quarterly basis in arrears. 
If there is any change in the Applicable Rate during any quarter, the
daily amount available to be drawn under each Letter of Credit shall be
computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect.  Notwithstanding anything to the contrary
contained herein, upon the request of the Required Revolving Lenders, while any
Event of Default exists, all Letter of Credit Fees shall accrue at the Default
Rate.

(j)            Fronting Fee and Documentary and Processing Charges
Payable to L/C Issuer.  The Borrowers
shall pay directly to the L/C Issuer for its own account a fronting fee with
respect to each Letter of Credit, at the rate per annum specified in the Fee
Letter, computed on the daily amount available to be drawn under such Letter of
Credit on a quarterly basis in arrears. 
Such fronting fee shall be due and payable on the tenth Business Day
after the end of each March, June, September and December in respect of the
most recently-ended quarterly period (or portion thereof, in the case of the
first payment), commencing with the first such date to occur after the issuance
of such Letter of Credit, on the Letter of Credit Expiration Date and
thereafter on demand.  For purposes of
computing the daily amount available to be drawn under any Letter of Credit,
the amount of such Letter of Credit shall be determined in accordance with Section 1.06.  In addition, the Borrowers shall pay directly
to the L/C Issuer for its own account the customary issuance, presentation,
amendment and other processing fees, and other standard costs 

 40
 

and charges, of the L/C Issuer relating to
letters of credit as from time to time in effect.  Such customary fees and standard costs and
charges are due and payable on demand and are nonrefundable.

(k)           Conflict with Issuer Documents.  In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.

(l)            Letters of Credit Issued for Subsidiaries.  Notwithstanding that a Letter of Credit
issued or outstanding hereunder is in support of any obligations of, or is for
the account of, a Subsidiary, the Borrowers shall be obligated to reimburse the
L/C Issuer hereunder for any and all drawings under such Letter of Credit.  Each Borrower hereby acknowledges that the
issuance of Letters of Credit for the account of Subsidiaries inures to the
benefit of the Borrowers, and that the Borrowers’ business derives substantial
benefits from the businesses of such Subsidiaries.

2.04         [Reserved].

2.05         Prepayments. 
(a) Optional.  Subject to
the last sentence of this Section 2.05(a)(i), the Borrowers may,
upon notice to the Administrative Agent, at any time or from time to time
voluntarily prepay Term Loans and Revolving Credit Loans in whole or in part
without premium or penalty; provided that (A) such notice must be
received by the Administrative Agent not later than 11:00 a.m. (1) three
Business Days prior to any date of prepayment of Eurodollar Rate Loans and (2)
on the date of prepayment of Base Rate Loans; (B) any prepayment of Eurodollar
Rate Loans shall be in a principal amount of $1,000,000 or a whole multiple of
$1,000,000 in excess thereof; and (C) any prepayment of Base Rate Loans shall
be in a principal amount of $500,000 or a whole multiple of $100,000 in excess
thereof or, in each case, if less, the entire principal amount thereof then
outstanding.  Each such notice shall
specify the date and amount of such prepayment and the Type(s) of Loans to be
prepaid and, if Eurodollar Rate Loans are to be prepaid, the Interest Period(s)
of such Loans.  The Administrative Agent
will promptly notify each Lender of its receipt of each such notice, and of the
amount of such Lender’s ratable portion of such prepayment (based on such
Lender’s Applicable Percentage in respect of the relevant Facility).  If such notice is given by the Borrowers, the
Borrowers shall make such prepayment and the payment amount specified in such
notice shall be due and payable on the date specified therein.  Any prepayment of a Eurodollar Rate Loan
shall be accompanied by all accrued interest on the amount prepaid, together
with any additional amounts required pursuant to Section 3.05.  Each prepayment of the outstanding Term Loans
pursuant to this Section 2.05(a) shall be applied to the principal
repayment installments thereof in inverse order of maturity, and each such
prepayment shall be paid to the Lenders in accordance with their respective
Applicable Percentages in respect of each of the relevant Facilities.

(b)           Mandatory. 
(i) Within five Business Days after financial statements have been
delivered pursuant to Section 6.01(a) and the related Compliance
Certificate has been delivered pursuant to Section 6.02(b), the
Borrowers shall prepay an aggregate principal amount of Loans equal to the
excess (if any) of (A) either (I) 50% of Excess Cash Flow for the fiscal year
covered by such financial statements if the Borrowers’ Consolidated Senior
Leverage Ratio 

 41
 

for such fiscal year was greater than 2.0 to
1.0 or (II) 25% of Excess Cash Flow for the fiscal year covered by such
financial statements if the Borrowers’ Consolidated Senior Leverage Ratio for
such fiscal year was greater than 1.5 to 1.0 but less than or equal to 2.0 to
1.0, over (B) the aggregate principal amount of Term Loans prepaid
pursuant to Section 2.05(a)(i) (such prepayments to be applied as
set forth in clauses (vi) and (ix) below).

(ii)           If
any Loan Party or any of its Subsidiaries Disposes of any property (other than
any Disposition of any property permitted by Section 7.05(a)
through (d) and other than Net Cash Proceeds of $100,000 or less in any
fiscal yer) which results in the realization by such Person of Net Cash
Proceeds, the Borrowers shall prepay an aggregate principal amount of Loans
equal to 100% of such Net Cash Proceeds immediately upon receipt thereof by
such Person (such prepayments to be applied as set forth in clauses (vi) and
(ix) below).

(iii)          Upon
the sale or issuance by any Loan Party or any of its Subsidiaries of any of its
Equity Interests (other than Excluded Issuances and any sales or issuances of
Equity Interests to another Loan Party), the Borrowers shall prepay an
aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds
received therefrom immediately upon receipt thereof by such Loan Party or such
Subsidiary (such prepayments to be applied as set forth in clauses (vi) and
(ix) below).

(iv)          Upon
the incurrence or issuance by any Loan Party or any of its Subsidiaries of any
Indebtedness (other than Indebtedness expressly permitted to be incurred or
issued pursuant to Section 7.02), the Borrowers shall prepay an
aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds
received therefrom immediately upon receipt thereof by such Loan Party or such
Subsidiary (such prepayments to be applied as set forth in clauses (vi) and
(ix) below).

(v)           Upon
any Extraordinary Receipt received by or paid to or for the account of any Loan
Party or any of its Subsidiaries, and not otherwise included in clause (ii),
(iii) or (iv) of this Section 2.05(b), the Borrowers shall prepay
an aggregate principal amount of Loans equal to 100% of all Net Cash Proceeds
received therefrom immediately upon receipt thereof by such Loan Party or such
Subsidiary (such prepayments to be applied as set forth in clauses (vi) and
(ix) below).

(vi)          Each
prepayment of Loans pursuant to the foregoing provisions of this Section 2.05(b)
shall be applied, first, to the Term Facility and to the principal
repayment installments thereof in inverse order of maturity and, second,
to the Revolving Credit Facility in the manner set forth in clause (ix) of this
Section 2.05(b).

(vii)         If
for any reason the Total Revolving Credit Outstandings at any time exceed the
Revolving Credit Facility at such time, the Borrowers shall immediately prepay
Revolving Credit Loans and L/C Borrowings and/or Cash Collateralize the L/C
Obligations (other than the L/C Borrowings) in an aggregate amount equal to
such excess.

(viii)        Except
as otherwise provided in clause (x), prepayments  of the Revolving Credit Facility made pursuant to this Section 2.05(b),
first, shall be applied ratably to the L/C Borrowings, second,
shall be applied ratably to the outstanding 

 42
 

Revolving Credit Loans, and, third,
shall be used to Cash Collateralize the remaining L/C Obligations; and, in the
case of prepayments of the Revolving Credit Facility required pursuant to
clause (i), (ii), (iii), (iv) or (v) of this Section 2.05(b), the
amount remaining, if any, after the prepayment in full of all L/C Borrowings
and Revolving Credit Loans outstanding at such time and the Cash
Collateralization of the remaining L/C Obligations in full (the sum of such
prepayment amounts, cash collateralization amounts and remaining amount being,
collectively, the “Reduction Amount”) may be retained by the Borrowers
for use in the ordinary course of its business, and the Revolving Credit
Facility shall be automatically and permanently reduced by the Reduction Amount
as set forth in Section 2.06(b)(iii).  Upon the drawing of any Letter of Credit that
has been Cash Collateralized, the funds held as Cash Collateral shall be
applied (without any further action by or notice to or from any Borrower or any
other Loan Party) to reimburse the L/C Issuer or the Revolving Credit Lenders,
as applicable.

(ix)           The
Borrowers shall, on the first Business Day of each Clean-up Period, prepay in
full all Revolving Credit Loans and L/C Borrowings outstanding on such day.

2.06         Termination or Reduction of Commitments.  (a) Optional.  The Borrowers may, upon notice to the
Administrative Agent, terminate the Revolving Credit Facility or the Letter of
Credit Sublimit, or from time to time permanently reduce the Revolving Credit
Facility or the Letter of Credit Sublimit; provided that (i) any such
notice shall be received by the Administrative Agent not later than 11:00 a.m.
five Business Days prior to the date of termination or reduction, (ii) any such
partial reduction shall be in an aggregate amount of $1,000,000 or any whole
multiple of $1,000,000 in excess thereof and (iii) the Borrowers shall not
terminate or reduce (A) the Revolving Credit Facility if, after giving effect
thereto and to any concurrent prepayments hereunder, the Total Revolving Credit
Outstandings would exceed the Revolving Credit Facility or (B) the Letter of
Credit Sublimit if, after giving effect thereto, the Outstanding Amount of L/C
Obligations not fully Cash Collateralized hereunder would exceed the Letter of
Credit Sublimit.

(b)           Application of Commitment Reductions; Payment of Fees.  The Administrative Agent will promptly notify
the Lenders of any termination or reduction of the Letter of Credit Sublimit or
the Revolving Credit Commitment under this Section 2.06.  Upon any reduction of the Revolving Credit
Commitments, the Revolving Credit Commitment of each Revolving Credit Lender
shall be reduced by such Lender’s Applicable Revolving Credit Percentage of such
reduction amount.  All fees in respect of
the Revolving Credit Facility accrued until the effective date of any
termination of the Revolving Credit Facility shall be paid on the effective
date of such termination.

2.07         Repayment of Loans. 
(a)  Term Loans.  The Borrowers shall repay to the Term Lenders
the aggregate principal amount of all Term Loans outstanding on the following
dates in the respective amounts set forth opposite such dates (which amounts
shall be reduced as a result of the application of prepayments in accordance
with the order of priority set forth in Section 2.06):

 43

	
  The last Business Day of each Calendar Month

  	
   

  	
  Amount

  	
   

  
	
  Commencing June 30,
  2007 through May 31, 2008

  	
   

  	
  $

  	
  500,000

  	
   

  
	
  Commencing June 30,
  2008 through November 30, 2008

  	
   

  	
  $

  	
  625,000

  	
   

  
	
  Commencing December 31,
  2008 through May 31, 2009

  	
   

  	
  $

  	
  725,000

  	
   

  
	
  Commencing June 30,
  2009 through November 30, 2009

  	
   

  	
  $

  	
  825,000

  	
   

  
	
  Commencing December 31,
  2009 through April 30, 2010

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  Maturity Date

  	
   

  	
  Remaining Balance

  	
   

  

 

provided, however, that the
final principal repayment installment of the Term Loans shall be repaid on the
Maturity Date for the Term Facility and in any event shall be in an amount
equal to the aggregate principal amount of all Term Loans outstanding on such
date.

(b)           Revolving Credit Loans.  The Borrowers shall repay to the Revolving
Credit Lenders on the Maturity Date for the Revolving Credit Facility the
aggregate principal amount of all Revolving Credit Loans outstanding on such
date.

2.08         Interest. 
(a)  Subject to the provisions of Section 2.08(b),
(i) each Eurodollar Rate Loan under a Facility shall bear interest on the
outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the Eurodollar Rate for such Interest Period plus the
Applicable Rate for such Facility; and (ii) each Base Rate Loan under a
Facility shall bear interest on the outstanding principal amount thereof from
the applicable borrowing date at a rate per annum equal to the Base Rate plus
the Applicable Rate for such Facility.

(b)           (i)  If any amount
of principal of any Loan is not paid when due, whether at stated maturity, by
acceleration or otherwise, such amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws.

(ii)           If
any amount (other than principal of any Loan) payable by the Borrowers under
any Loan Document is not paid when due, whether at stated maturity, by
acceleration or otherwise, then upon the request of the Required Lenders such
amount shall thereafter bear interest at a fluctuating interest rate per annum
at all times equal to the Default Rate to the fullest extent permitted by
applicable Laws.

(iii)          Upon
the request of the Required Lenders, while any Event of Default exists, the
Borrowers shall pay interest on the principal amount of all outstanding
Obligations hereunder at a fluctuating interest rate per annum at all times
equal to the Default Rate to the fullest extent permitted by applicable Laws.

(iv)          Accrued
and unpaid interest on past due amounts (including interest on past due
interest) shall be due and payable upon demand.

(c)           Interest on each Loan shall be due and payable in arrears
on each Interest Payment Date applicable thereto and at such other times as may
be specified herein.  Interest hereunder
shall be due and payable in accordance with the terms hereof before and after
judgment, and before and after the commencement of any proceeding under any
Debtor Relief Law.

 44
 

2.09         Fees.  In
addition to certain fees described in Sections 2.03(i) and (j):

(a)           Commitment Fee. 
The Borrowers shall pay to the Administrative Agent for the account of
each Revolving Credit Lender in accordance with its Applicable Revolving Credit
Percentage, a commitment fee equal to the Applicable Fee Rate times the
actual daily amount by which the Revolving Credit Facility exceeds the sum of
(i) the Outstanding Amount of Revolving Credit Loans and (ii) the Outstanding
Amount of L/C Obligations.  The
commitment fee shall accrue at all times during the Availability Period,
including at any time during which one or more of the conditions in Article
IV is not met, and shall be due and payable quarterly in arrears on the
last Business Day of each March, June, September and December, commencing with
the first such date to occur after the Closing Date, and on the last day of the
Availability Period for the Revolving Credit Facility.  The commitment fee shall be calculated
quarterly in arrears, and if there is any change in the Applicable Fee Rate during
any quarter, the actual daily amount shall be computed and multiplied by the
Applicable Fee Rate separately for each period during such quarter that such
Applicable Fee Rate was in effect.

(b)           Other Fees. 
(i) The Borrowers shall pay to the Arranger and the Administrative Agent
for their own respective accounts fees in the amounts and at the times
specified in the Fee Letter.  Such fees
shall be fully earned when paid and shall not be refundable for any reason
whatsoever.

(ii)           The
Borrowers shall pay to the Lenders such fees as shall have been separately
agreed upon in writing in the amounts and at the times so specified.  Such fees shall be fully earned when paid and
shall not be refundable for any reason whatsoever.

(c)           Termination Fees. 
The Borrowers shall pay to the Administrative Agent for the account of
the Lenders termination fees in the amount of (i) $795,000 if the Borrowers
shall terminate this Agreement prior to the first anniversary of the Closing
Date and (ii) $397,500 if the Borrowers shall terminate this Agreement after
the first anniversary of the Closing Date but on or before the second
anniversary of the Closing Date; provided, however that such fees
shall be waived if this Agreement is refinanced with another facility provided
by Bank of America and its Affiliates.

2.10         Computation of Interest and Fees; Retroactive Adjustments
of Applicable Rate.  (a) All
computations of interest for Base Rate Loans when the Base Rate is determined
by Bank of America’s “prime rate” shall be made on the basis of a year of 365
or 366 days, as the case may be, and actual days elapsed.  All other computations of fees and interest
shall be made on the basis of a 360-day year and actual days elapsed (which
results in more fees or interest, as applicable, being paid than if computed on
the basis of a 365-day year).  Interest
shall accrue on each Loan for the day on which the Loan is made, and shall not
accrue on a Loan, or any portion thereof, for the day on which the Loan or such
portion is paid, provided that any Loan that is repaid on the same day on
which it is made shall, subject to Section 2.12(a), bear interest
for one day.  Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.

 45
 

(b)           If, as a result of any restatement of or other adjustment
to the financial statements of Holdings or for any other reason, either
Borrower or the Lenders determine that (i) the Consolidated Senior Leverage
Ratio as calculated by Holdings as of any applicable date was inaccurate and
(ii) a proper calculation of the Consolidated Senior Leverage Ratio would have
resulted in higher pricing for such period, the Borrowers shall immediately and
retroactively be obligated to pay to the Administrative Agent for the account of
the applicable Lenders, promptly on demand by the Administrative Agent (or,
after the occurrence of an actual or deemed entry of an order for relief with
respect to any Borrower under the Bankruptcy Code of the United States,
automatically and without further action by the Administrative Agent, any
Lender or the L/C Issuer), an amount equal to the excess of the amount of
interest and fees that should have been paid for such period over the amount of
interest and fees actually paid for such period.  This paragraph shall not limit the rights of
the Administrative Agent, any Lender or the L/C Issuer, as the case may be,
under Section 2.03(c)(iii), 2.03(i) or 2.08(b) or
under Article VIII.  The Borrowers’
obligations under this paragraph shall survive the termination of the Aggregate
Commitments and the repayment of all other Obligations hereunder.

2.11         Evidence of Debt. 
(a)  The Credit Extensions made by
each Lender shall be evidenced by one or more accounts or records maintained by
such Lender and by the Administrative Agent in the ordinary course of
business.  The accounts or records
maintained by the Administrative Agent and each Lender shall be conclusive
absent manifest error of the amount of the Credit Extensions made by the
Lenders to the Borrowers and the interest and payments thereon.  Any failure to so record or any error in
doing so shall not, however, limit or otherwise affect the obligation of the
Borrowers hereunder to pay any amount owing with respect to the Obligations.  In the event of any conflict between the
accounts and records maintained by any Lender and the accounts and records of
the Administrative Agent in respect of such matters, the accounts and records
of the Administrative Agent shall control in the absence of manifest error.  Upon the request of any Lender made through
the Administrative Agent, the Borrowers shall execute and deliver to such
Lender (through the Administrative Agent) a Note, which shall evidence such
Lender’s Loans in addition to such accounts or records.  Each Lender may attach schedules to its Note
and endorse thereon the date, Type (if applicable), amount and maturity of its
Loans and payments with respect thereto.

(b)           In addition to the accounts and records referred to in Section 2.11(a),
each Lender and the Administrative Agent shall maintain in accordance with its
usual practice accounts or records evidencing the purchases and sales by such
Lender of participations in Letters of Credit. 
In the event of any conflict between the accounts and records maintained
by the Administrative Agent and the accounts and records of any Lender in
respect of such matters, the accounts and records of the Administrative Agent
shall control in the absence of manifest error.

2.12         Payments Generally; Administrative Agent’s Clawback.  (a)  General.  All payments to be made by the Borrowers
shall be made without condition or deduction for any counterclaim, defense,
recoupment or setoff.  Except as
otherwise expressly provided herein, all payments by the Borrowers hereunder
shall be made to the Administrative Agent, for the account of the respective
Lenders to which such payment is owed, at the Administrative Agent’s Office in
Dollars and in immediately available funds not later than 2:00 p.m. on the date
specified herein.  The Administrative
Agent will promptly distribute to each Lender its Applicable 

 46
 

Percentage in respect of the relevant
Facility (or other applicable share as provided herein) of such payment in like
funds as received by wire transfer to such Lender’s Lending Office.  All payments received by the Administrative
Agent after 2:00 p.m. shall be deemed received on the next succeeding Business
Day and any applicable interest or fee shall continue to accrue.  If any payment to be made by the Borrowers
shall come due on a day other than a Business Day, payment shall be made on the
next following Business Day, and such extension of time shall be reflected on
computing interest or fees, as the case may be.

(b)           (i)  Funding by
Lenders; Presumption by Administrative Agent.  Unless the Administrative Agent shall have
received notice from a Lender prior to the proposed date of any Borrowing of
Eurodollar Rate Loans (or, in the case of any Borrowing of Base Rate Loans,
prior to 12:00 noon on the date of such Borrowing) that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with Section 2.02 (or,
in the case of a Borrowing of Base Rate Loans, that such Lender has made such
share available in accordance with and at the time required by Section 2.02)
and may, in reliance upon such assumption, make available to the Borrowers a
corresponding amount.  In such event, if
a Lender has not in fact made its share of the applicable Borrowing available
to the Administrative Agent, then the applicable Lender and the Borrowers
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount in immediately available funds with interest thereon, for
each day from and including the date such amount is made available to the
Borrowers to but excluding the date of payment to the Administrative Agent, at
(A) in the case of a payment to be made by such Lender, the greater of the
Federal Funds Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation, plus any
administrative, processing or similar fees customarily charged by the
Administrative Agent in connection with the foregoing, and (B) in the case of a
payment to be made by the Borrowers, the interest rate applicable to Base Rate
Loans.  If the Borrowers and such Lender
shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrowers the amount of such interest paid by the Borrowers for such
period.  If such Lender pays its share of
the applicable Borrowing to the Administrative Agent, then the amount so paid
shall constitute such Lender’s Loan included in such Borrowing.  Any payment by the Borrowers shall be without
prejudice to any claim the Borrowers may have against a Lender that shall have
failed to make such payment to the Administrative Agent.

(ii)           Payments
by Borrower; Presumptions by Administrative Agent.  Unless the Administrative Agent shall have
received notice from the Borrowers prior to the time at which any payment is
due to the Administrative Agent for the account of the Lenders or the L/C
Issuer hereunder that the Borrowers will not make such payment, the
Administrative Agent may assume that the Borrowers have made such payment on
such date in accordance herewith and may, in reliance upon such assumption,
distribute to the Appropriate Lenders or the L/C Issuer, as the case may be,
the amount due.  In such event, if the
Borrowers have not in fact made such payment, then each of the Appropriate
Lenders or the L/C Issuer, as the case may be, severally agrees to repay to the
Administrative Agent forthwith on demand the amount so distributed to such
Lender or the L/C Issuer, in immediately available funds with interest thereon,
for each day from and including the date such amount is distributed to it to
but excluding the date of 

 47
 

payment to the Administrative Agent, at the
greater of the Federal Funds Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation.

A notice of the Administrative Agent to any Lender or
any Borrower with respect to any amount owing under this subsection (b) shall
be conclusive, absent manifest error.

(c)           Failure to Satisfy Conditions Precedent.  If any Lender makes available to the
Administrative Agent funds for any Loan to be made by such Lender as provided
in the foregoing provisions of this Article II, and such funds are not
made available to the Borrowers by the Administrative Agent because the
conditions to the applicable Credit Extension set forth in Article IV
are not satisfied or waived in accordance with the terms hereof, the
Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.

(d)           Obligations of Lenders Several.  The obligations of the Lenders hereunder to
make Term Loans and Revolving Credit Loans, to fund participations in Letters
of Credit and to make payments pursuant to Section 10.04(c) are
several and not joint.  The failure of
any Lender to make any Loan, to fund any such participation or to make any
payment under Section 10.04(c) on any date required hereunder shall
not relieve any other Lender of its corresponding obligation to do so on such
date, and no Lender shall be responsible for the failure of any other Lender to
so make its Loan, to purchase its participation or to make its payment under Section 10.04(c).

(e)           Funding Source. 
Nothing herein shall be deemed to obligate any Lender to obtain the
funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

(f)            Insufficient Funds.  If at any time insufficient funds are
received by and available to the Administrative Agent to pay fully all amounts
of principal, L/C Borrowings, interest and fees then due hereunder, such funds
shall be applied (i) first, toward payment of interest and fees then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of interest and fees then due to such parties, and (ii) second,
toward payment of principal and L/C Borrowings then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of principal
and L/C Borrowings then due to such parties.

2.13         Sharing of Payments by Lenders.  If any Lender shall, by exercising any right
of setoff or counterclaim or otherwise, obtain payment in respect of (a)
Obligations in respect of any the Facilities due and payable to such Lender
hereunder and under the other Loan Documents at such time in excess of its
ratable share (according to the proportion of (i) the amount of such
Obligations due and payable to such Lender at such time to (ii) the aggregate
amount of the Obligations in respect of the Facilities due and payable to all
Lenders hereunder and under the other Loan Documents at such time) of payments
on account of the Obligations in respect of the Facilities due and payable to
all Lenders hereunder and under the other Loan Documents at such time obtained
by all the Lenders at such time or (b) Obligations in respect of any of the Facilities
owing (but not due and payable) to such Lender hereunder and under the 

 48
 

other Loan Documents at such time in excess
of its ratable share (according to the proportion of (i) the amount of such
Obligations owing (but not due and payable) to such Lender at such time to (ii)
the aggregate amount of the Obligations in respect of the Facilities owing (but
not due and payable) to all Lenders hereunder and under the other Loan Parties
at such time) of payment on account of the Obligations in respect of the
Facilities owing (but not due and payable) to all Lenders hereunder and under
the other Loan Documents at such time obtained by all of the Lenders at such
time then the Lender receiving such greater proportion shall (a) notify the
Administrative Agent of such fact, and (b) purchase (for cash at face value)
participations in the Loans and subparticipations in L/C Obligations of the
other Lenders, or make such other adjustments as shall be equitable, so that
the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of Obligations in respect of the
Facilities then due and payable to the Lenders or owing (but not due and
payable) to the Lenders, as the case may be, provided that:

(i)            if
any such participations or subparticipations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and

(ii)           the
provisions of this Section shall not be construed to apply to (A) any payment
made by the Borrowers pursuant to and in accordance with the express terms of
this Agreement or (B) any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or
subparticipations in L/C Obligations to any assignee or participant, other than
to any Borrower or any Subsidiary thereof (as to which the provisions of this
Section shall apply).

Each Loan Party consents
to the foregoing and agrees, to the extent it may effectively do so under
applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to
such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such
participation.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

3.01         Taxes.  (a) Payments
Free of Taxes.  Any and all payments
by or on account of any obligation of the Borrowers hereunder or under any
other Loan Document shall be made free and clear of and without reduction or
withholding for any Indemnified Taxes or Other Taxes, provided that if
any Borrower shall be required by applicable law to deduct any Indemnified
Taxes (including any Other Taxes) from such payments, then (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, any Lender or the L/C Issuer, as the case may be,
receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make such deductions and (iii)
such Borrower shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.

 49
 

(b)           Payment of Other Taxes by the Borrowers.  Without limiting the provisions of subsection (a)
above, the Borrowers shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.

(c)           Indemnification by the Borrowers.  The Borrowers shall, jointly and severally,
indemnify the Administrative Agent, each Lender and the L/C Issuer, within 30
days after demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on
or attributable to amounts payable under this Section) paid by the
Administrative Agent, such Lender or the L/C Issuer, as the case may be, and
any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority;
provided, however, that the Borrowers shall
have no liability hereunder in respect of penalties, interest and other
liabilities attributable to any Indemnified Taxes or Other Taxes if such
penalties, interest or other liabilities are attributable to the gross
negligence or willful misconduct of an Administrative Agent, Lender or L/C
Issuer.  A certificate as to the amount of such
payment or liability delivered to the Borrowers by a Lender or the L/C Issuer
(with a copy to the Administrative Agent), or by the Administrative Agent on
its own behalf or on behalf of a Lender or the L/C Issuer, shall be conclusive
absent manifest error.

(d)           Evidence of Payments.  As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by any Borrower to a Governmental Authority,
such Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.

(e)           Status of Lenders. 
Any Foreign Lender that is entitled to an exemption from or reduction of
withholding tax under the law of the jurisdiction in which any Borrower is
resident for tax purposes, or any treaty to which such jurisdiction is a party,
with respect to payments hereunder or under any other Loan Document shall
deliver to the Borrowers (with a copy to the Administrative Agent), at the time
or times prescribed by applicable law or reasonably requested by the Borrowers
or the Administrative Agent, 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 of withholding.  In addition, any Lender, if requested by the
Borrowers or the Administrative Agent, shall deliver such other documentation
prescribed by applicable law or reasonably requested by the Borrowers or the
Administrative Agent as will enable the Borrowers or the Administrative Agent
to determine whether or not such Lender is subject to backup withholding or
information reporting requirements.

Without limiting the generality of the foregoing, if
the Borrowers are resident for tax purposes in the United States, any Foreign
Lender shall deliver to the Borrowers and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the
date on which such Foreign Lender becomes a Lender under this Agreement (and
from time to time thereafter upon the request of the Borrowers or the
Administrative Agent, but only if such Foreign Lender is legally entitled to do
so), whichever of the following is applicable:

 50
 

(i)            duly
completed copies of Internal Revenue Service Form W-8BEN claiming eligibility
for benefits of an income tax treaty to which the United States is a party,

(ii)           duly
completed copies of Internal Revenue Service Form W-8ECI,

(iii)          in
the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under Section 881(c) of the Code, (A) a certificate to
the effect that such Foreign Lender is not (1) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (2) a “10 percent shareholder” of any Borrower
within the meaning of section 881(c)(3)(B) of the Code, or (3) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and (B)
duly completed copies of  Internal
Revenue Service Form W-8BEN, or

(iv)          any
other form prescribed by applicable law as a basis for claiming exemption from
or a reduction in United States Federal withholding tax duly completed together
with such supplementary documentation as may be prescribed by applicable law to
permit the Borrowers to determine the withholding or deduction required to be
made.

(f)            Treatment of Certain Refunds.  If the Administrative Agent, any Lender or
the L/C Issuer determines, in its sole discretion, that it has received a
refund of any Taxes or Other Taxes as to which it has been indemnified by the
Borrowers or with respect to which the Borrowers have paid additional amounts
pursuant to this Section, it shall pay to the Borrowers an amount equal to such
refund (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrowers under this Section with respect to the Taxes or
Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
the Administrative Agent, such Lender or the L/C Issuer, as the case may be,
and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund), provided that the Borrowers,
upon the request of the Administrative Agent, such Lender or the L/C Issuer,
agree to repay the amount paid over to the Borrowers (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent, such Lender or the L/C Issuer if the
Administrative Agent, such Lender or the L/C Issuer is required to repay such
refund to such Governmental Authority. 
This subsection shall not be construed to require the Administrative
Agent, any Lender or the L/C Issuer to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to the
Borrowers or any other Person.

3.02         Illegality.  If
any Lender determines that any Law has made it unlawful, or that any
Governmental Authority has asserted that it is unlawful, for any Lender or its
applicable Lending Office to make, maintain or fund Eurodollar Rate Loans, or
to determine or charge interest rates based upon the Eurodollar Rate, or any
Governmental Authority has imposed material restrictions on the authority of
such Lender to purchase or sell, or to take deposits of, Dollars in the London
interbank market, then, on notice thereof by such Lender to the Borrowers through
the Administrative Agent, any obligation of such Lender to make or continue
Eurodollar Rate Loans or to convert Base Rate Loans to Eurodollar Rate Loans
shall be suspended until such Lender notifies the Administrative Agent and the
Borrowers that the circumstances giving rise to such determination no longer
exist.  Upon receipt of such notice, the
Borrowers shall, upon demand from such Lender (with a copy to the
Administrative Agent), prepay or, if 

 51
 

applicable, convert all Eurodollar Rate Loans
of such Lender to Base Rate Loans, either on the last day of the Interest
Period therefor, if such Lender may lawfully continue to maintain such
Eurodollar Rate Loans to such day, or immediately, if such Lender may not
lawfully continue to maintain such Eurodollar Rate Loans.  Upon any such prepayment or conversion, the
Borrowers shall also pay accrued interest on the amount so prepaid or
converted.

3.03         Inability to Determine Rates.  If the Required Lenders determine that for
any reason in connection with any request for a Eurodollar Rate Loan or a
conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan, or
(c) the Eurodollar Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost
to such Lenders of funding such Loan, the Administrative Agent will promptly so
notify the Borrowers and each Lender. 
Thereafter, the obligation of the Lenders to make or maintain Eurodollar
Rate Loans shall be suspended until the Administrative Agent (upon the
instruction of the Required Lenders) revokes such notice.  Upon receipt of such notice, the Borrowers
may revoke any pending request for a Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or, failing that, will be deemed to have
converted such request into a request for a Committed Borrowing of Base Rate
Loans in the amount specified therein.

3.04         Increased Costs. 
(a)  Increased Costs Generally.  If any Change in Law shall:

(i)            impose,
modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for
the account of, or credit extended or participated in by, any Lender (except
any reserve requirement contemplated by Section 3.04(e)) or the L/C
Issuer;

(ii)           subject
any Lender or the L/C Issuer to any tax of any kind whatsoever with respect to
this Agreement, any Letter of Credit, any participation in a Letter of Credit
or any Eurodollar Rate Loan made by it, or change the basis of taxation of
payments to such Lender or the L/C Issuer in respect thereof (except for
Indemnified Taxes or Other Taxes covered by Section 3.01 and the
imposition of, or any change in the rate of, any Excluded Tax payable by such
Lender or the L/C Issuer); or

(iii)          impose
on any Lender or the L/C Issuer or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Rate Loans
made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to
increase the cost to such Lender of making or maintaining any Eurodollar Rate
Loan (or of maintaining its obligation to make any such Loan), or to increase
the cost to such Lender or the L/C Issuer of participating in, issuing or
maintaining any Letter of Credit (or of maintaining its obligation to
participate in or to issue any Letter of Credit), or to reduce the amount of
any sum received or receivable by such Lender or the L/C Issuer hereunder
(whether of principal, interest or any other amount) then, upon the written
request of such Lender or the L/C Issuer, the Borrowers will pay to such Lender
or the L/C 

 52
 

Issuer, as the case may be, such additional amount or
amounts as will compensate such Lender or the L/C Issuer, as the case may be,
for such additional costs incurred or reduction suffered.

(b)           Capital Requirements.  If any Lender or the L/C Issuer determines
that any Change in Law affecting such Lender or the L/C Issuer or any Lending
Office of such Lender or such Lender’s or the L/C Issuer’s holding company, if
any, regarding capital requirements has or would have the effect of reducing
the rate of return on such Lender’s or the L/C Issuer’s capital or on the
capital of such Lender’s or the L/C Issuer’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by the L/C Issuer, to a level below that which such Lender or
the L/C Issuer or such Lender’s or the L/C Issuer’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
the L/C Issuer’s policies and the policies of such Lender’s or the L/C Issuer’s
holding company with respect to capital adequacy), then from time to time the
Borrowers will pay to such Lender or the L/C Issuer, as the case may be, upon
the written request of such Lender, such additional amount or amounts as will
compensate such Lender or the L/C Issuer or such Lender’s or the L/C Issuer’s
holding company for any such reduction suffered.

(c)           Certificates for Reimbursement.  A certificate of a Lender or the L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or the
L/C Issuer or its holding company, as the case may be, as specified in subsection
(a) or (b) of this Section and delivered to the Borrowers shall be
conclusive absent manifest error.  The
Borrowers shall pay such Lender or the L/C Issuer, as the case may be, the
amount shown as due on any such certificate within 10 days after receipt
thereof.

(d)           Delay in Requests. 
Failure or delay on the part of any Lender or the L/C Issuer to demand
compensation pursuant to the foregoing provisions of this Section shall not
constitute a waiver of such Lender’s or the L/C Issuer’s right to demand such
compensation, provided that the Borrowers shall not be required to
compensate a Lender or the L/C Issuer pursuant to the foregoing provisions of this
Section for any increased costs incurred or reductions suffered more than nine
months prior to the date that such Lender or the L/C Issuer, as the case may
be, notifies the Borrowers of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or the L/C Issuer’s intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

(e)           Reserves on Eurodollar Rate Loans.  The Borrowers shall pay to each Lender, as
long as such Lender shall be required to maintain reserves with respect to
liabilities or assets consisting of or including Eurocurrency funds or deposits
(currently known as “Eurocurrency liabilities”), additional interest on the
unpaid principal amount of each Eurodollar Rate Loan equal to the actual costs
of such reserves allocated to such Loan by such Lender (as determined by such
Lender in good faith, which determination shall be conclusive), which shall be
due and payable on each date on which interest is payable on such Loan, provided
the Borrowers shall have received at least 10 days’ prior notice (with a copy
to the Administrative Agent) of such additional interest from such Lender.  If a Lender fails to give notice 10 days 

 53
 

prior to the relevant Interest Payment Date,
such additional interest shall be due and payable 10 days from receipt of such
notice.

3.05         Compensation for Losses.  Upon demand of any Lender (with a copy to the
Administrative Agent) from time to time, the Borrowers shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:

(a)           any continuation, conversion, payment or prepayment of any
Loan other than a Base Rate Loan on a day other than the last day of the
Interest Period for such Loan (whether voluntary, mandatory, automatic, by
reason of acceleration, or otherwise);

(b)           any failure by the Borrowers (for a reason other than the
failure of such Lender to make a Loan) to prepay, borrow, continue or convert
any Loan other than a Base Rate Loan on the date or in the amount notified by
the Borrowers;

(c)           any assignment of a Eurodollar Rate Loan on a day other
than the last day of the Interest Period therefor as a result of a request by
the Borrowers pursuant to Section 10.13; or

(d)           any assignment by a Lender pursuant to Section 10.06
prior to the six month anniversary of the Closing Date;

including any loss
of anticipated profits and any loss or expense arising from the
liquidation or reemployment of funds obtained by it to maintain such Loan or
from fees payable to terminate the deposits from which such funds were obtained.  The
Borrowers shall also pay any customary administrative fees charged by such
Lender in connection with the foregoing.

For purposes of calculating amounts payable by the
Borrowers to the Lenders under this Section 3.05, each Lender shall be deemed to have funded each
Eurodollar Rate Loan made by it at the Eurodollar
Rate  for such Loan by a
matching deposit or other borrowing in the London interbank eurodollar market
for a comparable amount and for a comparable period, whether or not such
Eurodollar Rate Loan was in fact so funded.

3.06         Mitigation Obligations; Replacement of Lenders.  (a) Designation of a Different Lending
Office.  If any Lender requests
compensation under Section 3.04, or the Borrowers is required to
pay any additional amount to any Lender or any Governmental Authority for the
account of any Lender pursuant to Section 3.01, or if any Lender
gives a notice pursuant to Section 3.02, then such Lender shall use
reasonable efforts to designate a different Lending Office for funding or
booking its Loans hereunder or to assign its rights and obligations hereunder
to another of its offices, branches or affiliates, if, in the judgment of such
Lender, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 3.01 or 3.04, as the case may be, in
the future, or eliminate the need for the notice pursuant to Section 3.02,
as applicable, and (ii) in each case, would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender.  The Borrowers hereby agree to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.

 54

(b)           Replacement of Lenders.  If any Lender requests compensation under Section 3.04,
or if the Borrowers are required to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 3.01,
the Borrowers may replace such Lender in accordance with Section 10.13.

3.07         Survival.  All
of the Borrowers’ obligations under this Article III shall survive
termination of the Aggregate Commitments and repayment of all other Obligations
hereunder.

ARTICLE IV

CONDITIONS PRECEDENT TO Credit Extensions

4.01         Conditions of Initial Credit Extension.  The obligation of the L/C Issuer and each
Lender to make its initial Credit Extension hereunder is subject to
satisfaction of the following conditions precedent:

(a)           The Administrative Agent’s receipt of the following, each
of which shall be originals or facsimiles (followed promptly by originals)
unless otherwise specified, each properly executed by a Responsible Officer of
the signing Loan Party, each dated the Closing Date (or, in the case of
certificates of governmental officials, a recent date before the Closing Date)
and each in form and substance satisfactory to the Administrative Agent and
each of the Lenders:

(i)            executed
counterparts of this Agreement and the Guaranty, sufficient in number for
distribution to the Administrative Agent, each Lender and the Borrowers;

(ii)           a
Note executed by the Borrowers in favor of each Lender requesting a Note;

(iii)          a
security agreement, in substantially the form of Exhibit G (together
with each other security agreement and security agreement supplement delivered
pursuant to Section 6.12, in each case as amended, the “Security
Agreement”), duly executed by each Loan Party, together with:

(A)          acknowledgment copies of proper financing statements,
duly filed on or before the day of the initial 
Credit Extension under the Uniform Commercial Code of all
jurisdictions that the Administrative Agent may deem necessary or desirable in
order to perfect the Liens created under the Security Agreement, covering the
Collateral described in the Security Agreement,

(B)           completed
requests for information, dated on or before the date of the initial Credit
Extension,
listing the financing statements referred to in clause (B) above and
all other effective financing
statements filed in the jurisdictions referred to in clause (A) above that
name any Loan Party as debtor, together with copies of such other financing
statements, and

 55
 

(C)           evidence
of the completion of all other actions, recordings and filings of or with
respect to the Security Agreement that the Administrative Agent may deem
necessary or desirable in order to perfect the Liens created thereby;

(iv)          the
Pledge Agreement, duly executed by each Borrower and each Subsidiary that holds
the capital stock of a Subsidiary, covering all present and future shares of
capital stock of (or other ownership or profit interests in) each of its
present and future Subsidiaries (limited, in the case of each entity that is a “controlled
foreign corporation” under Section 957 of the Internal Revenue Code, to a
pledge of 66% of the capital stock of each such first-tier foreign Subsidiary
to the extent the pledge of any greater percentage would result in material
adverse tax consequences to the Borrowers), and the Terner Pledge Agreement
duly executed by Jacob Y. Terner, M.D. together with;

(A)          certificates
representing the Pledged Equity referred to therein accompanied by undated stock powers
executed in blank;

(B)           acknowledgment
copies of properly filed Uniform Commercial Code financing statements (Form
UCC-1), amendments to the collateral descriptions contained in filed financing
statements, or such other evidence of filing as may be acceptable to the
Administrative Agent, naming each party to the Pledge Agreement and the Terner
Pledge Agreement as the debtor, and the Administrative Agent on behalf of the
Secured Parties, as the secured party, or other similar instruments or
documents, filed under the Uniform Commercial Code of all jurisdictions as may
be necessary or, in the opinion of the Administrative Agent, desirable to
perfect the security interest of the Administrative Agent pursuant to the
Pledge Agreement and the Terner Pledge Agreement;

(C)           Uniform
Commercial Code termination statements necessary to release all Liens and other
rights of any Person securing any existing Liens, together with such other
Uniform Commercial Code termination statements as the Administrative Agent may
reasonably request; and

(D)          certified
copies of Uniform Commercial Code Requests for Information or Copies (Form
UCC-3), or a similar search report certified by a party selected by and
acceptable to the Administrative Agent, dated a date reasonably near to the
Closing Date, listing all effective financing statements which name any of the
Loan Parties (under their present names and any previous names) as the debtor
and which are filed in the jurisdictions in which filings were made pursuant to
clause (B) above, together with copies of such financing statements (none of
which (other than those described in clause (B), if such Form UCC-3 or search
report, as the case may be, is current enough to list such financing statements
described in clause (B)) shall cover any Collateral described in the Pledge
Agreement and the Terner Pledge Agreement;

(v)           the Collateral Assignment of ProMed
Documents, duly executed by each Loan Party, together with evidence that all
action that the Administrative Agent 

 56
 

may deem necessary or desirable in order to
perfect the Liens created thereunder has been taken

(vi)          such
certificates of resolutions or other action, incumbency certificates, certified
copies of articles of incorporation or organization, bylaws and other
organizational documents of each of the Loan Parties and/or other certificates
of Responsible Officers of each Loan Party as the Administrative Agent may
require evidencing the identity, authority and capacity of each Responsible
Officer thereof authorized to act as a Responsible Officer in connection with
this Agreement and the other Loan Documents to which such Loan Party is a party
or is to be a party;

(vii)         such
documents and certifications as the Administrative Agent may reasonably require
to evidence that each Loan Party is duly organized or formed, and that each
Borrower and other Loan Party is validly existing, in good standing and
qualified to engage in business in its jurisdiction of incorporation or
organization and in each other jurisdiction where its ownership, lease or
operation of properties or the conduct of its business requires such qualification,
except to the extent that failure to do so could not reasonably be expected to
have a Material Adverse Effect;

(viii)        a
favorable opinion of Theodora
Oringher Miller & Richman PC, counsel to the Loan Parties,
addressed to the Administrative Agent and each Lender, as to the matters set
forth in Exhibit I and such other matters concerning the Loan
Parties and the Loan Documents as the Required Lenders may reasonably request;

(ix)           a
copy of the opinion of counsel to the ProMed Entities in the form attached as
an exhibit to the Acquisition Agreements for the ProMed Acquisition, which is
addressed and delivered to Holdings and Group in connection with the ProMed
Acquisition, together with a reliance letter addressed to the Administrative
Agent that states that the Administrative Agent and the Lenders may rely
thereon;

(x)            a
certificate of a Responsible Officer of each Loan Party either (A) attaching
copies of all consents, licenses and approvals required in connection with the
consummation by such Loan Party of the Transaction and the execution, delivery
and performance by such Loan Party and the validity against such Loan Party of
the Loan Documents to which it is a party, and such consents, licenses and
approvals shall be in full force and effect, or (B) stating that no such
consents, licenses or approvals are so required;

(xi)           a certificate signed by the chief
financial officer of each Borrower certifying (A) that the conditions specified
in Sections 4.02(a) and (b) have been satisfied (B) that
other than as reported in Holdings’ 10-Q Quarterly Report as of March 31,
2007 on file with the SEC, there has been no event or circumstance
(i) since the date of the Audited Financial Statements that has had or
could be reasonably expected to have, either individually or in the aggregate,
a Material Adverse Effect or (ii) since September 30, 2006 that has had or
could reasonably be expected to have, either individually or in the aggregate,
a material adverse change in, or a material adverse effect on, the operations,
business, assets, properties, liabilities (actual or contingent), condition
(financial or 

 57
 

otherwise) or prospects of the ProMed
Entities and their Subsidiaries taken as a whole, and (C) that (w) after a
$1,000,000 pro forma adjustment to the EBITDA of the ProMed Entities and the
$4,100,000 of pro forma adjustments to the Consolidated EBITDA of the Borrower
and its Subsidiaries, the Consolidated Senior Leverage Ratio of the Borrowers
and their Subsidiaries (after giving pro forma effect to the ProMed Acquisition
and giving effect to all Credit Extensions to be made on the Closing Date) is
not greater than 2.4 to 1.0, (x) Consolidated Adjusted EBITDA of the Borrowers
and their Subsidiaries for the twelve month period ended March 31, 2007
(calculated as if the ProMed Acquisition had occurred on the first day of each
such twelve-month period) is greater than $19,500,000, (y) the total membership
of Borrowers and their Subsidiaries (including the ProMed Entities) is not less
than 245,000, and (z) Borrowers and their Subsidiaries (including the ProMed
Entities) have unrestricted and unencumbered cash as of the Closing Date in an
amount not less than $18,000,000;

(xii)          certificates
attesting to the Solvency of each Loan Party and each of the ProMed Entities
before and after giving effect to the Transaction, from its chief financial
officer;

(xiii)         certified
copies of each employment agreement and other compensation arrangement with
each executive officer of any Loan Party or any of its Subsidiaries as the
Administrative Agent shall request;

(xiv)        evidence
that all insurance required to be maintained pursuant to the Loan Documents has
been obtained and is in effect, together with the certificates of insurance,
naming the Administrative Agent, on behalf of the Lenders, as an additional
insured or loss payee, as the case may be, under all insurance policies
maintained with respect to the assets and properties of the Loan Parties that
constitutes Collateral;

(xv)         copies
of all governmental, shareholder and material third party consents and
approvals necessary or, in the reasonable opinion of the Administrative Agent,
desirable in connection with the ProMed Acquisition and the Transaction and
evidence of the expiration of all applicable waiting periods without any action
being taken by any Governmental Authority that could restrain, prevent or
impose any material adverse conditions on the Borrowers and the Guarantors or
that could seek or threaten any of the foregoing, and that no Law or regulation
shall be applicable which in the reasonable judgment of the Administrative
Agent could have such effect;

(xvi)        certified
copies of each of the Related Documents, duly executed by the parties thereto,
together with all agreements, instruments and other documents delivered in connection
therewith as the Administrative Agent shall request;

(xvii)       a certificate from a Responsible Officer
of Holdings, dated as of the Closing Date, stating that (i) all conditions
precedent to the ProMed Acquisitions have been satisfied without waiver or
forbearance; (ii) the representations and warranties of all parties to the
ProMed Acquisition Documents are true and correct in all material respects; and
(iii) Holdings has given irrevocable instructions to its counsel to file the
necessary merger certificates in order to consummate the ProMed Acquisitions
subject to 

 58
 

receipt of the proceeds of the Loan to fund
the cash portion of the purchase price of the ProMed Acquisitions;

(xviii)      evidence
that the Existing Credit Agreement has been, or concurrently with the Closing
Date is being, terminated and all Liens securing obligations under the Existing
Credit Agreement have been, or concurrently with the Closing Date are being,
released; and

(xix)         such
other assurances, certificates, documents, consents, reports, audits or
opinions as the Administrative Agent, the L/C Issuer or any Lender reasonably
may require.

(b)           (i) All fees required to be paid to the Administrative
Agent and the Arranger on or before the Closing Date shall have been paid and
(ii) all fees required to be paid to the Lenders on or before the Closing Date
shall have been paid.

(c)           Unless waived by the Administrative Agent, the Borrowers
shall have paid all fees, charges and disbursements of counsel to the
Administrative Agent (directly to such counsel if requested by the
Administrative Agent) to the extent invoiced prior to or on the Closing Date
with reasonable specificity and time to review and address any reasonable
objections of Borrowers, plus such additional amounts of such fees, charges and
disbursements as shall constitute its reasonable estimate of such fees, charges
and disbursements incurred or to be incurred by it through the closing
proceedings (provided that such estimate shall not thereafter preclude a
final settling of accounts between the Borrowers and the Administrative Agent).

(d)           The Closing Date shall have occurred on or before
June 10, 2007.

(e)           The Lenders shall have completed a due diligence
investigation and filed audit of the Borrowers and their respective
Subsidiaries in scope, and with results, satisfactory to the Lenders, and shall
have been given such access to the management, records, books of account,
contracts and properties of the Borrowers and their respective Subsidiaries and
shall have received such financial, business and other information regarding
each of the foregoing Persons and businesses as they shall have requested.

(f)            The ProMed Acquisition Documents shall be in full force
and effect.

(g)           The
ProMed Acquisition shall have been consummated simultaneous herewith strictly
in accordance with the terms of the ProMed Acquisition Documents, without any
waiver or amendment not consented to by the Lenders of any term, provision or
condition set forth therein, and in compliance with all applicable requirements
of Law.

(h)           The ProMed
Acquisition shall have been consummated strictly in accordance with the terms
of the ProMed Acquisition Documents, which terms shall be satisfactory to the
Administrative Agent; the Administrative Agent shall be satisfied with the terms
of any additional financing provided to the Loan Parties in connection with the
ProMed Acquisition; the aggregate “Merger Consideration” and “Purchase Price”
(as such terms are defined in the ProMed Acquisition Documents) shall include a
minimum stock contribution by the Borrowers and their Affiliates valued at
least $6,960,000 or 14.5% of the Purchase Price 

 59
 

including reasonable assurance that Borrowers
are not issuing more than 19.99% of the outstanding shares of common stock of
Holdings on the Closing Date.

(i)            All loans made by the Lenders to the Borrowers shall be
in full compliance with the FRB’s margin regulations.

(j)            There shall not be any action, suit, investigation or
proceeding pending or, to the knowledge of either of the Borrowers, threatened
in any court or before any arbitrator or Governmental Authority that could
reasonably be expected to (i) have a material adverse effect on the business,
assets, properties, liabilities (actual or contingent), operations or condition
(financial or otherwise) of the Borrowers and their respective Subsidiaries and
Affiliates, taken as a whole, (ii) adversely affect the ability of either
Borrower or any Guarantor to perform its obligations under the loan
documentation or (iii) adversely affect the rights and remedies of the
Administrative Agent or the Lenders under the Loan Documents.

Without limiting the generality of the provisions of
the last paragraph of Section 9.03, for purposes of determining
compliance with the conditions specified in this Section 4.01, each
Lender that has signed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

4.02         Conditions to all Credit Extensions.  The obligation of each Lender to honor any
Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Loans to the other Type, or a continuation of Eurodollar
Rate Loans) is subject to the following conditions precedent:

(a)           The representations and warranties of the Borrowers and
each other Loan Party contained in Article V or any other Loan Document,
or which are contained in any document furnished at any time under or in
connection herewith or therewith, shall be true and correct on and as of the
date of such Credit Extension, except to the extent that such representations
and warranties specifically refer to an earlier date, in which case they shall
be true and correct as of such earlier date, and except that for purposes of
this Section 4.02, the representations and warranties contained in Sections
5.05(a) and (b) shall be deemed to refer to the most recent
statements furnished pursuant to Sections 6.01(a) and (b),
respectively.

(b)           No Default shall exist, or would result from such proposed
Credit Extension or from the application of the proceeds thereof.

(c)           The Administrative Agent and, if applicable, the L/C
Issuer shall have received a Request for Credit Extension in accordance with
the requirements hereof.

Each Request for Credit Extension (other than a
Committed Loan Notice requesting only a conversion of Loans to the other Type
or a continuation of Eurodollar Rate Loans) submitted by the Borrowers shall be
deemed to be a representation and warranty that the conditions specified in Sections
4.02(a) and (b) have been satisfied on and as of the date of the applicable
Credit Extension.

 60
 

ARTICLE V

REPRESENTATIONS AND WARRANTIES

Each of the  Borrowers represents and warrants
to the Administrative Agent and the Lenders that:

5.01         Existence, Qualification and Power.  Each Loan Party and each of its Subsidiaries
(a) is duly organized or formed, validly existing and, as applicable, in good
standing under the Laws of the jurisdiction of its incorporation or
organization, except for Nuestra Familia Medical Group, Inc. which shall be
back in good standing on or before June 15, 2007, (b) has all requisite
power and authority and all requisite governmental licenses, authorizations,
consents and approvals to (i) own or lease its assets and carry on its business
and (ii) execute, deliver and perform its obligations under the Loan Documents
and Related Documents to which it is a party and consummate the Transaction,
and (c) is duly qualified and is licensed and, as applicable, in good standing
under the Laws of each jurisdiction where its ownership, lease or operation of
properties or the conduct of its business requires such qualification or
license; except in each case referred to in clause (b)(i) or (c), to the extent
that failure to do so could not reasonably be expected to have a Material
Adverse Effect.

5.02         Authorization; No Contravention.  The execution, delivery and performance by
each Loan Party of each Loan Document and Related Document to which such Person
is a party have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of any
of such Person’s Organization Documents; (b) conflict with or result in any
breach or contravention of, or the creation of any Lien under, or require any
payment to be made under (i) any Contractual Obligation to which such Person is
a party or affecting such Person or the properties of such Person or any of its
Subsidiaries or (ii) any order, injunction, writ or decree of any Governmental
Authority or any arbitral award to which such Person or its property is
subject; or (c) violate any Law.

5.03         Governmental Authorization; Other Consents.  No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person is necessary or required in
connection with (a) the execution, delivery or performance by, or enforcement
against, any Loan Party of this Agreement or any other Loan Document or Related
Document, or for the consummation of the Transaction, (b) the grant by any
Loan Party of the Liens granted by it pursuant to the Collateral Documents,
(c) the perfection or maintenance of the Liens created under the
Collateral Documents (including the first priority nature thereof) or
(d) the exercise by the Administrative Agent or any Lender of its rights
under the Loan Documents or the remedies in respect of the Collateral pursuant
to the Collateral Documents, all of which have been duly obtained, taken, given or made and are in
full force and effect, except for the authorizations, approvals, actions,
notices and filings listed on Schedule 5.03 or those which,
individually or in the aggregate, are not material.  All applicable waiting periods in connection
with the Transaction have expired without any action having been taken by any Governmental
Authority restraining, preventing or imposing materially adverse conditions
upon the Transaction or the rights of the Loan Parties or their Subsidiaries
freely to transfer or otherwise dispose of, or to create any Lien on, any
properties now owned or hereafter acquired by any of them.

 61
 

5.04         Binding Effect. 
This Agreement has been, and each other Loan Document, when delivered
hereunder, will have been, duly executed and delivered by each Loan Party that
is party thereto.  This Agreement constitutes,
and each other Loan Document when so delivered will constitute, a legal, valid
and binding obligation of such Loan Party, enforceable against each Loan Party
that is party thereto in accordance with its terms subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors’ rights generally, and general principles of equity.

5.05         Financial Statements; No Material Adverse Effect.  (a) The Audited Financial Statements (i) were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise expressly noted therein; (ii) fairly
present the financial condition of Holdings and its Subsidiaries as of the date
thereof and their results of operations for the period covered thereby in
accordance with GAAP consistently applied throughout the period covered
thereby, except as otherwise expressly noted therein; and (iii) show all
material indebtedness and other liabilities, direct or contingent, of Holdings
and its Subsidiaries as of the date thereof, including liabilities for taxes,
material commitments and Indebtedness. 
The audited financial statements of the ProMed Entities dated as of
December 31, 2006 (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; (ii) fairly present the financial condition of the
ProMed Entities and their Subsidiaries as of the date thereof and their results
of operations for the period covered thereby in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein; and (iii) show all material indebtedness and other
liabilities, direct or contingent, of the ProMed Entities and their
Subsidiaries as of the date thereof, including liabilities for taxes, material
commitments and Indebtedness.

(b)           The unaudited consolidated balance sheet of Holdings and
its Subsidiaries dated March 31, 2007, and the related consolidated
statements of income or operations, shareholders’ equity and cash flows for the
fiscal quarter ended on that date (i) were prepared in accordance with GAAP
consistently applied throughout the period covered thereby, except as otherwise
expressly noted therein, and (ii) fairly present the financial condition of
Holdings and its Subsidiaries as of the date thereof and their results of
operations for the period covered thereby, subject, in the case of clauses (i)
and (ii), to the absence of footnotes and to normal year-end audit
adjustments.  The unaudited consolidated
balance sheet of the ProMed Entities and their Subsidiaries dated
March 31, 2007, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for the fiscal quarter ended on
that date (i) were prepared in accordance with GAAP consistently applied
throughout the period covered thereby, except as otherwise expressly noted
therein, and (ii) fairly present the financial condition of the ProMed Entities
and their Subsidiaries as of the date thereof and their results of operations
for the period covered thereby, subject, in the case of clauses (i) and (ii),
to the absence of footnotes and to normal year-end audit adjustments.

(c)           Since the date of
the Audited Financial Statements, other than as reported in Holdings’ Form 10-Q
Quarterly Report as of March 31, 2007 on file with the SEC, there has been
no event or circumstance, either individually or in the aggregate, that has had
or could 

 62
 

reasonably be expected to have a Material
Adverse Effect.  Since December 31,
2006, there has been no event or circumstance, either individually or in the
aggregate, that has had or could reasonably be expected to have a material adverse
change in, or a material adverse effect upon, the operations, business, assets,
properties, liabilities (actual or contingent), condition (financial or
otherwise) or prospects of the ProMed Entities and their Subsidiaries taken as
a whole.

(d)           The consolidated and consolidating pro forma balance sheet
of Holdings and its Subsidiaries as at March 31, 2007, and the related
consolidated and consolidating pro forma statements of income and cash
flows of the Borrowers and their Subsidiaries for the six months then ended,
certified by the chief financial officer or treasurer of the Borrowers, copies
of which have been furnished to each Lender, fairly present the consolidated
and consolidating pro forma financial condition of Holdings and its
Subsidiaries as at such date and the consolidated and consolidating pro forma
results of operations of Holdings and its Subsidiaries for the period ended on
such date, in each case giving effect to the Transaction, all in accordance
with GAAP.

(e)           The consolidated and consolidating forecasted balance
sheet, statements of income and cash flows of Holdings and its Subsidiaries
delivered pursuant to Section 4.01 or Section 6.01(d)
were prepared in good faith on the basis of the assumptions stated therein,
which assumptions were fair in light of the conditions existing at the time of
delivery of such forecasts, and represented, at the time of delivery, the
Borrowers’ best estimate of its future financial condition and performance.

5.06         Litigation. 
There are no actions, suits, proceedings, claims or disputes pending or,
to the knowledge of the Borrowers, threatened, at law, in equity, in
arbitration or before any Governmental Authority, by or against any Borrower or
any of their respective Subsidiaries or against any of their properties or
revenues that (a) purport to affect or pertain to this Agreement, any other
Loan Document, any Related Document or the consummation of the Transaction, or
(b) either individually or in the aggregate, if determined adversely, could
reasonably be expected to have a Material Adverse Effect.

5.07         No Default. 
Neither any Loan Party nor any Subsidiary thereof is in default under or
with respect to, or a party to, any Contractual Obligation that could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.  No Default has occurred
and is continuing or would result from the consummation of the transactions
contemplated by this Agreement or any other Loan Document.

5.08         Ownership of Property; Liens; Investments.  (a) 
Each Loan Party and each of its Subsidiaries has good record and
marketable title in fee simple to, or valid leasehold interests in, all real
property necessary or used in the ordinary conduct of its business, except for
such defects in title as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.

(b)           Schedule 5.08(b)
sets forth a complete and accurate list of all Liens on the property or assets
of each Loan Party and each of its Subsidiaries, showing as of the date hereof
the lienholder thereof, the principal amount of the obligations secured thereby
and the property or assets of such Loan Party or such Subsidiary subject
thereto.  The property of each Loan Party
and each of its Subsidiaries is subject to no Liens, other than Liens set forth
on Schedule 5.08(b), 

 63
 

and as otherwise permitted by Section 7.01
and the Liens under the Existing Credit Agreement being terminated concurrently
with the Closing.

(c)           Schedule 5.08(c) sets forth a complete and
accurate list of all real property owned by each Loan Party and each of its
Subsidiaries, showing as of the date hereof the street address, county or other
relevant jurisdiction, state, record owner and book and estimated fair value
thereof.  Each Loan Party and each of its
Subsidiaries has good, marketable and insurable fee simple title to the real
property owned by such Loan Party or such Subsidiary, free and clear of all
Liens, other than Liens created or permitted by the Loan Documents.

(d)           (i) Schedule 5.08(d)(i) sets forth a complete
and accurate list of all leases of real property under which any Loan Party or
any Subsidiary of a Loan Party is the lessee, showing as of the date hereof the
street address, county or other relevant jurisdiction, state, lessor, lessee,
expiration date and annual rental cost thereof. 
Each such lease is the legal, valid and binding obligation of the lessor
thereof, enforceable in accordance with its terms.

(ii)           Schedule
5.08(d)(ii) sets forth a complete and accurate list of all leases of real
property under which any Loan Party or any Subsidiary of a Loan Party is the
lessor, showing as of the date hereof the street address, county or other
relevant jurisdiction, state, lessor, lessee, expiration date and annual rental
cost thereof.  Each such lease is the
legal, valid and binding obligation of the lessee thereof, enforceable in
accordance with its terms.

(e)           Schedule 5.08(e) sets forth a complete and
accurate list of all Investments held by any Loan Party or any Subsidiary of a
Loan Party on the date hereof, showing as of the date hereof the amount,
obligor or issuer and maturity, if any, thereof.

5.09         Environmental Compliance.  (a) The Loan Parties and their respective
Subsidiaries conduct in the ordinary course of business a review of the effect
of existing Environmental Laws and claims alleging potential liability or
responsibility for violation of any Environmental Law on their respective
businesses, operations and properties, and as a result thereof the Borrowers
have reasonably concluded that such Environmental Laws and claims could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

(b)           No Loan Party nor,
to the Loan Parties’ knowledge, any other Person, has ever caused or permitted
any Hazardous Material to be disposed of on or under any real property owned,
leased or operated by any Loan Party, or in which any Loan Party ever held,
directly any legal or beneficial interest or estate, and no such real property
has ever been used by any Loan Party or, to Loan Parties’ knowledge, any other
Person, as a disposal site or permanent or temporary storage site for any
Hazardous Material.  Each Loan Party has
been issued and is in compliance with all material Permits relating to
environmental matters, and have filed all notifications and reports required
under applicable Environmental Laws, the failure to have or comply with which
could reasonably be expected to have a Material Adverse Effect.  All Hazardous Materials used or generated by
Loan Parties or any business merged into or otherwise acquired by any Loan
Party have been generated, accumulated, stored, transported, treated, recycled
and disposed of in compliance with all Environmental Laws, except where the
failure so 

 64
 

to comply could not reasonably be expected to
have a Material Adverse Effect.  No Loan
Party has any liabilities with respect to Hazardous Materials, and to Loan
Parties’ knowledge, no facts or circumstances exist which could give rise to
liabilities with respect to Hazardous Materials which could reasonably be
expected to have a Material Adverse Effect.

5.10         Insurance.  The
properties of the Borrowers and their Subsidiaries are insured with financially
sound and reputable insurance companies not Affiliates of the Borrowers, in
such amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar
properties in localities where the Borrowers or the applicable Subsidiary
operates.

5.11         Taxes.  The
Borrowers and their Subsidiaries have filed all Federal, state and other
material tax returns and reports required to be filed, and have paid all
Federal, state and other material taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being contested in
good faith by appropriate proceedings diligently conducted and for which
adequate reserves have been provided in accordance with GAAP.  There is no proposed tax assessment against any
Borrower or any Subsidiary that would, if made, have a Material Adverse
Effect.  Neither any Loan Party nor any
Subsidiary thereof is party to any tax sharing agreement.

5.12         ERISA Compliance. 
(a)  Each Plan is in compliance in
all material respects with the applicable provisions of ERISA, the Code and
other Federal or state Laws.  Each Plan
that is intended to qualify under Section 401(a) of the Code has received
a favorable determination letter from the IRS or an application for such a
letter is currently being processed by the IRS with respect thereto and, to the
best knowledge of the Borrowers, nothing has occurred which would prevent, or
cause the loss of, such qualification. 
The Borrowers and each ERISA Affiliate have made all required
contributions to each Plan subject to Section 412 of the Code, and no
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code has been made with respect to any
Plan.

(b)           There are no pending or, to the best knowledge of the
Borrowers, threatened claims, actions or lawsuits, or action by any
Governmental Authority, with respect to any Plan that could reasonably be
expected to have a Material Adverse Effect. 
There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

(c)           (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii)
neither any Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007
of ERISA); (iv) neither any Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in
such liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan; and (v) neither any Borrower nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c)
of ERISA.

 65

5.13         Subsidiaries; Equity Interests; Loan Parties.  No Loan Party has any Subsidiaries other than
those specifically disclosed in Part (a) of Schedule 5.13 (as
the same may be updated from time to time), and all of the outstanding Equity
Interests in such Subsidiaries have been validly issued, are fully paid and
non-assessable and are owned by a Loan Party in the amounts specified on
Part (a) of Schedule 5.13 free and clear of all Liens except
those created under the Collateral Documents. 
No Loan Party has any equity investments in any other corporation or
entity other than those specifically disclosed in Part (b) of Schedule 5.13.  Set forth on Part (d) of Schedule 5.13
is a complete and accurate list of all Loan Parties, showing as of the Closing
Date (as to each Loan Party) the jurisdiction of its incorporation, the address
of its principal place of business and its U.S. taxpayer identification number
or, in the case of any non-U.S. Loan Party that does not have a U.S. taxpayer
identification number, its unique identification number issued to it by the
jurisdiction of its incorporation.  The
copy of the charter of each Loan Party and each amendment thereto provided
pursuant to Section 4.01(a)(vii) is a true and correct copy of each
such document, each of which is valid and in full force and effect.  Pinnacle Health Resources does not conduct
any business and the fair market value of its assets does not exceed $25,000.

5.14         Margin Regulations; Investment Company Act.  (a)  The Borrowers are not engaged
and will not engage, principally or as one of its important activities, in the
business of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the FRB), or extending credit for the purpose of
purchasing or carrying margin stock.

(b)           None of any Borrower, any Person Controlling any Borrower,
or any Subsidiary is or is required to be registered as an “investment company”
under the Investment Company Act of 1940.

5.15         Disclosure. 
Each Borrower has disclosed to the Administrative Agent and the Lenders
all agreements, instruments and corporate or other restrictions to which it or
any of its Subsidiaries or any other Loan Party is subject, and all other
matters known to it, that, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.  No report, financial statement, certificate
or other information furnished (whether in writing or orally) by or on behalf
of any Loan Party to the Administrative Agent or any Lender in connection with
the transactions contemplated hereby and the negotiation of this Agreement or
delivered hereunder or under any other Loan Document (in each case as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrowers represent only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.

5.16         Compliance with Laws. 
Each Loan Party and each Subsidiary thereof is in compliance in all
material respects with the requirements of all Laws and all orders, writs,
injunctions and decrees applicable to it or to its properties, except in such
instances in which (a) such requirement of Law or order, writ, injunction
or decree is being contested in good faith by appropriate proceedings
diligently conducted or (b) the failure to comply therewith, either
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.

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5.17         Intellectual Property; Licenses, Etc.  Each Loan Party and each of its Subsidiaries
own, or possess the right to use, all of the trademarks, service marks, trade
names, copyrights, patents, patent rights, franchises, licenses and other
intellectual property rights (collectively, “IP Rights”) that are reasonably
necessary for the operation of their respective businesses, without conflict
with the rights of any other Person, and Schedule 5.17 sets forth a
complete and accurate list of all such IP Rights owned or used by each Loan
Party and each of its Subsidiaries.  To
the best knowledge of the Borrowers, no slogan or other advertising device,
product, process, method, substance, part or other material now employed, or
now contemplated to be employed, by any Loan Party or any of its Subsidiaries
infringes upon any rights held by any other Person.  No claim or litigation regarding any of the
foregoing is pending or, to the best knowledge of the Borrowers, threatened,
which, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.

5.18         Solvency.  Each
Loan Party is, individually and together with its Subsidiaries on a
consolidated basis, Solvent.

5.19         Casualty, Etc. 
Neither the businesses nor the properties of any Loan Party or any of
its Subsidiaries are affected by any fire, explosion, accident, strike, lockout
or other labor dispute, drought, storm, hail, earthquake, embargo, act of God
or of the public enemy or other casualty (whether or not covered by insurance)
that, either individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect.

5.20         Labor Matters. 
There are no collective bargaining agreements or Multiemployer Plans
covering the employees of any Borrower or any of its Subsidiaries as of the
Closing Date and neither any Borrower nor any Subsidiary has suffered any
strikes, walkouts, work stoppages or other material labor difficulty within the
last five years.

5.21         Collateral Documents. 
The provisions of the Collateral Documents are effective to create in
favor of the Administrative Agent for the benefit of the Secured Parties a legal,
valid and enforceable first priority Lien (subject to Liens permitted by Section 7.01)
on all right, title and interest of the respective Loan Parties in the
Collateral described therein.  Except for
filings completed prior to the Closing Date and as contemplated hereby and by
the Collateral Documents, no filing or other action will be necessary to
perfect or protect such Liens.

5.22         ProMed Acquisition. 
The copies of the Related Documents provided to the Administrative Agent
and the Lenders are in full force and effect and there have been no amendments
or other modifications to any of the Related Documents.

5.23         Health Care Matters. 
Without limiting the generality of any other provision contained herein:

(a)           Compliance with Health Care Laws; Permits.  Each Loan Party and each of its Subsidiaries,
and any Person acting on their behalf, is in compliance in all material
respects with all Health Care Laws applicable to it, its products and its
properties or other assets or its business or operation, including its
provision of professional services.  Each
Loan Party and each of its Subsidiaries, and any Person acting on their behalf,
has in effect all Permits, including, without limitation, all Permits necessary
for it to own, lease or operate its properties and other 

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assets and to carry on its business and
operations, including its provision of professional services, as presently
conducted.  All such Permits are in full
force and effect and there has occurred no default under, or violation of, any
such Permit.  Except as set forth on Schedule 5.23,
no action, demand, requirement or investigation by any Governmental Authority
and no suit, action or proceeding by any other person, in each case with
respect to each Loan Party, any of its Subsidiaries, any Person acting on their
behalf, or any of their respective properties, other assets or provision of
professional services under any Laws, is pending or, to the knowledge of each
Loan Party and its Subsidiaries, threatened.

(b)           Filings. 
Except as set forth on Schedule 5.23, all reports,
documents, claims, notices or approvals required to be filed, obtained,
maintained or furnished to any Governmental Authority have been so filed,
obtained, maintained or furnished, and all such reports, documents, claims and
notices were complete and correct in all material respects on the date filed
(or were corrected in or supplemented by a subsequent filing).

(c)           Material Statements.  No Loan Party nor any of its Subsidiaries,
nor any officer, affiliate, employee or agent of any Loan Party or any of its
Subsidiaries, has made an untrue statement of a material fact or fraudulent
statement to any Governmental Authority, failed to disclose a material fact
required to any Governmental Authority, or committed an act, made a statement,
or failed to make a statement that, at the time such disclosure was made, would
reasonably be expected to constitute a violation of any Health Care Law.  No Loan Party nor any of its Subsidiaries,
nor any officer, affiliate, employee or agent of any Loan Party or any of its
Subsidiaries, has made any untrue statement of fact regarding claims incurred
but not reported.

(d)           Billing. 
Each Loan Party, each of its Subsidiaries and each contracting physician
of a Loan Party or Subsidiary (to the extent required) has the requisite
provider number or other Permit to bill the Medicare program (to the extent
such entity participates in the Medicare program), the respective Medicaid
program in the state or states in which such entity operates, and all other
Third Party Payor Programs (as defined below), including but not limited to
Capitated Contracts with managed care organizations, that each Loan Party and
each of its Subsidiaries currently bill. 
There is no investigation, audit, claim review, or other action pending,
or to the knowledge of any Loan Party or its Subsidiaries, threatened which
could result in a revocation, suspension, termination, probation, restriction,
limitation, or non-renewal of any Third Party Payor (as defined below) provider
number or result in any Loan Party’s or any Subsidiaries’ exclusion from any
Third Party Payor Program.  No Loan Party
nor each of its Subsidiaries has billed or received any payment or
reimbursement in excess of amounts allowed by any Health Care Law or other law.  For purposes of this Agreement, a “Third
Party Payor” means Medicare, Medicaid, TRICARE, Blue Cross and/or Blue
Shield, state government insurers, private insurers and any other person or
entity which presently or in the future maintains Third Party Payor Programs.  In addition, for purposes of this Agreement, “Third
Party Payor Programs” means all third party payor programs in which each of
the Loan Parties and each of its Subsidiaries participates (including, without
limitation, Medicare, Medicaid, TRICARE or any other federal or state health
care programs, as well as Blue Cross and/or Blue Shield, managed care plans, or
any other private insurance programs).

(e)           Proceedings. 
There are no facts, circumstances or conditions that would reasonably be
expected to form the basis for any material investigation, suit, claim, audit,
action 

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(legal or regulatory) or proceeding (legal or
regulatory) by a Governmental Authority against or affecting any Loan Party or
any of its Subsidiaries relating to any of the Health Care Laws.

(f)            Prohibited Transactions.  Neither the Loan Parties nor any Subsidiary
nor any Person acting on behalf of the Loan Parties or any Subsidiary is a
party to any contract, lease agreement or other arrangement (including any
joint venture or consulting agreement) with any physician, health care
facility, hospital, nursing facility, home health agency or other person who is
in a position to make or influence referrals to or otherwise generate business
to provide services, lease space, lease equipment or engage in any other
venture or activity, other than agreements which are in compliance with all
applicable Health Care Laws.  Neither the
Loan Parties nor any Subsidiary, nor any person acting on behalf of the Loan
Parties or any Subsidiary, directly or indirectly:  (1) offered or paid any remuneration, in
cash or in kind, to, or made any financial arrangements with, any past, present
or potential patient, supplier, medical staff member, contractor or Third Party
Payor of the Loan Parties and/or any Subsidiary in order to illegally obtain
business or payments from such person; (2) given or agreed to give, or is
aware that there has been made or that there is any illegal agreement to make,
any illegal gift or gratuitous payment of any kind, nature or description
(whether in money, property or services) to any past, present or potential
patient, supplier, contractor, Third Party Payor or any other person; (3) made
or agreed to make, or is aware that there has been made or that there is any
agreement to make, any contribution, payment or gift of funds or property to,
or for the private use of, any governmental official, employee or agent where
either the contribution, payment or gift or the purpose of such contribution,
payment or gift is or was illegal under the laws of any government entity
having jurisdiction over such payment, contribution or gift; (4) established
or maintained any unrecorded fund or asset for any purpose or made any
misleading, false or artificial entries on any of its books or records for any
reason; or (5) made, or agreed to make, or is aware that there has been
made or that there is any agreement to make, any payment to any person with the
intention or understanding that any part of such payment would be used or was
given for any purpose other than that described in the documents supporting
such payment.

(g)           Medicare/Medicaid. 
There are no Medicare or Medicaid termination proceedings underway with
respect to any of the Loan Parties, each entity meets the Medicare conditions
of participation and, to our knowledge after such reasonable investigation
under the circumstances, no employee or independent contractor to any of the
Loan Parties has been excluded in participating in Medicare or Medicaid or any
similar federal programs.

(h)           Compliance. 
Loan Parties possess and implement all necessary policies and procedures
to ensure that all aspects of Loan Parties operations, their employees, and all
healthcare providers under contract with any Loan Party, comply with all
applicable Health Care Laws.

ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, each of  the
Borrowers shall, and shall (except in the case of the covenants set forth in Sections 6.01,
6.02, 6.03 and 6.11) cause each Subsidiary to:

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6.01         Financial Statements. 
Deliver to the Administrative Agent and each Lender, in form and detail
satisfactory to the Administrative Agent and the Required Lenders:

(a)           as soon as available, but in any event within 120 days
after the end of each fiscal year of Holdings (commencing with the fiscal year
ended September 30, 2007), a consolidated balance sheet of Holdings and
its Subsidiaries as at the end of such fiscal year, and the related
consolidated statements of income or operations, shareholders’ equity and cash
flows for such fiscal year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and prepared in
accordance with GAAP, audited and accompanied by a report and opinion of an
independent certified public accountant of nationally recognized standing
reasonably acceptable to the Required Lenders, which report and opinion shall
be prepared in accordance with generally accepted auditing standards and shall
not be subject to any “going concern” or like qualification or exception or any
qualification or exception as to the scope of such audit, and together with any
letters from such accountants to the board of directors or management of
Holdings;

(b)           as soon as available, but in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal year of
Holdings (commencing with the fiscal quarter ended June 30, 2007), a
consolidated balance sheet of Holdings and its Subsidiaries as at the end of
such fiscal quarter, and the related consolidated statements of income or
operations, shareholders’ equity and cash flows for such fiscal quarter and for
the portion of Holdings’ fiscal year then ended, setting forth in each case in
comparative form the figures for the corresponding fiscal quarter of the
previous fiscal year and the corresponding portion of the previous fiscal year,
all in reasonable detail, certified by the chief executive officer, chief
financial officer, treasurer or controller of Holdings as fairly presenting the
financial condition, results of operations, shareholders’ equity and cash flows
of Holdings and its Subsidiaries in accordance with GAAP, subject only to
normal year-end audit adjustments and the absence of footnotes;

(c)           as soon as available, but in any event within 30 days
after the end of each of the first 11 months of each fiscal year of Holdings
(commencing with the fiscal month ended May 31, 2007), a consolidated
balance sheet of Holdings and its Subsidiaries as of the end of such month, and
the related consolidated statements of income or operations, shareholders’
equity and cash flows for such month and for the portion of Holdings’ fiscal
year than ended setting forth in each case in comparative form for the
corresponding month of the previous fiscal year and the corresponding portion
of the previous fiscal year, all in reasonable detail and duly certified by the
chief executive officer, chief financial officer, treasurer or controller of  Holdings; and

(d)           as soon as available, but in any event at least 15 days
before the end of each fiscal year of Holdings, an annual business plan and
budget of Holdings and its Subsidiaries on a consolidated basis, including
forecasts prepared by management of the Borrowers, in form satisfactory to the
Administrative Agent and the Required Lenders, of consolidated balance sheets
and statements of income or operations and cash flows of Holdings and its
Subsidiaries on a monthly  basis
for the immediately following fiscal year.

As to any information contained in materials furnished
pursuant to Section 6.02(d), the Borrowers shall not be separately
required to furnish such information under Section 6.01(a) or 

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(b) above, but the foregoing shall
not be in derogation of the obligation of the Borrowers to furnish the
information and materials described in Sections 6.01(a) and (b)
above at the times specified therein.

6.02         Certificates; Other Information.  Deliver to the Administrative Agent and each
Lender, in form and detail satisfactory to the Administrative Agent and the
Required Lenders:

(a)           concurrently with the delivery of the financial statements
referred to in Section 6.01(a), a certificate of its independent
certified public accountants certifying such financial statements and stating
that during the performance of the financial audit no knowledge was obtained of
any Default under the financial covenants set forth in Section 7.11 or, if
any such Default shall exist, stating the nature and status of such event;

(b)           concurrently with the delivery of the financial statements
referred to in Sections 6.01(c), a duly completed Compliance
Certificate signed by the chief executive officer, chief financial officer,
treasurer or controller of Holdings;

(c)           promptly after any request by the Administrative Agent or
any Lender, copies of any detailed audit reports, management letters or
recommendations submitted to the board of directors (or the audit committee of
the board of directors) of any Loan Party by independent accountants in
connection with the accounts or books of any Loan Party or any of its
Subsidiaries, or any audit of any of them;

(d)           promptly after the same are available, copies of each
annual report, proxy or financial statement or other report or communication
sent to the stockholders of Holdings, and copies of all annual, regular,
periodic and special reports and registration statements which Holdings may
file or be required to file with the SEC under Section 13 or 15(d) of the
Securities Exchange Act of 1934, or with any national securities exchange, and
in any case not otherwise required to be delivered to the Administrative Agent
pursuant hereto;

(e)           promptly after the furnishing thereof, copies of any
statement or report furnished to any holder of debt securities of any Loan
Party or of any of its Subsidiaries pursuant to the terms of any indenture,
loan or credit or similar agreement and not otherwise required to be furnished
to the Lenders pursuant to Section 6.01 or any other clause of this
Section 6.02;

(f)            as soon as available, but in any event within 30 days
after the end of each fiscal year of Holdings, a report summarizing the
insurance coverage (specifying type, amount and carrier) in effect for each
Loan Party and its Subsidiaries and containing such additional information as
the Administrative Agent, or any Lender through the Administrative Agent, may
reasonably specify;

(g)           promptly, and in any event within ten Business Days after
receipt thereof by any Loan Party or any Subsidiary thereof, copies of each
notice or other correspondence received from the SEC (or comparable agency in
any applicable non-U.S. jurisdiction) concerning any investigation or possible
investigation or other inquiry by such agency regarding financial or other
operational results of any Loan Party or any Subsidiary thereof;

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(h)           not later than five Business Days after receipt thereof by
any Loan Party or any Subsidiary thereof, copies of all notices, requests and
other documents alleging that an event of default has occurred (including
amendments, waivers and other modifications) so received under or pursuant to
any Related Document or instrument, indenture, loan or credit or similar
agreement and, from time to time upon request by the Administrative Agent, such
information and reports regarding the Related Documents and such instruments,
indentures and loan and credit and similar agreements as the Administrative
Agent may reasonably request;

(i)            promptly after the assertion or occurrence thereof,
notice of any action or proceeding against or of any noncompliance by any Loan
Party or any of its Subsidiaries with any Environmental Law or Environmental
Permit that could reasonably be expected to have a Material Adverse Effect;

(j)            [Reserved.]

(k)           quarterly, on or prior to the 30th day following the end of each fiscal quarter
of Holdings, a schedule listing all then-existing Capitated Contracts and their
expiration dates, and in addition, promptly, but in any case not later than
3 Business Days after any Loan Party obtains knowledge thereof, the Loan
Parties shall advise the Administrative Agent in writing of the termination or
non-renewal of any Capitated Contract, any adjustment in the per-patient price
or rate of payment under any Capitated Contract or any adjustment, offset or
deduction in respect of Capitated Contract Rights for retroactive additions
and/or deletions of patients covered by Capitated Contracts during any
consecutive 60-day period (the “Affected Capitated Contracts”) the
payments under which Capitated Contract constituted, alone or together with
payments under all other Affected Capitated Contracts, in excess of 10% of the
aggregate payments under all Capitated Contracts during the immediately preceding
twelve month period;

(l)            monthly, on or prior to the 30th day after the end of each calendar month, a
report of IBNR (incurred but not reported) items for such month, which report
shall include, but not be limited to, the claims lag analysis prepared by the
Borrowers for each PMG Loan Party, in form and substance satisfactory to the
Administrative Agent and prepared using the per-member-per-month method,
including all medical expenses;

(m)          promptly upon receipt thereof, copies of actuarial reports
as of March 31 and September 30 of each year;

(n)           as soon as available, but not later than 30 days after
submission thereof to the California Department of Managed Health Care or the
corresponding agency of another State and/or any other applicable or successor
State agency or body, written notice of any application for, or the grant of,
any Healthcare Service Plan License and all reports and/or financial statements
required under any such Loan Party’s Healthcare Service Plan License, if any;

(o)           at the end of each 180-day period commencing with the
first such period ending 180 days after the Closing Date, deliver updates of
each of the schedules of applicable Obligors attached to the master Obligor
Notices referenced in Section 6.20 to the Administrative Agent; and

 72
 

(p)           promptly, such additional information regarding the
business, financial, legal or corporate affairs of any Loan Party or any
Subsidiary thereof, or compliance with the terms of the Loan Documents, as the
Administrative Agent or any Lender may from time to time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a)
or (b) or Section 6.02(d) (to the extent any such documents
are included in materials otherwise filed with the SEC) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on
the date (i) on which the Borrowers post such documents, or provides a
link thereto on the Borrowers’ website on the Internet at the website address
listed on Schedule 11.02; or (ii) on which such documents are
posted on the Borrowers’ behalf on an Internet or intranet website, if any, to
which each Lender and the Administrative Agent have access (whether a
commercial, third-party website or whether sponsored by the Administrative
Agent); provided that:  (i) the
Borrowers shall deliver paper copies of such documents to the Administrative
Agent or any Lender that requests the Borrowers to deliver such paper copies
until a written request to cease delivering paper copies is given by the
Administrative Agent or such Lender and (ii) the Borrowers shall notify
the Administrative Agent and each Lender (by telecopier or electronic mail) of
the posting of any such documents and provide to the Administrative Agent by
electronic mail electronic versions (i.e., soft copies) of such
documents.  Notwithstanding anything
contained herein, in every instance the Borrowers shall be required to provide
paper copies of the Compliance Certificates required by Section 6.02(b)
to the Administrative Agent.  Except for
such Compliance Certificates, the Administrative Agent shall have no obligation
to request the delivery or to maintain copies of the documents referred to
above, and in any event shall have no responsibility to monitor compliance by
the Borrowers with any such request for delivery, and each Lender shall be
solely responsible for requesting delivery to it or maintaining its copies of
such documents.

Each Borrower hereby acknowledges that (a) the
Administrative Agent and/or the Arranger will make available to the Lenders and
the L/C Issuer materials and/or information provided by or on behalf of the
Borrowers hereunder (collectively, “Borrower Materials”) by posting the
Borrower Materials on IntraLinks or another similar electronic system (the “Platform”)
and (b) certain of the Lenders (each, a “Public Lender”) may have
personnel who do not wish to receive material non-public information with
respect to the Borrowers or their Affiliates, or the respective securities of
any of the foregoing, and who may be engaged in investment and other
market-related activities with respect to such Persons’ securities.  The Borrowers hereby agree to identify that portion of all Borrower
Materials that are to be made available to Public Lenders.  All such Borrower Materials shall be
clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that
the word “PUBLIC” shall appear prominently on the first page thereof; (x) by
marking Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have
authorized the Administrative Agent, the Arranger, the L/C Issuer and the
Lenders to treat such Borrower Materials as not containing any material
non-public information (although it may be sensitive and proprietary) with
respect to any Borrower or its securities for purposes of United States Federal
and state securities laws (provided, however, that to the extent
such Borrower Materials constitute Information, they shall be treated as set
forth in Section 10.07); (y) all Borrower Materials marked “PUBLIC”
are permitted to be made available through a portion of the Platform designated
“Public Investor;” and (z) the Administrative Agent and the Arranger shall be
entitled to treat any Borrower Materials that are 

 73
 

not marked “PUBLIC” as being suitable only for posting
on a portion of the Platform not designated “Public Investor.”  Notwithstanding the foregoing, the Borrowers shall be under no
obligation to mark any Borrower Materials “PUBLIC.”

6.03         Notices. 
Promptly notify the Administrative Agent and each Lender:

(a)           of the occurrence of any Default;

(b)           of any matter that has resulted or could reasonably be
expected to result in a Material Adverse Effect, including (i) breach or
non-performance of, or any default under, a Contractual Obligation of any
Borrower or any Subsidiary; (ii) any dispute, litigation, investigation,
proceeding or suspension between any Borrower or any Subsidiary and any Governmental
Authority; or (iii) the commencement of, or any material development in,
any litigation or proceeding affecting any Borrower or any Subsidiary,
including pursuant to any applicable Environmental Laws;

(c)           of the occurrence of any ERISA Event;

(d)           of any material change in accounting policies or financial
reporting practices by any Loan Party or any Subsidiary thereof, including any
determination by any Borrower referred to in Section 2.10(b);

(e)           of the (i) occurrence of any Disposition of property or
assets for which the Borrowers are required to make a mandatory prepayment
pursuant to Section 2.05(b)(ii), (ii) occurrence of any sale of
capital stock or other Equity Interests for which the Borrowers are required to
make a mandatory prepayment pursuant to Section 2.05(b)(iii), (iii)
incurrence or issuance of any Indebtedness for which the Borrowers are required
to make a mandatory prepayment pursuant to Section 2.05(b)(iv), and
(iv) receipt of any Extraordinary Receipt for which the Borrowers are required
to make a mandatory prepayment pursuant to Section 2.05(b)(v);

(f)            of any investigation or audit, or pending or threatened
proceedings relating to any violation by any Loan Party, any Subsidiary, or any
health care facility to which a Loan Party or any Subsidiary provides services,
of any Health Care Laws (including, without limitation, any investigation or
audit or proceeding involving violation of any of the Medicare and/or Medicaid
fraud and abuse provisions);

(g)           of, and provide copies of any written recommendation from,
any Governmental Authority or other regulatory body that any Loan Party, any
Subsidiary, or any Obligor to which any Loan Party or any Subsidiary provides
services should have its licensure, provider or supplier number, or
accreditation suspended, revoked, or limited in any way, or have its
eligibility to participate in TRICARE, Medicare or Medicaid or to accept
assignments or rights to reimbursement under TRICARE, Medicaid or Medicare
regulations suspended, revoked, or limited in any way;

(h)           of any claim to recover any alleged material overpayments
with respect to any Accounts including, without limitation, payments received
from TRICARE, Medicare, Medicaid or from any private insurance carrier;

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(i)            of termination of eligibility of any Loan Party, any
Subsidiary of any Loan Party, or any health care facility to which any Loan
Party provides services to participate in any reimbursement program of any
private insurance carrier, managed care or similar organization, or other
Obligor applicable to it;

(j)            of any material reduction in the level of reimbursement
expected to be received with respect to any Accounts;

(k)           of any reimbursement payment contract or process that
results or is reasonably expected to result in any claim against a Loan Party
or any Subsidiary of such Loan Party (including on account of overpayments,
settlement payments, appeals, repayment plan requests);

(l)            of, and provide copies of any report or communication
from, any Governmental Authority in connection with any inspection of any
facility of a Loan Party or any Subsidiary of such Loan Party;

(m)          of any healthcare provider’s fees being contested or
disputed; and

(n)           of any litigation, investigation or proceeding that
includes a claim for damages, penalties or other amounts to be paid that
exceeds the amount covered by insurance by the Threshold Amount.

Each notice pursuant to Section 6.03
(other than Section 6.03(e)) shall be accompanied by a statement of
a Responsible Officer of the Borrowers setting forth details of the occurrence
referred to therein and stating what action the Borrowers have taken and
proposes to take with respect thereto. 
Each notice pursuant to Section 6.03(a) shall describe with
particularity any and all provisions of this Agreement and any other Loan
Document that have been breached.

6.04         Payment of Obligations.  Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all
tax liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in
accordance with GAAP are being maintained by the Borrowers or such Subsidiary;
(b) ll lawful claims which, if unpaid, would by law become a Lien upon its property, unless
the same are being contested in good faith by appropriate proceedings diligently
conducted and with adequate reserves in accordance with GAAP; and
(c) ll Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.

6.05         Preservation of Existence, Etc.  (a) Preserve, renew and maintain in full
force and effect its legal existence and good standing under the Laws of the
jurisdiction of its organization except in a transaction permitted by Section 7.04
or 7.05; provided, however, that the Borrowers and their
Subsidiaries may consummate the Merger and any other merger or consolidation
permitted under Section 7.04; (b) take all reasonable action
to maintain all rights, privileges, permits, licenses and franchises necessary
or desirable in the normal conduct of its business, except to the extent that
failure to do so could not reasonably be expected to have a Material 

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Adverse Effect; and (c) preserve or
renew all of its registered patents, trademarks, trade names and service marks,
the non-preservation of which could reasonably be expected to have a Material
Adverse Effect.

6.06         Maintenance of Properties.  (a) Maintain, preserve and protect all
of its material properties and equipment necessary in the operation of its
business in good working order and condition, ordinary wear and tear excepted;
(b) make all necessary repairs thereto and renewals and replacements
thereof except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect; and (c) use the standard of care typical
in the industry in the operation and maintenance of its facilities.

6.07         Maintenance of Insurance.  Maintain with financially sound and reputable
insurance companies not Affiliates of the Borrowers, insurance with respect to
its properties and business against loss or damage of the kinds customarily
insured against by Persons engaged in the same or similar business, of such
types and in such amounts as are customarily carried under similar
circumstances by such other Persons and providing for not less than 30 days’
prior notice to the Administrative Agent of termination, lapse or cancellation
of such insurance.

6.08         Compliance with Laws. 
(a) Comply in all material respects with the requirements of all
Laws and all orders, writs, injunctions and decrees applicable to it or to its
business or property, except in such instances in which (i) such
requirement of Law or order, writ, injunction or decree is being contested in
good faith by appropriate proceedings diligently conducted; or (ii) the
failure to comply therewith could not reasonably be expected to have a Material
Adverse Effect and (b) regularly review and revise the policies and
procedures of the Loan Parties to ensure continuing compliance by all Loan
Parties, their employees and all healthcare providers under contract with any
Loan Party with all applicable Health Care Laws and maintain appropriate
programs and procedures for communicating such policies and procedures to all
employees of any Loan Party and healthcare providers under contract with any
Loan Party and for making sure that all employees of any Loan Party are able to
report violations of any Health Care Laws and have such reports adequately
addressed and corrected as soon as practicable.

6.09         Books and Records. 
(a) Maintain proper books of record and account, in which full,
true and correct entries in conformity with GAAP consistently applied shall be
made of all financial transactions and matters involving the assets and
business of such Borrower or such Subsidiary, as the case may be; and (b) maintain
such books of record and account in material conformity with all applicable
requirements of any Governmental Authority having regulatory jurisdiction over
such Borrower or such Subsidiary, as the case may be.

6.10         Inspection Rights. 
Permit representatives and independent contractors of the Administrative
Agent and each Lender to visit and inspect any of its properties, to examine
its corporate, financial and operating records, and make copies thereof or
abstracts therefrom, and to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants, all at the expense of
the Borrowers and at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Borrowers; provided, however, that when an Event of Default
exists the Administrative Agent or any Lender (or any of their respective
representatives or independent contractors) may do any of 

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the foregoing at the expense of the Borrowers
at any time during normal business hours and without advance notice.

6.11         Use of Proceeds. 
Use the proceeds of (a) the initial Credit Extension (i) to
finance, in part, the ProMed Acquisition, (ii) to refinance the Existing
Credit Agreement, and to (iii) pay expenses incurred in connection with
the foregoing and the Transaction, and (b) the other Credit Extensions for
meeting financial solvency requirements under the DMHC regulations.

6.12         Covenant to Guarantee Obligations and Give Security.  (a) Upon the formation or acquisition of
any new direct or indirect Subsidiary by any Loan Party (other than that
Subsidiary set forth on Schedule 6.12 which Subsidiary may be formed but
may not conduct business without meeting the requirements of this Section 6.12),
then the Borrowers shall, at the Borrowers’ expense:

(i)            within
10 days after such formation or acquisition, cause such Subsidiary, and
cause each direct and indirect parent of such Subsidiary (if it has not already
done so), to duly execute and deliver to the Administrative Agent a guaranty or
guaranty supplement, in form and substance satisfactory to the Administrative
Agent, guaranteeing the other Loan Parties’ obligations under the Loan
Documents,

(ii)           within
10 days after such formation or acquisition, furnish to the Administrative
Agent a description of the real and personal properties of such Subsidiary, in
detail satisfactory to the Administrative Agent,

(iii)          within
15 days after such formation or acquisition, cause such Subsidiary and
each direct and indirect parent of such Subsidiary (if it has not already done
so) to duly execute and deliver to the Administrative Agent deeds of trust,
trust deeds, deeds to secure debt, mortgages, leasehold mortgages, leasehold
deeds of trust and other security and pledge agreements, as specified by and in
form and substance satisfactory to the Administrative Agent (including delivery
of all Pledged Interests in and of such Subsidiary, and other instruments of
the type specified in Section 4.01(a)(iii)), securing payment of
all the Obligations of such Subsidiary or such parent, as the case may be,
under the Loan Documents and constituting Liens on all such real and personal
properties,

(iv)          within
30 days after such formation or acquisition, cause such Subsidiary and
each direct and indirect parent of such Subsidiary (if it has not already done
so) to take whatever action (including the recording of mortgages, the filing
of Uniform Commercial Code financing statements, the giving of notices and the
endorsement of notices on title documents) may be necessary or advisable in the
opinion of the Administrative Agent to vest in the Administrative Agent (or in
any representative of the Administrative Agent designated by it) valid and
subsisting Liens on the properties purported to be subject to the deeds of
trust, trust deeds, deeds to secure debt, mortgages, leasehold mortgages,
leasehold deeds of trust and security and pledge agreements delivered pursuant
to this Section 6.12, enforceable against all third parties in
accordance with their terms,

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(v)           within
60 days after such formation or acquisition, deliver to the Administrative
Agent, upon the request of the Administrative Agent in its sole discretion, a
signed copy of a favorable opinion, addressed to the Administrative Agent and
the other Secured Parties, of counsel for the Loan Parties acceptable to the
Administrative Agent as to the matters contained in clauses (i), (iii) and
(iv) above, and as to such other matters as the Administrative Agent may reasonably
request, and

(vi)          as
promptly as practicable after such formation or acquisition, deliver, upon the
request of the Administrative Agent in its sole discretion, to the
Administrative Agent with respect to each parcel of real property owned or held
by the entity that is the subject of such formation or acquisition title
reports, surveys and engineering, soils and other reports, and environmental
assessment reports, each in scope, form and substance satisfactory to the
Administrative Agent, provided, however,
that to the extent that any Loan Party or any of its Subsidiaries shall have
otherwise received any of the foregoing items with respect to such real
property, such items shall, promptly after the receipt thereof, be delivered to
the Administrative Agent.

(b)           Upon the acquisition of any property by any Loan Party, if
such property, in the judgment of the Administrative Agent, shall not already
be subject to a perfected first priority security interest in favor of the
Administrative Agent for the benefit of the Secured Parties, then the Borrowers
shall, at the Borrowers’ expense:

(i)            within
10 days after such acquisition, furnish to the Administrative Agent a
description of the property so acquired in detail satisfactory to the
Administrative Agent,

(ii)           within 15
days after such acquisition, cause the applicable Loan Party to duly execute
and deliver to the Administrative Agent deeds of trust, trust deeds, deeds to
secure debt, mortgages, leasehold mortgages, leasehold deeds of trust and other
security and pledge agreements, as specified by and in form and substance
satisfactory to the Administrative Agent, securing payment of all the
Obligations of the applicable Loan Party under the Loan Documents and
constituting Liens on all such properties,

(iii)          within
30 days after such acquisition, cause the applicable Loan Party to take
whatever action (including the recording of mortgages, the filing of Uniform
Commercial Code financing statements, the giving of notices and the endorsement
of notices on title documents) may be necessary or advisable in the opinion of
the Administrative Agent to vest in the Administrative Agent (or in any
representative of the Administrative Agent designated by it) valid and
subsisting Liens on such property, enforceable against all third parties,

(iv)          within
60 days after such acquisition, deliver to the Administrative Agent, upon
the request of the Administrative Agent in its sole discretion, a signed copy
of a favorable opinion, addressed to the Administrative Agent and the other
Secured Parties, of counsel for the Loan Parties acceptable to the
Administrative Agent as to the matters contained in clauses (ii) and (iii)
above and as to such other matters as the Administrative Agent may reasonably
request, and

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(v)           as
promptly as practicable after any acquisition of a real property, deliver, upon
the request of the Administrative Agent in its sole discretion, to the
Administrative Agent with respect to such real property title reports, surveys
and engineering, soils and other reports, and environmental assessment reports,
each in scope, form and substance satisfactory to the Administrative Agent, provided,
however, that to the extent that any Loan Party or any of its
Subsidiaries shall have otherwise received any of the foregoing items with
respect to such real property, such items shall, promptly after the receipt
thereof, be delivered to the Administrative Agent,

(c)           Upon the request of the Administrative Agent following the
occurrence and during the continuance of a Default, the Borrowers shall, at the
Borrowers’ expense:

(i)            within
10 days after such request, furnish to the Administrative Agent a
description of the real and personal properties of the Loan Parties and their
respective Subsidiaries in detail satisfactory to the Administrative Agent,

(ii)           within
15 days after such request, duly execute and deliver, and cause each Loan
Party (if it has not already done so) to duly execute and deliver, to the
Administrative Agent deeds of trust, trust deeds, deeds to secure debt, mortgages,
leasehold mortgages, leasehold deeds of trust and other security and pledge
agreements, as specified by and in form and substance satisfactory to the
Administrative Agent (including delivery of all Pledged Equity in such
Subsidiary, and other instruments of the type specified in Section 4.01(a)(iii)),
securing payment of all the Obligations of the applicable Loan Party under the
Loan Documents and constituting Liens on all such properties,

(iii)          within
30 days after such request, take, and cause each Loan Party  to take, whatever action (including the
recording of mortgages, the filing of Uniform Commercial Code financing
statements, the giving of notices and the endorsement of notices on title
documents) may be necessary or advisable in the opinion of the Administrative
Agent to vest in the Administrative Agent (or in any representative of the
Administrative Agent designated by it) valid and subsisting Liens on the
properties purported to be subject to the deeds of trust, trust deeds, deeds to
secure debt, mortgages, leasehold mortgages, leasehold deeds of trust and
security and pledge agreements delivered pursuant to this Section 6.12,
enforceable against all third parties in accordance with their terms,

(iv)          within
60 days after such request, deliver to the Administrative Agent, upon the
request of the Administrative Agent in its sole discretion, a signed copy of a
favorable opinion, addressed to the Administrative Agent and the other Secured
Parties, of counsel for the Loan Parties acceptable to the Administrative Agent
as to the matters contained in clauses (ii) and (iii) above, and as to
such other matters as the Administrative Agent may reasonably request, and

(v)           as
promptly as practicable after such request, deliver, upon the request of the
Administrative Agent in its sole discretion, to the Administrative Agent with
respect to each parcel of real property owned or held by any Borrower and its 

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Subsidiaries, title reports, surveys and engineering, soils and other
reports, and environmental assessment reports, each in scope, form and
substance satisfactory to the Administrative Agent, provided, however, that to the extent that any Loan Party or any of its
Subsidiaries shall have otherwise received any of the foregoing items with
respect to such real property, such items shall, promptly after the receipt
thereof, be delivered to the Administrative Agent.

(d)           At any time upon request of the Administrative Agent,
promptly execute and deliver any and all further instruments and documents and
take all such other action as the Administrative Agent may deem necessary or
desirable in obtaining the full benefits of, or (as applicable) in perfecting
and preserving the Liens of, such guaranties, deeds of trust, trust deeds,
deeds to secure debt, mortgages, leasehold mortgages, leasehold deeds of trust
and other security and pledge agreements.

6.13         Compliance with Environmental Laws.  Use and operate all of its facilities and properties in material
compliance with all applicable Environmental Laws, keep all material permits,
approvals, certificates, licenses and other authorizations required pursuant to
applicable Environmental Laws in effect and remain in material compliance
therewith, and handle all Hazardous Materials in material compliance with all
applicable Environmental Laws; promptly notify the Administrative Agent and
provide copies upon receipt of all written claims, complaints, notices or
inquiries relating to the condition of its facilities and properties under, or
compliance of its facilities and properties with, applicable Environmental
Laws, and shall promptly commence and diligently proceed to cure, to the
reasonable satisfaction of the Administrative Agent any actions and proceedings
relating to violations of compliance with applicable Environmental Laws; and
provide such information and certifications which the Administrative Agent
may reasonably request from time to time to evidence compliance with this Section 6.13..

6.14         [Reserved.]

6.15         Further Assurances. 
Promptly upon request by the Administrative Agent, or any Lender through
the Administrative Agent, (a) correct any material defect or error that
may be discovered in any Loan Document or in the execution, acknowledgment,
filing or recordation thereof, and (b) do, execute, acknowledge, deliver,
record, re-record, file, re-file, register and re-register any and all such
further acts, deeds, certificates, assurances and other instruments as the
Administrative Agent, or any Lender through the Administrative Agent, may
reasonably require from time to time in order to (i) carry out more
effectively the purposes of the Loan Documents, (ii) to the fullest extent
permitted by applicable law, subject any Loan Party’s or any of its
Subsidiaries’ properties, assets, rights or interests to the Liens now or hereafter
intended to be covered by any of the Collateral Documents, (iii) perfect
and maintain the validity, effectiveness and priority of any of the Collateral
Documents and any of the Liens intended to be created thereunder and (iv) assure,
convey, grant, assign, transfer, preserve, protect and confirm more effectively
unto the Secured Parties the rights granted or now or hereafter intended to be
granted to the Secured Parties under any Loan Document or under any other
instrument executed in connection with any Loan Document to which any Loan
Party or any of its Subsidiaries is or is to be a party, and cause each of its
Subsidiaries to do so.

 

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6.16         Compliance with Terms of Leaseholds.  Make all payments and otherwise perform all
obligations in respect of all leases of real property to which any Borrower or
any of its Subsidiaries is a party, keep such leases in full force and effect
and not allow such leases to lapse or be terminated or any rights to renew such
leases to be forfeited or cancelled, notify the Administrative Agent of any
default by any party with respect to such leases and cooperate with the
Administrative Agent in all respects to cure any such default, and cause each
of its Subsidiaries to do so, except, in any case, where the failure to do so,
either individually or in the aggregate, could not be reasonably likely to have
a Material Adverse Effect.

6.17         Interest Rate Hedging.  Enter into prior to June 15, 2007, and
maintain at all times thereafter, interest rate Swap Contracts with Persons
acceptable to the Administrative Agent and having Debt Ratings from S&P of
not less than AA, covering a notional amount of not less than 75% of the aggregate outstanding Term
Facility and providing for such Persons to make payments thereunder for
a period of no less than three years
and otherwise on terms acceptable to the Administrative Agent.

6.18         Material Contracts. 
Perform and observe all the terms and provisions of each Material
Contract to be performed or observed by it, maintain each such Material
Contract in full force and effect, enforce each such Material Contract in
accordance with its terms, take all such action to such end as may be from time
to time requested by the Administrative Agent and, upon request of the
Administrative Agent, make to each other party to each such Material Contract
such demands and requests for information and reports or for action as any Loan
Party or any of its Subsidiaries is entitled to make under such Material
Contract, and cause each of its Subsidiaries to do so.

6.19         Notices to Obligors; Delivery of Collections and RA/EOBs.  Within ninety (90) days after the
Closing Date, the Loan Parties shall deliver Obligor Notices to all of their
Obligors obligated under the Accounts consisting of Capitated Contract Rights,
which Obligor Notice shall direct each such Obligor to make payments of
Collections directly to an applicable Lockbox (or in the case of payments by
wire transfer, the applicable Lockbox Account), and the Loan Parties shall
deliver or cause to be delivered to the Administrative Agent on the Closing
Date the duplicate original of each such Obligor Notice and evidence
satisfactory to the Administrative Agent that the delivery of such Obligor
Notices to the Obligors has been accomplished. 
In addition, within ten (10) days after the Closing Date, the Loan
Parties shall deliver to the Administrative Agent a master Obligor Notice, in
form and substance satisfactory to the Administrative Agent, in respect of all
of their Obligors obligated under Fee-For-Services Accounts which are
governmental Accounts and a master Obligor Notice, in form and substance
satisfactory to the Administrative Agent, in respect of all their Obligors
obligated under Fee-For-Services Accounts which are not governmental Accounts,
a copy of which Obligor Notice specifying the applicable Obligor’s information
the Administrative Agent may deliver to the applicable Obligors on or after the
occurrence of an Event of Default, and each which master Obligor Notice, among
other things, shall direct such Obligor to make payments of Collections
directly to an applicable Lockbox (or in the case of payments by wire transfer,
the applicable Lockbox Account), and mail all RA/EOBs directly to the
applicable Lockbox, and each of which master Obligor Notice shall attach a
schedule listing all of the applicable Obligors as of a date reasonably
proximate to the Closing Date, which schedules shall be updated pursuant to and
in accordance with Section 6.02(o). 
No such direction given by the Loan Parties to any Obligor 

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shall be changed, modified or superseded
without the express prior written consent of the Administrative Agent.  The Loan Parties shall cause all billing and
claim forms sent to Obligors (and return envelopes, if any, furnished by the
Loan Parties) to set forth only the applicable Lockbox as the address for
payment of Accounts and, in the case of Fee-For-Services Accounts, delivery of
the related RA/EOBs, and only the applicable Lockbox Account as the bank
account for receipt of wire transfers for payment of Accounts; provided that
unless an Event of Default has occurred and is continuing and the
Administrative Agent has instructed the Loan Parties to do so, the Loan Parties
are not required to direct Obligors of Fee-For-Services Accounts to remit
payments and RA/EOBs only to a Lockbox or Lockbox Account.  If a payment on an Account is made by an
Obligor other than to the appropriate Lockbox or Lockbox Account, the Loan
Parties shall (x) remit such payment to the Lockbox Account on the same
day of the receipt thereof, if possible, but in any event no later than the
Business Day immediately following the day of receipt thereof, and (y) promptly
take all necessary actions to effect the collection of such proceeds from the
Person having possession thereof, if other than a Loan Party.  The Loan Parties shall cooperate with the
Administrative Agent in the identification of items received in the Lockboxes
and amounts deposited in the Lockbox Accounts and reconciliation thereof.

ARTICLE VII

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment
hereunder, any Loan or other Obligation hereunder shall remain unpaid or
unsatisfied, or any Letter of Credit shall remain outstanding, neither Borrower
shall, nor shall it permit any Subsidiary to, directly or indirectly:

7.01         Liens.  Create,
incur, assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, or sign or file or suffer to
exist under the Uniform Commercial Code of any jurisdiction a financing
statement that names any Borrower or any of its Subsidiaries as debtor, or
assign any accounts or other right to receive income, other than the following:

(a)           Liens pursuant to any Loan Document;

(b)           Liens existing on the date hereof and listed on Schedule 5.08(b)
and any renewals or extensions thereof, provided that (i) the
property covered thereby is not changed, (ii) the amount secured or benefited
thereby is not increased except as contemplated by Section 7.02(g),
(iii) the direct or any contingent obligor with respect thereto is not
changed, and (iv) any renewal or extension of the obligations secured or
benefited thereby is permitted by Section 7.02(g);

(c)           Liens for taxes not yet due or which are being contested
in good faith and by appropriate proceedings diligently conducted, if adequate
reserves with respect thereto are maintained on the books of the applicable
Person in accordance with GAAP;

(d)           carriers’, warehousemen’s, mechanics’, materialmen’s,
repairmen’s or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 30 days or which are being
contested in good faith and by appropriate proceedings 

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diligently conducted, if adequate reserves
with respect thereto are maintained on the books of the applicable Person;

(e)           pledges or deposits in the ordinary course of business in
connection with workers’ compensation, unemployment insurance and other social
security legislation, other than any Lien imposed by ERISA;

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

(g)           easements, rights-of-way, restrictions and other similar
encumbrances affecting real property which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or materially interfere with the ordinary
conduct of the business of the applicable Person;

(h)           Liens securing judgments for the payment of money not
constituting an Event of Default under Section 8.01(h);

(i)            Liens securing Indebtedness permitted under Section 7.02(e);
provided that (i) such Liens do not at any time encumber any
property other than the property financed by such Indebtedness and (ii) the
Indebtedness secured thereby does not exceed the cost or fair market value,
whichever is lower, of the property being acquired on the date of acquisition;

(j)            other Liens securing Indebtedness permitted under Section 7.02
outstanding in an aggregate principal amount not to exceed $1,000,000, provided
that no such Lien shall extend to or cover any Collateral; and

(k)           Liens in favor of any lender to Brotman Medical Center on
the shares held by Prospect Hospital Advisory Services in Brotman Medical
Center.

7.02         Indebtedness. 
Create, incur, assume or suffer to exist any Indebtedness, except:

(a)           Indebtedness of a Guarantor owed to a Borrower or another
Guarantor, or owed by a Borrower to a Guarantor or the other Borrower, which
Indebtedness shall be on terms (including subordination terms) acceptable to
the Administrative Agent;

(b)           Indebtedness under the Loan Documents;

(c)           Indebtedness outstanding on the date hereof and listed on Schedule 7.02
and any refinancings, refundings, renewals or extensions thereof; provided
that the amount of such Indebtedness is not increased at the time of such
refinancing, refunding, renewal or extension except by an amount equal to a
reasonable premium or other reasonable amount paid, and fees and expenses
reasonably incurred, in connection with such refinancing and by an amount equal
to any existing commitments unutilized thereunder and the direct or any
contingent obligor with respect thereto is not changed, as a result of or in
connection with such refinancing, refunding, renewal or extension; and provided,
still  further, that the terms relating to principal amount,
amortization, maturity, collateral (if any) and subordination (if any), and
other material 

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terms taken as a whole, of any such
refinancing, refunding, renewing or extending Indebtedness, and of any agreement
entered into and of any instrument issued in connection therewith, are no less
favorable in any material respect to the Loan Parties or the Lenders than the
terms of any agreement or instrument governing the Indebtedness being
refinanced, refunded, renewed or extended and the interest rate applicable to
any such refinancing, refunding, renewing or extending Indebtedness does not
exceed the then applicable market interest rate;

(d)           Guarantees of any Borrower or any Subsidiary  in respect of Indebtedness otherwise
permitted hereunder of any Borrower or any wholly-owned Subsidiary;

(e)           Indebtedness in respect of Capitalized Leases, Synthetic
Lease Obligations and purchase money obligations for fixed or capital assets
within the limitations set forth in Section 7.01(i); provided,
however, that the aggregate amount of all such Indebtedness at any one
time outstanding shall not exceed $1,000,000;

(f)            Indebtedness of any Person that becomes a Subsidiary of a
Borrower after the date hereof in accordance with the terms of Section 7.03(h),
which Indebtedness is existing at the time such Person becomes a Subsidiary of
such Borrower (other than Indebtedness incurred solely in contemplation of such
Person’s becoming a Subsidiary of such Borrower); and

(g)           Letters of Credit required under any Capitated Contract in
favor of a HMO and any renewals thereof required by such HMO under the terms of
the Capitated Contract.

7.03         Investments. 
Make or hold any Investments, except:

(a)           Investments held by the Borrowers and their Subsidiaries
in the form of Cash Equivalents;

(b)           (i) Investments by the Borrowers and their Subsidiaries in
their respective Subsidiaries outstanding on the date hereof, (ii) additional
Investments by the Borrowers and their Subsidiaries in Loan Parties (other than
Holdings) and (iii) additional Investments by Subsidiaries of the Borrowers
that are not Loan Parties in other Subsidiaries that are not Loan Parties;

(c)           Investments consisting of extensions of credit in the
nature of accounts receivable or notes receivable arising from the grant of
trade credit in the ordinary course of business, and Investments received in
satisfaction or partial satisfaction thereof from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit loss;

(d)           Guarantees permitted by Section 7.02;

(e)           Investments existing on the date hereof (other than those
referred to in Section 7.03(c)(i)) and set forth on Schedule 5.08(e);

(f)            the purchase or other acquisition of all of the Equity Interests
in, or all or substantially all of the property of, any Person that, upon the
consummation thereof, will be wholly-owned directly by a Borrower or one or
more of its wholly-owned Subsidiaries 

 84
 

(including as a result of a merger or
consolidation); provided that, with respect to each purchase or other
acquisition made pursuant to this Section 7.03(f):

(i)            the
prior written consent of the Required Lenders shall have been delivered;

(ii)           any
such newly-created or acquired Subsidiary shall comply with the requirements of
Section 6.12;

(iii)          the
lines of business of the Person to be (or the property of which is to be) so
purchased or otherwise acquired shall be substantially the same lines of
business as one or more of the principal businesses of the Borrowers and their
Subsidiaries in the ordinary course;

(iv)          such
purchase or other acquisition shall not include or result in any contingent
liabilities that could reasonably be expected to be material to the business,
financial condition, operations or prospects of the Borrowers and their
Subsidiaries, taken as a whole (as determined in good faith by the board of
directors (or the persons performing similar functions) of such Borrower or
such Subsidiary if the board of directors is otherwise approving such transaction
and, in each other case, by a Responsible Officer);

(v)           (A) immediately
before and immediately after giving pro forma effect to any such purchase or
other acquisition, no Default shall have occurred and be continuing and
(B) immediately after giving effect to such purchase or other acquisition,
Holdings and its Subsidiaries shall be in pro forma compliance with all of the
covenants set forth in Section 7.11, such compliance to be
determined on the basis of the financial information most recently delivered to
the Administrative Agent and the Lenders pursuant to Section 6.01(a)
or (b) as though such purchase or other acquisition had been consummated
as of the first day of the fiscal period covered thereby; and

(vi)          the
Borrowers shall have delivered to the Administrative Agent and each Lender, at
least five Business Days prior to the date on which any such purchase or other
acquisition is to be consummated, a certificate of a Responsible Officer, in
form and substance reasonably satisfactory to the Administrative Agent and the
Required Lenders, certifying that all of the requirements set forth in this
clause (vi) have been satisfied or will be satisfied on or prior to the
consummation of such purchase or other acquisition;

(g)           Investments by the Borrowers and their Subsidiaries not
otherwise permitted under this Section 7.03 in an aggregate amount
not to exceed $1,000,000; provided that, with respect to each Investment
made pursuant to this Section 7.03(g):

(i)            such
Investment shall not include or result in any contingent liabilities that could
reasonably be expected to be material to the business, financial condition,
operations or prospects of the Borrowers and their Subsidiaries, taken as a
whole (as determined in good faith by the board of directors (or persons
performing 

 85
 

similar functions) of such Borrower or such
Subsidiary if the board of directors is otherwise approving such transaction
and, in each other case, by a Responsible Officer);

(ii)           such
Investment shall be in property that is part of, or in lines of business that
are, substantially the same lines of business as one or more of the principal
businesses of the Borrowers and their Subsidiaries in the ordinary course;

(iii)          any
determination of the amount of such Investment shall include all cash and
noncash consideration (including the fair market value of all Equity Interests
issued or transferred to the sellers thereof, all indemnities, earnouts and
other contingent payment obligations to, and the aggregate amounts paid or to
be paid under noncompete, consulting and other affiliated agreements with, the
sellers thereof, all write-downs of property and reserves for liabilities with
respect thereto and all assumptions of debt, liabilities and other obligations
in connection therewith) paid by or on behalf of Holdings and its Subsidiaries
in connection with such Investment; and

(iv)          (A) immediately
before and immediately after giving pro forma effect to any such purchase or
other acquisition, no Default shall have occurred and be continuing and
(B) immediately after giving effect to such purchase or other acquisition,
Holdings and its Subsidiaries shall be in pro forma compliance with all of the
covenants set forth in Section 7.11, such compliance to be
determined on the basis of the financial information most recently delivered to
the Administrative Agent and the Lenders pursuant to Section 6.01(a)
or (b) as though such Investment had been consummated as of the first
day of the fiscal period covered thereby; and

(h)           other Investments not exceeding $1,000,000 in the
aggregate in any fiscal year of Holdings.

7.04         Fundamental Changes. 
Merge, dissolve, liquidate, consolidate with or into another Person, or
Dispose of (whether in one transaction or in a series of transactions) all or
substantially all of its assets (whether now owned or hereafter acquired) to or
in favor of any Person, except that, so long as no Default exists or would
result therefrom:

(a)           any Subsidiary may merge with (i) a Borrower, provided
that such Borrower shall be the continuing or surviving Person, or (ii) any
one or more other Subsidiaries, provided that when any Loan Party is
merging with another Subsidiary, such Loan Party shall be the continuing or
surviving Person;

(b)           any Loan Party may Dispose of all or substantially all of
its assets (upon voluntary liquidation or otherwise) to a Borrower or to
another Loan Party (other than Holdings);

(c)           any Subsidiary that is not a Loan Party may dispose of all
or substantially all its assets (including any Disposition that is in the
nature of a liquidation) to (i) another Subsidiary that is not a Loan
Party or (ii) to a Loan Party;

(d)           the Borrowers and their Subsidiaries may consummate the
transactions contemplated by the ProMed Acquisition Agreements;

 86
 

(e)           in connection with any acquisition permitted under Section 7.03,
any Subsidiary of any Borrower may merge into or consolidate with any other
Person or permit any other Person to merge into or consolidate with it; provided
that (i) the Person surviving such merger shall be a wholly-owned
Subsidiary of a Borrower and (ii) in the case of any such merger to which
any Loan Party (other than a Borrower) is a party, such Loan Party is the
surviving Person; and

(f)            so long as no Default has occurred and is continuing or
would result therefrom, any Subsidiary of the Borrowers  may merge into or consolidate with any
other Person or permit any other Person to merge into or consolidate with it; provided,
however, that in each case, immediately after giving effect thereto (i) in
the case of any such merger to which a Borrower is a party, such Borrower is
the surviving corporation and (ii) in the case of any such merger to which
any Loan Party (other than the Borrowers) is a party, such Loan Party is the
surviving corporation.

7.05         Dispositions.  Make any Disposition or enter into any
agreement to make any Disposition, except:

(a)           Dispositions of obsolete, surplus or worn out property,
whether now owned or hereafter acquired, in the ordinary course of business;

(b)           Dispositions of inventory in the ordinary course of
business;

(c)           Dispositions of equipment or real property to the extent
that (i) such property is exchanged for credit against the purchase price
of similar replacement property or (ii) the proceeds of such Disposition
are reasonably promptly applied to the purchase price of such replacement
property;

(d)           Dispositions of property by any Subsidiary to a Borrower
or to a wholly-owned Subsidiary; provided that if the transferor of such
property is a Guarantor, the transferee thereof must either be a Borrower or a
Guarantor; and

(e)           Dispositions permitted by Section 7.04;

provided, however, that any
Disposition pursuant to Section 7.05(a) through Section 7.05(e)
shall be for fair market value.

7.06         Restricted Payments. 
Declare or make, directly or indirectly, any Restricted Payment, or
incur any obligation (contingent or otherwise) to do so, or issue or sell any
Equity Interests or accept any capital contributions, except that, so long as
no Default shall have occurred and be continuing at the time of any action
described below or would result therefrom:

(a)           each Subsidiary may make Restricted Payments to a
Borrower, any Subsidiaries of any Borrower that are Guarantors and any other
Person that owns a direct Equity Interest in such Subsidiary, ratably according
to their respective holdings of the type of Equity Interest in respect of which
such Restricted Payment is being made;

 87
 

(b)           each Borrower and each Subsidiary may declare and make
dividend payments or other distributions payable solely in the common stock or
other common Equity Interests of such Person;

(c)           Group may make payments to Holdings in an amount not to
exceed an amount necessary to permit Holdings to pay (i) reasonable and
customary corporate and operating expenses (including reasonable out-of-pocket
expenses for legal, administrative and accounting services provided by third
parties, and compensation, benefits and other amounts payable to officers and
employees in connection with their employment in the ordinary course of business
and to board of director observers), (ii) franchise fees or similar taxes
and fees required to maintain its corporate existence, and (iii) its
proportionate share of the tax liability of the affiliated group of
corporations that file consolidated Federal income tax returns (or that file
state and local income tax returns on a consolidated basis);

(d)           Holdings may issue and sell its common Equity Interests,
so long as the Net Cash Proceeds thereof are applied to the repayment of Loans
pursuant to Section 2.05(b)(iii), other than the case of the
issuance and sale of Excluded Issuances which Holdings may issue and sell
without applying the proceeds thereof (ie., exercise price of options and
warrants) to repayment of the Loans; and

(e)           the Loan Parties may make payments pursuant to the terms
of their Management Agreements with each other, and make loans and advances in
accordance with the terms of such Management Agreements, all of which will be
subject to subordination terms acceptable to Lender.

7.07         Change in Nature of Business.  Engage in any material line of business
substantially different from those lines of business conducted by the Borrowers
and their Subsidiaries on the date hereof or any business substantially related
or incidental thereto.

7.08         Transactions with Affiliates.  Enter into any transaction of any kind with
any Affiliate of any Borrower, whether or not in the ordinary course of
business, other than on fair and reasonable terms substantially as favorable to
such Borrower or such Subsidiary as would be obtainable by such Borrower or
such Subsidiary at the time in a comparable arm’s length transaction with a
Person other than an Affiliate; provided that the foregoing restriction shall not apply to
transactions between or among the Loan Parties.

7.09         Burdensome Agreements.  Enter into or permit to exist any Contractual
Obligation (other than this Agreement or any other Loan Document) that
(a) limits the ability (i) of any Subsidiary to make Restricted
Payments to any Borrower or any Guarantor or to otherwise transfer property to
or invest in any Borrower or any Guarantor, except for any agreement in effect
(A) on the date hereof and set forth on Schedule 7.09 or
(B) at the time any Subsidiary becomes a Subsidiary of a Borrower, so long
as such agreement was not entered into solely in contemplation of such Person
becoming a Subsidiary of a Borrower, (ii) of any Subsidiary to Guarantee
the Indebtedness of a Borrower or (iii) of any Borrower or any Subsidiary
to create, incur, assume or suffer to exist Liens on property of such Person; provided,
however, that this clause (iii) shall not prohibit any negative
pledge incurred or provided in favor of any holder of Indebtedness permitted
under Section 7.02(i) solely to the extent any such 

 88
 

negative pledge relates to the property
financed by or the subject of such Indebtedness; or (b) requires the grant
of a Lien to secure an obligation of such Person if a Lien is granted to secure
another obligation of such Person.

7.10         Use of Proceeds. 
Use the proceeds of any Credit Extension, whether directly or
indirectly, and whether immediately, incidentally or ultimately, to purchase or
carry margin stock (within the meaning of Regulation U of the FRB) or to extend
credit to others for the purpose of purchasing or carrying margin stock or to
refund indebtedness originally incurred for such purpose.

7.11         Financial Covenants. 
(a) Consolidated Senior Leverage Ratio.  Permit the Consolidated Senior Leverage Ratio
at any time during any Measurement Period set forth below to be greater than
the ratio set forth below opposite such period:

	
  Twelve Months Ending

  	
   

  	
  Maximum Consolidated

  Senior Leverage Ratio

  
	
  Closing Date
  through March 31, 2008

  	
   

  	
  2.6
  to 1.0

  
	
  April 30, 2008
  and each month thereafter

  	
   

  	
  2.0 to 1.0

  

 

(b)           Consolidated Adjusted EBITDA.  Permit the Consolidated Adjusted  EBITDA
calculated for any Measurement Period as of the end of any month to be less
than the amount set forth below opposite such period:

	
  Twelve Months Ending

  	
   

  	
  Minimum Adjusted EBITDA

  	
   

  
	
  Closing Date
  through August 31, 2008

  	
   

  	
  $

  	
  17,000,000

  	
   

  
	
  September 30,
  2008 through August 31, 2009

  	
   

  	
  $

  	
  18,900,000

  	
   

  
	
  September 30, 2009 and
  each month thereafter

  	
   

  	
  $

  	
  21,500,000

  	
   

  

 

(c)           Consolidated Net Worth.  Permit Consolidated Net Worth at any time
during any period set forth below to be less than the amount set forth below
opposite such period:

	
  Period

  	
   

  	
  Minimum Net Worth

  	
   

  
	
  Closing Date
  through September 30, 2007

  	
   

  	
  $

  	
  36,800,000

  	
   

  
	
  October 1, 2007
  through September 30, 2008

  	
   

  	
  $

  	
  39,000,000

  	
   

  
	
  October 1, 2008
  through September 30, 2009

  	
   

  	
  $

  	
  46,000,000

  	
   

  
	
  October 1, 2009 and at
  all times thereafter

  	
   

  	
  $

  	
  55,000,000

  	
   

  

 

(d)           Consolidated Membership.  (i) Permit the aggregate Membership of
the Borrowers and ProMed as of the end of any calendar month to be less than
95% of such aggregate Membership as of the end of the previous calendar month
or permit the total Membership of the Borrowers and ProMed for any fiscal
quarter to be less than 95% of the Membership from the prior Fiscal Quarter
unless any such decline shall have resulted from the Borrowers’ termination of
an existing contract and the Borrowers (a) shall have provided the
Administrative Agent with notice of such termination of such contract
contemporaneously with the delivery of such notice to the counterparty and
(b) shall have delivered to Administrative Agent, prior to giving  the notice of termination, projections
satisfactory to the Required Lenders 

 89
 

confirming that the Borrowers will remain in
compliance with this Agreement and that such termination will not impair the
Borrowers’ ability to repay its Obligations hereunder; or (ii) permit the
aggregate monthly revenues for the Borrowers and ProMed in any calendar month
to be less than 95% of the aggregate revenues for the prior calendar month or
permit the aggregate revenue for any Fiscal Quarter of the Borrowers and ProMed
to be less than 95% of the aggregate revenue for the preceding Fiscal Quarter.

(e)           Consolidated Fixed Charge Coverage Ratio.  Permit the Consolidated Fixed Charge Coverage
Ratio as of the end of any month to be less than 1.25 to 1.00.

7.12         Capital Expenditures. 
Make or become legally obligated to make any Capital Expenditure, except
for Capital Expenditures in the ordinary course of business not exceeding, in
the aggregate for the Borrowers and their Subsidiaries during each fiscal year
set forth below, the amount set forth opposite such fiscal year:

	
  Fiscal Year

  	
   

  	
  Amount

  	
   

  
	
  2007

  	
   

  	
  $

  	
  1,200,000

  	
   

  
	
  2008

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  2009

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  2010

  	
   

  	
  $

  	
  1,000,000

  	
   

  
	
  2011

  	
   

  	
  $

  	
  1,000,000

  	
   

  

 

7.13         Amendments of Organization Documents.  Amend any of its Organization Documents.

7.14         Accounting Changes. 
Make any change in (a) accounting policies or reporting practices,
except as required by GAAP, or (b) fiscal year.

7.15         Prepayments, Etc. of Indebtedness.  Prepay, redeem, purchase, defease or
otherwise satisfy prior to the scheduled maturity thereof in any manner, or
make any payment in violation of any subordination terms of, any Indebtedness,
except (a) the prepayment of the Credit Extensions in accordance with the
terms of this Agreement and (b) regularly scheduled or required repayments
or redemptions of Indebtedness set forth in Schedule 7.02 and
refinancings and refundings of such Indebtedness in compliance with Section 7.02(g).

7.16         Amendment, Etc. of Related Documents and Indebtedness.  (a) Cancel or terminate any Related
Document or consent to or accept any cancellation or termination thereof, (b) amend,
modify or change in any manner any term or condition of any Related Document or
give any consent, waiver or approval thereunder, (c) waive any default
under or any breach of any term or condition of any Related Document, (d) take
any other action in connection with any Related Document that would impair the
value of the interest or rights of any Loan Party thereunder or that would
impair the rights or interests of the Administrative Agent or any Lender or
(e) amend, modify or change in any manner any term or condition of any
Indebtedness set forth in Schedule 7.02, except for any
refinancing, refunding, renewal or extension thereof permitted by Section 7.02(g).

 90

7.17         Holding Company. 
In the case of Holdings, engage in any business or activity other than
(a) the ownership of all outstanding Equity Interests in those Loan
Parties which are Subsidiaries of Holdings (b) maintaining its corporate
existence, (c) participating in tax, accounting and other administrative
activities as the parent of the consolidated group of companies, including the
Loan Parties, (d) the execution and delivery of the Loan Documents to
which it is a party and the performance of its obligations thereunder, and
(e) activities incidental to the businesses or activities described in
clauses (a) through (d) of this Section.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

8.01         Events of Default. 
Any of the following shall constitute an Event of Default:

(a)           Non-Payment. 
Any Borrower or any other Loan Party fails to (i) pay when and as
required to be paid herein, any amount of principal of any Loan or any L/C
Obligation or deposit any funds as Cash Collateral in respect of L/C
Obligations, or (ii) pay within three Business Days after the same becomes
due, any interest on any Loan or on any L/C Obligation, or any fee due
hereunder, or (iii) pay within five Business Days after the same becomes
due, any other amount payable hereunder or under any other Loan Document; or

(b)           Specific Covenants. 
Any Borrower fails to perform or observe any term, covenant or agreement
contained in any of Section 6.01, 6.02, 6.03, 6.05,
6.10, 6.11, 6.12, 6.14, 6.17, 6.19, 6.20
or Article VII; or

(c)           Other Defaults. 
Any Loan Party fails to perform or observe any other covenant or
agreement (not specified in Section 8.01(a) or (b) above)
contained in any Loan Document on its part to be performed or observed and such
failure continues for 30 days; or

(d)           Representations and Warranties.  Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of any Borrower or any
other Loan Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be incorrect or misleading
when made or deemed made; or

(e)           Cross-Default. 
(i) Any Loan Party or any Subsidiary thereof (A) fails to make
any payment when due after giving effect to any applicable notice and cure
period (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) in respect of any Indebtedness or Guarantee (other than
Indebtedness hereunder and Indebtedness under Swap Contracts) having an
aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount, (B) fails to
observe or perform any other agreement or condition relating to any such
Indebtedness or Guarantee or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event occurs after
giving effect to any applicable notice and cure period, the effect of which
default or other event is to cause, or to permit the holder or holders of such
Indebtedness or the beneficiary or beneficiaries of such Guarantee (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required, such 

 91
 

Indebtedness to be demanded or to become due
or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded, or
(C) incurs a loss or has a material breach or other occurrence with
respect to a Material Contract which would be likely to result in a Material
Adverse Effect; or (ii) there occurs under any Swap Contract an Early
Termination Date (as defined in such Swap Contract) resulting from (A) any
event of default under such Swap Contract as to which a Loan Party or any
Subsidiary thereof is the Defaulting Party (as defined in such Swap Contract)
or (B) any Termination Event (as so defined) under such Swap Contract as
to which a Loan Party or any Subsidiary thereof is an Affected Party (as so
defined) and, in either event, the Swap Termination Value owed by such Loan
Party or such Subsidiary as a result thereof is greater than the Threshold
Amount; or

(f)            Insolvency Proceedings, Etc.  Any Loan Party or any Subsidiary thereof
institutes or consents to the institution of any proceeding under any Debtor
Relief Law, or makes an assignment for the benefit of creditors; or applies for
or consents to the appointment of any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer for it or for all or
any material part of its property; or any receiver, trustee, custodian,
conservator, liquidator, rehabilitator or similar officer is appointed without
the application or consent of such Person and the appointment continues undischarged
or unstayed for 60 calendar days; or any proceeding under any Debtor
Relief Law relating to any such Person or to all or any material part of its
property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

(g)           Inability to Pay Debts; Attachment.  (i) Any Loan Party or any Subsidiary
thereof becomes unable or admits in writing its inability or fails generally to
pay its debts as they become due, or (ii) any writ or warrant of
attachment or execution or similar process is issued or levied against all or
any material part of the property of any such Person and is not released, vacated
or fully bonded within 30 days after its issue or levy; or

(h)           Judgments. 
There is entered against any Loan Party or any Subsidiary thereof (i) one
or more final judgments or orders for the payment of money in an aggregate
amount (as to all such judgments and orders) exceeding the Threshold Amount (to
the extent not covered by independent third-party insurance as to which the
insurer is rated at least “A” by A.M. Best Company, has been notified of the
potential claim and does not dispute coverage), or (ii) any one or more
non-monetary final judgments that have, or could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect and, in
either case, (A) enforcement proceedings are commenced by any creditor
upon such judgment or order, or (B) there is a period of 10 consecutive
days during which a stay of enforcement of such judgment, by reason of a
pending appeal or otherwise, is not in effect; or

(i)            ERISA. 
(i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrowers under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount in excess of the
Threshold Amount, or (ii) any Borrower or any ERISA Affiliate fails to pay
when due, after the expiration of any applicable grace period, any 

 92
 

installment payment with respect to its withdrawal
liability under Section 4201 of ERISA under a Multiemployer Plan in an
aggregate amount in excess of the Threshold Amount; or

(j)            Invalidity of Loan Documents.  Any provision of any Loan Document, at any
time after its execution and delivery and for any reason other than as expressly
permitted hereunder or thereunder or satisfaction in full of all the
Obligations, ceases to be in full force and effect; or any Loan Party or any
other Person contests in any manner the validity or enforceability of any
provision of any Loan Document; or any Loan Party denies that it has any or
further liability or obligation under any provision of any Loan Document, or
purports to revoke, terminate or rescind any provision of any Loan Document; or

(k)           Change of Control. 
There occurs any Change of Control; or

(l)            Collateral Documents.  Any Collateral Document after delivery
thereof pursuant to Section 4.01 or 6.12 shall for any
reason (other than pursuant to the terms thereof) cease to create a valid and
perfected first priority Lien (subject to Liens permitted by Section 7.01)
on the Collateral purported to be covered thereby; or

(m)          Indictment. 
The indictment or, as the Administrative Agent may reasonably and in
good faith determine, the threatened indictment by any Governmental Authority
of any Loan Party or Subsidiary or Affiliate of a Loan Party, in either case,
as to which there is a reasonable probability of an adverse determination under
any criminal statute, or commencement or threatened commencement of criminal or
civil proceedings against a Loan Party or any Subsidiary or Affiliate of a Loan
Party, pursuant to which statute or proceeding the penalties or remedies sought
or available include forfeiture of (i) any material portion of the
Collateral, or (ii) any other assets of a Loan Party that are necessary or
material to the conduct of its business; or

(n)           DMHC Regulations. 
The breach by any Loan Party of any of the Solvency Regulations set
forth in Title 28 of the California Code of Regulations; or

(o)           Subordination. 
(i) The subordination provisions of the documents evidencing or
governing any subordinated Indebtedness (the “Subordinated Provisions”)
shall, in whole or in part, terminate, cease to be effective or cease to be
legally valid, binding and enforceable against any holder of the applicable
subordinated Indebtedness; or (ii) any Borrower or any other Loan Party shall, directly or
indirectly, disavow or contest in any manner (A) the effectiveness,
validity or enforceability of any of the Subordination Provisions, (B) that
the Subordination Provisions exist for the benefit of the Administrative Agent,
the Lenders and the L/C Issuer or (C) that all payments of principal of or
premium and interest on the applicable subordinated Indebtedness, or realized
from the liquidation of any property of any Loan Party, shall be subject to any
of the Subordination Provisions.

8.02         Remedies upon Event of Default.  If any Event of Default occurs and is
continuing, the Administrative Agent shall, at the request of, or may, with the
consent of, the Required Lenders, take any or all of the following actions:

 93
 

(a)           declare the commitment of each Lender to make Loans and
any obligation of the L/C Issuer to make L/C Credit Extensions to be
terminated, whereupon such commitments and obligation shall be terminated;

(b)           declare the unpaid principal amount of all outstanding
Loans, all interest accrued and unpaid thereon, and all other amounts owing or
payable hereunder or under any other Loan Document to be immediately due and
payable, without presentment, demand, protest or other notice of any kind, all
of which are hereby expressly waived by the Borrowers;

(c)           require that the Borrowers Cash Collateralize the L/C
Obligations (in an amount equal to the then Outstanding Amount thereof); and

(d)           exercise on behalf of itself, the Lenders and the L/C
Issuer all rights and remedies available to it, the Lenders and the L/C Issuer
under the Loan Documents;

provided, however, that upon
the occurrence of an actual or deemed entry of an order for relief with respect
to any Borrower under the Bankruptcy Code of the United States, the obligation
of each Lender to make Loans and any obligation of the L/C Issuer to make L/C
Credit Extensions shall automatically terminate, the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable, and the obligation of the Borrowers to
Cash Collateralize the L/C Obligations as aforesaid shall automatically become
effective, in each case without further act of the Administrative Agent or any
Lender.

8.03         Application of Funds. 
After the exercise of remedies provided for in Section 8.02
(or after the Loans have automatically become immediately due and payable and
the L/C Obligations have automatically been required to be Cash Collateralized
as set forth in the proviso to Section 8.02), any amounts received
on account of the Obligations shall be applied by the Administrative Agent in
the following order:

First, to payment of that portion of
the Obligations constituting fees, indemnities, expenses and other amounts
(including fees, charges and disbursements of counsel to the Administrative
Agent and amounts payable under Article III) payable to the
Administrative Agent in its capacity as such;

Second, to payment of that portion of the
Obligations constituting fees, indemnities and other amounts (other than
principal, interest and Letter of Credit Fees) payable to the Lenders and
the L/C Issuer (including fees, charges and disbursements of counsel to the
respective Lenders and the L/C Issuer
and amounts payable under Article III, ratably among them in
proportion to the respective amounts described in this clause Second
payable to them;

Third, to payment of that portion of the
Obligations constituting accrued and unpaid Letter of Credit Fees and interest
on the Loans, L/C Borrowings and other Obligations, ratably among the Lenders
and the L/C Issuer in proportion to the respective amounts described in this
clause Third payable to them;

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Fourth, to payment of that portion of the Obligations
constituting unpaid principal of the Loans, L/C Borrowings and amounts owing
under Secured Hedge Agreements and Secured Cash Management Agreements, ratably
among the Lenders, the L/C Issuer, the Hedge Banks and the Cash Management
Banks in proportion to the respective amounts described in this clause Fourth
held by them;

Fifth, to the Administrative Agent for the account
of the L/C Issuer, to Cash Collateralize that portion of L/C Obligations
comprised of the aggregate undrawn amount of Letters of Credit; and

Last, the balance, if any, after all of the
Obligations have been indefeasibly paid in full, to the Borrowers or as
otherwise required by Law.

Subject to Section 2.03(c), amounts used
to Cash Collateralize the aggregate undrawn amount of Letters of Credit
pursuant to clause Fifth above shall be applied to satisfy drawings
under such Letters of Credit as they occur. 
If any amount remains on deposit as Cash Collateral after all Letters of
Credit have either been fully drawn or expired, such remaining amount shall be
applied to the other Obligations, if any, in the order set forth above.

ARTICLE IX

ADMINISTRATIVE AGENT

9.01         Appointment and Authority.  (a) 
Each of the Lenders and the L/C Issuer hereby irrevocably appoints Bank
of America to act on its behalf as the Administrative Agent hereunder and under
the other Loan Documents and authorizes the Administrative Agent to take such
actions on its behalf and to exercise such powers as are delegated to the
Administrative Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto.  The provisions of this Article are solely for
the benefit of the Administrative Agent, the Lenders and the L/C Issuer, and
neither any Borrower nor any other Loan Party shall have rights as a third
party beneficiary of any of such provisions.

(b)           The Administrative Agent shall also act as the “collateral agent” under the Loan
Documents, and each of the Lenders (in its capacities as a Lender, potential
Hedge Bank and potential Cash Management Bank) and the L/C Issuer hereby
irrevocably appoints and authorizes the Administrative Agent to act as the
agent of such Lender and the L/C Issuer for purposes of acquiring, holding and
enforcing any and all Liens on Collateral granted by any of the Loan Parties to
secure any of the Obligations, together with such powers and discretion as are
reasonably incidental thereto.  In this
connection, the Administrative Agent, as “collateral agent” and any co-agents,
sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant
to Section 9.05 for purposes of holding or enforcing any Lien on
the Collateral (or any portion thereof) granted under the Collateral Documents,
or for exercising any rights and remedies thereunder at the direction of the
Administrative Agent), shall be entitled to the benefits of all provisions of
this Article IX and Article XI (including Section 10.04(c),
as though such co-agents, sub-agents and attorneys-in-fact were the “collateral
agent” under the Loan Documents) as if set forth in full herein with respect
thereto.

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9.02         Rights as a Lender. 
The Person serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent and the term “Lender”
or “Lenders” shall, unless otherwise expressly indicated or unless the context
otherwise requires, include the Person serving as the Administrative Agent
hereunder in its individual capacity. 
Such Person and its Affiliates may accept deposits from, lend money to,
act as the financial advisor or in any other advisory capacity for and
generally engage in any kind of business with any Borrower or any Subsidiary or
other Affiliate thereof as if such Person were not the Administrative Agent
hereunder and without any duty to account therefor to the Lenders.

9.03         Exculpatory Provisions.  The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents.  Without limiting the
generality of the foregoing, the Administrative Agent:

(a)           shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing;

(b)           shall not have any duty to take any discretionary action
or exercise any discretionary powers, except discretionary rights and powers
expressly contemplated hereby or by the other Loan Documents that the
Administrative Agent is required to exercise as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be
expressly provided for herein or in the other Loan Documents), provided
that the Administrative Agent shall not be required to take any action that, in
its opinion or the opinion of its counsel, may expose the Administrative Agent
to liability or that is contrary to any Loan Document or applicable law; and

(c)           shall not, except as expressly set forth herein and in the
other Loan Documents, have any duty to disclose, and shall not be liable for
the failure to disclose, any information relating to any Borrower or any of
their Affiliates that is communicated to or obtained by the Person serving as
the Administrative Agent or any of its Affiliates in any capacity.

The Administrative Agent shall not be liable for any
action taken or not taken by it (i) with the consent or at the request of
the Required Lenders (or such other number or percentage of the Lenders as
shall be necessary, or as the Administrative Agent shall believe in good faith
shall be necessary, under the circumstances as provided in Sections 10.01
and 8.02) or (ii) in the absence of its own gross negligence or
willful misconduct.  The Administrative
Agent shall be deemed not to have knowledge of any Default unless and until
notice describing such Default is given to the Administrative Agent by a
Borrower, a Lender or the L/C Issuer.

The Administrative Agent shall not be responsible for
or have any duty to ascertain or inquire into (i) any statement, warranty
or representation made in or in connection with this Agreement or any other
Loan Document, (ii) the contents of any certificate, report or other
document delivered hereunder or thereunder or in connection herewith or
therewith, (iii) the performance or observance of any of the covenants,
agreements or other terms or conditions set forth herein or therein or the occurrence
of any Default, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any 

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other agreement, instrument or document, or the
creation, perfection or priority of any Lien purported to be created by the
Collateral Documents, (v) the value or the sufficiency of any Collateral,
or (v) the satisfaction of any condition set forth in Article IV
or elsewhere herein, other than to confirm receipt of items expressly required
to be delivered to the Administrative Agent.

9.04         Reliance by Administrative Agent.  The Administrative Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
(including any electronic message, Internet or intranet website posting or
other distribution) believed by it to be genuine and to have been signed, sent
or otherwise authenticated by the proper Person.  The Administrative Agent also may rely upon
any statement made to it orally or by telephone and reasonably believed by it
to have been made by the proper Person, and shall not incur any liability for
relying thereon.  In determining
compliance with any condition hereunder to the making of a Loan, or the
issuance of a Letter of Credit, that by its terms must be fulfilled to the
satisfaction of a Lender or the L/C Issuer, the Administrative Agent may
presume that such condition is satisfactory to such Lender or the L/C Issuer
unless the Administrative Agent shall have received notice to the contrary from
such Lender or the L/C Issuer prior to the making of such Loan or the issuance
of such Letter of Credit.  The
Administrative Agent may consult with legal counsel (who may be counsel for the
Borrowers), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the
advice of any such counsel, accountants or experts.

9.05         Delegation of Duties. 
The Administrative Agent may perform any and all of its duties and
exercise its rights and powers hereunder or under any other Loan Document by or
through any one or more sub-agents appointed by the Administrative Agent.  The Administrative Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and
powers by or through their respective Related Parties.  The exculpatory provisions of this Article shall
apply to any such sub-agent and to the Related Parties of the Administrative
Agent and any such sub-agent, and shall apply to their respective activities in
connection with the syndication of the credit facilities provided for herein as
well as activities as Administrative Agent.

9.06         Resignation of Administrative Agent.  The Administrative Agent may at any time give
notice of its resignation to the Lenders, the L/C Issuer and the
Borrowers.  Upon receipt of any such
notice of resignation, the Required Lenders shall have the right, in
consultation with the Borrowers, to appoint a successor, which shall be a bank
with an office in the United States, or an Affiliate of any such bank with an
office in the United States.  If no such
successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within 30 days after the retiring Administrative
Agent gives notice of its resignation, then the retiring Administrative Agent
may on behalf of the Lenders and the L/C Issuer, appoint a successor
Administrative Agent meeting the qualifications set forth above; provided that
if the Administrative Agent shall notify the Borrowers and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall nonetheless
become effective in accordance with such notice and (a) the retiring
Administrative Agent shall be discharged from its duties and obligations
hereunder and under the other Loan Documents (except that in the case of any
collateral security held by the Administrative Agent on behalf of the Lenders
or the L/C Issuer under any of the Loan Documents, the retiring Administrative
Agent shall continue to 

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hold such collateral security until such time
as a successor Administrative Agent is appointed) and (b) all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender and the L/C
Issuer directly, until such time as the Required Lenders appoint a successor Administrative
Agent as provided for above in this Section. 
Upon the acceptance of a successor’s appointment as Administrative Agent
hereunder, such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent, and the retiring Administrative Agent shall be discharged
from all of its duties and obligations hereunder or under the other Loan
Documents (if not already discharged therefrom as provided above in this
Section).  The fees payable by the
Borrowers to a successor Administrative Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrowers and
such successor.  After the retiring
Administrative Agent’s resignation hereunder and under the other Loan
Documents, the provisions of this Article and Section 10.04 shall
continue in effect for the benefit of such retiring Administrative Agent, its
sub-agents and their respective Related Parties in respect of any actions taken
or omitted to be taken by any of them while the retiring Administrative Agent
was acting as Administrative Agent.

Any resignation by Bank of America as Administrative
Agent pursuant to this Section shall also constitute its resignation as L/C
Issuer.  Upon the acceptance of a
successor’s appointment as Administrative Agent hereunder, (i) such
successor shall succeed to and become vested with all of the rights, powers,
privileges and duties of the retiring L/C Issuer, (ii) the retiring L/C
Issuer shall be discharged from all of their respective duties and obligations
hereunder or under the other Loan Documents, and (iii) the successor L/C
Issuer shall issue letters of credit in substitution for the Letters of Credit,
if any, outstanding at the time of such succession or make other arrangements
satisfactory to the retiring L/C Issuer to effectively assume the obligations
of the retiring L/C Issuer with respect to such Letters of Credit.

9.07         Non-Reliance on Administrative Agent and Other Lenders.  Each Lender and the L/C Issuer acknowledges
that it has, independently and without reliance upon the Administrative Agent
or any other Lender or any of their Related Parties and based on such documents
and information as it has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement.  Each
Lender and the L/C Issuer also acknowledges that it will, independently and
without reliance upon the Administrative Agent or any other Lender or any of
their Related Parties and based on such documents and information as it shall
from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Loan
Document or any related agreement or any document furnished hereunder or
thereunder.

9.08         No Other Duties, Etc. 
Anything herein to the contrary notwithstanding, no Lead Arranger or
Book Manager listed on the cover page hereof shall have any powers, duties or
responsibilities under this Agreement or any of the other Loan Documents.

9.09         Administrative Agent May File Proofs of Claim.  In case of the pendency of any proceeding
under any Debtor Relief Law or any other judicial proceeding relative to any
Loan Party, the Administrative Agent (irrespective of whether the principal of
any Loan or L/C Obligation shall then be due and payable as herein expressed or
by declaration or otherwise and 

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irrespective of whether the Administrative
Agent shall have made any demand on the Borrowers) shall be entitled and
empowered, by intervention in such proceeding or otherwise:

(a)           to file and prove a claim for the whole amount of the
principal and interest owing and unpaid in respect of the Loans, L/C
Obligations and all other Obligations that are owing and unpaid and to file
such other documents as may be necessary or advisable in order to have the
claims of the Lenders, the L/C Issuer and the Administrative Agent (including
any claim for the reasonable compensation, expenses, disbursements and advances
of the Lenders, the L/C Issuer and the Administrative Agent and their
respective agents and counsel and all other amounts due the Lenders, the L/C
Issuer and the Administrative Agent under Sections 2.03(i) and (j),
2.09 and 10.04) allowed in such judicial proceeding; and

(b)           to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or other similar official in any such judicial
proceeding is hereby authorized by each Lender and the L/C Issuer to make such
payments to the Administrative Agent and, if the Administrative Agent shall
consent to the making of such payments directly to the Lenders and the L/C
Issuer, to pay to the Administrative Agent any amount due for the reasonable
compensation, expenses, disbursements and advances of the Administrative Agent
and its agents and counsel, and any other amounts due the Administrative Agent
under Sections 2.09 and 10.04.

Nothing contained herein shall be deemed to authorize
the Administrative Agent to authorize or consent to or accept or adopt on
behalf of any Lender or the L/C Issuer any plan of reorganization, arrangement,
adjustment or composition affecting the Obligations or the rights of any Lender
or the L/C Issuer to authorize the Administrative Agent to vote in respect of
the claim of any Lender or the L/C Issuer or in any such proceeding.

9.10         Collateral and Guaranty Matters.  The Lenders and the L/C Issuer irrevocably
authorize the Administrative Agent, at its option and in its discretion,

(a)           to release any Lien on any property granted to or held by
the Administrative Agent under any Loan Document (i) upon termination of
the Aggregate Commitments and payment in full of all Obligations (other than
contingent indemnification obligations) and the expiration or termination of
all Letters of Credit, (ii) that is sold or to be sold as part of or in
connection with any sale permitted hereunder or under any other Loan Document,
or (iii) if approved, authorized or ratified in writing in accordance with
Section 10.01;

(b)           to release any Guarantor from its obligations under the
Guaranty if such Person ceases to be a Subsidiary as a result of a transaction
permitted hereunder; and

(c)           to subordinate any Lien on any property granted to or held
by the Administrative Agent under any Loan Document to the holder of any Lien
on such property that is permitted by Section 7.01(i).

Upon request by the Administrative Agent at any time,
the Required Lenders will confirm in writing the Administrative Agent’s
authority to release or subordinate its interest in 

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particular types or items of property, or to release
any Guarantor from its obligations under the Guaranty pursuant to this Section 9.10.  In each case as specified in this Section 9.10,
the Administrative Agent will, at the Borrowers’ expense, execute and deliver
to the applicable Loan Party such documents as such Loan Party may reasonably
request to evidence the release of such item of Collateral from the assignment
and security interest granted under the Collateral Documents or to subordinate
its interest in such item, or to release such Guarantor from its obligations
under the Guaranty, in each case in accordance with the terms of the Loan
Documents and this Section 9.10.

ARTICLE X

MISCELLANEOUS

10.01       Amendments, Etc. 
No amendment or waiver of any provision of this Agreement or any other
Loan Document, and no consent to any departure by any Borrower or any other
Loan Party therefrom, shall be effective unless in writing signed by the
Required Lenders and the Borrowers or the applicable Loan Party, as the case
may be, and acknowledged by the Administrative Agent, and each such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, however, that no such amendment, waiver or
consent shall:

(a)           waive any condition set forth in Section 4.01
(other than Section 4.01(b)(i) or (c)), or, in the case of
the initial Credit Extension, Section 4.02, without the written
consent of each Lender;

(b)           without limiting the generality of clause (a) above,
waive any condition set forth in Section 4.02 as to any Credit
Extension under a particular Facility without the written consent of the
Required Revolving Lenders or the Required Term Lenders, as the case may be;

(c)           extend or increase the Commitment of any Lender (or
reinstate any Commitment terminated pursuant to Section 8.02)
without the written consent of such Lender;

(d)           postpone any date fixed by this Agreement or any other
Loan Document for any payment  (excluding
mandatory prepayments) of principal, interest, fees or other amounts due to the
Lenders (or any of them) hereunder or under such other Loan Document without
the written consent of each Lender entitled to such payment;

(e)           reduce the principal of, or the rate of interest specified
herein on, any Loan or L/C Borrowing, or any fees or other amounts payable
hereunder or under any other Loan Document; provided, however,
that only the consent of the Required Lenders shall be necessary (i) to amend
the definition of “Default Rate” or to waive any obligation of the Borrowers to
pay interest or Letter of Credit Fees at the Default Rate or (ii) to amend
any financial covenant hereunder (or any defined term used therein) even if the
effect of such amendment would be to reduce the rate of interest on any Loan or
L/C Borrowing or to reduce any fee payable hereunder;

(f)            change (i) Section 8.03 in a manner that
would alter the pro rata sharing of payments required thereby without the
written consent of each Lender or (ii) the order of application of any
reduction in the Commitments or any prepayment of Loans among the Facilities
from the application thereof set forth in the applicable provisions of Section 2.05(b)
or 

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2.06(b),
respectively, in any manner that materially and adversely affects the Lenders
under a Facility without the written consent of (i) if such Facility is
the Term Facility, the Required Term Lenders and (ii) if such Facility is
the Revolving Credit Facility, the Required Revolving Lenders;

(g)           change (i) any provision of this Section 10.01
or the definition of “Required Lenders” or any other provision hereof
specifying the number or percentage of Lenders required to amend, waive or
otherwise modify any rights hereunder or make any determination or grant any
consent hereunder (other than the definitions specified in clause (ii) of
this Section 10.01(g)), without the written consent of each Lender
or (ii) the definition of “Required Revolving Lenders” or “Required Term
Lenders,” without the written consent of each Lender under the applicable
Facility;

(h)           release all or substantially all of the Collateral in any
transaction or series of related transactions, without the written consent of
each Lender;

(i)            release all or substantially all of the value of any
Guaranty, without the written consent of each Lender, except to the extent the
release of any Subsidiary from the Guaranty is permitted pursuant to Section 9.10
(in which case such release may be made by the Administrative Agent acting alone);
or

(j)            impose any greater restriction on the ability of any
Lender under a Facility to assign any of its rights or obligations hereunder
without the written consent of (i) if such Facility is the Term Facility, the
Required Term Lenders and (ii) if such Facility is the Revolving Credit
Facility, the Required Revolving Lenders;

and provided, further, that (i) no
amendment, waiver or consent shall, unless in writing and signed by the L/C
Issuer in addition to the Lenders required above, affect the rights or duties
of the L/C Issuer under this Agreement or any Issuer Document relating to any
Letter of Credit issued or to be issued by it; (ii) no amendment, waiver
or consent shall, unless in writing and signed by the Administrative Agent in
addition to the Lenders required above, affect the rights or duties of the
Administrative Agent under this Agreement or any other Loan Document; and (iii) the Fee Letter may be
amended, or rights or privileges thereunder waived, in a writing executed only
by the parties thereto.  Notwithstanding
anything to the contrary herein, no Defaulting Lender shall have any right to
approve or disapprove any amendment, waiver or consent hereunder, except that
the Commitment of such Lender may not be increased or extended without the
consent of such Lender.

10.02       Notices; Effectiveness; Electronic Communications.  (a) Notices Generally.  Except in the case of notices and other
communications expressly permitted to be given by telephone (and except as
provided in subsection (b) below), all notices and other
communications provided for herein shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered mail or
sent by telecopier as follows, and all notices and other communications expressly
permitted hereunder to be given by telephone shall be made to the applicable
telephone number, as follows:

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(i)            if
to any Borrower, the Administrative Agent or the L/C Issuer, to the address,
telecopier number, electronic mail address or telephone number specified for
such Person on Schedule 10.02; and

(ii)           if
to any other Lender, to the address, telecopier number, electronic mail address
or telephone number specified in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices sent by telecopier shall be deemed to have been given when
sent (except that, if not given during normal business hours for the recipient,
shall be deemed to have been given at the opening of business on the next
business day for the recipient).  Notices
delivered through electronic communications to the extent provided in subsection (b)
below shall be effective as provided in such subsection (b).

(b)           Electronic Communications.  Notices and other communications to the
Lenders and the L/C Issuer hereunder may be delivered or furnished by
electronic communication (including e-mail and Internet or intranet websites)
pursuant to procedures approved by the Administrative Agent, provided
that the foregoing shall not apply to notices to any Lender or the L/C Issuer
pursuant to Article II if such Lender or the L/C Issuer, as
applicable, has notified the Administrative Agent that it is incapable of
receiving notices under such Article by electronic communication.  The Administrative Agent or any 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.

Unless the Administrative Agent otherwise prescribes,
(i) notices and other communications sent to an e-mail address shall be
deemed received upon the sender’s receipt of an acknowledgement from the
intended recipient (such as by the “return receipt requested” function, as
available, return e-mail or other written acknowledgement), provided
that if such notice or other communication is not sent during the normal business
hours of the recipient, such notice or communication shall be deemed to have
been sent at the opening of business on the next business day for the
recipient, and (ii) notices or communications posted to an Internet or
intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available
and identifying the website address therefor.

(c)           The Platform. 
THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.”  THE AGENT PARTIES (AS DEFINED BELOW) DO NOT
WARRANT THE ACCURACY OR COMPLETENESS OF THE BORROWER MATERIALS OR THE ADEQUACY
OF THE PLATFORM, AND EXPRESSLY DISCLAIM LIABILITY FOR ERRORS IN OR OMISSIONS
FROM THE BORROWER MATERIALS.  NO WARRANTY
OF ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM.  In no event shall the Administrative Agent or
any of its Related Parties (collectively, the “Agent Parties”) have any
liability to any 

 102
 

Borrower, any Lender, the L/C Issuer or any
other Person for losses, claims, damages, liabilities or expenses of any kind
(whether in tort, contract or otherwise) arising out of the any Borrower’s or
the Administrative Agent’s transmission of Borrower Materials through the
Internet, except to the extent that such losses, claims, damages, liabilities
or expenses are determined by a court of competent jurisdiction by a final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Agent Party; provided, however, that in no
event shall any Agent Party have any liability to any Borrower, any Lender, the
L/C Issuer or any other Person for indirect, special, incidental, consequential
or punitive damages (as opposed to direct or actual damages).

(d)           Change of Address, Etc.  Each of the Borrowers, the Administrative
Agent and the L/C Issuer may change its address, telecopier or telephone number
for notices and other communications hereunder by notice to the other parties
hereto.  Each other Lender may change its
address, telecopier or telephone number for notices and other communications
hereunder by notice to the Borrowers, the Administrative Agent and the L/C
Issuer.  In addition, each Lender agrees
to notify the Administrative Agent from time to time to ensure that the
Administrative Agent has on record (i) an effective address, contact name,
telephone number, telecopier number and electronic mail address to which
notices and other communications may be sent and (ii)  accurate wire
instructions for such Lender.  Furthermore,
each Public Lender agrees to cause at least one individual at or on behalf of
such Public Lender to at all times have selected the “Private Side Information”
or similar designation on the content declaration screen of the Platform in
order to enable such Public Lender or its delegate, in accordance with such
Public Lender’s compliance procedures and applicable Law, including United
States Federal and state securities Laws, to make reference to Borrower
Materials that are not made available through the “Public Side Information”
portion of the Platform and that may contain material non-public information
with respect to the Borrowers or its securities for purposes of United States
Federal or state securities laws.

(e)           Reliance by Administrative Agent, L/C Issuer and
Lenders. 
The Administrative Agent, the L/C Issuer and the Lenders
shall be entitled to rely and act upon any notices (including telephonic
Committed Loan Notices) purportedly given by or on behalf of the Borrowers even
if (i) such notices were not made in a manner specified herein, were
incomplete or were not preceded or followed by any other form of notice
specified herein, or (ii) the terms thereof, as understood by the
recipient, varied from any confirmation thereof.  The Borrowers shall indemnify the
Administrative Agent, the L/C Issuer, each Lender and the Related Parties of
each of them from all losses, costs, expenses and liabilities resulting from
the reliance by such Person on each notice purportedly given by or on behalf of
any Borrower.  All telephonic notices to
and other telephonic communications with the Administrative Agent may be
recorded by the Administrative Agent, and each of the parties hereto hereby
consents to such recording.

10.03       No Waiver; Cumulative Remedies.  No failure by any Lender, the L/C Issuer or
the Administrative Agent to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder or under any other
Loan Document 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, and 

 103
 

provided under each other Loan Document, are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

10.04       Expenses; Indemnity; Damage Waiver.  (a)  Costs
and Expenses.  The Borrowers shall
pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates (including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent), in connection with
the syndication of the credit facilities provided for herein, the preparation,
negotiation, execution, delivery and administration of this Agreement and the
other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated
hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket
expenses incurred by the L/C Issuer in connection with the issuance, amendment,
renewal or extension of any Letter of Credit or any demand for payment
thereunder and (iii) all reasonable out-of-pocket expenses
incurred by the Administrative Agent, any Lender or the L/C Issuer (including
the reasonable fees, charges and disbursements of any counsel for the
Administrative Agent, any Lender or the L/C Issuer), and shall pay all fees and
time charges for attorneys who may be employees of the Administrative Agent,
any Lender or the L/C Issuer, in connection with the enforcement or protection
of its rights (A) in connection with this Agreement and the other Loan
Documents, including its rights under this Section, or (B) in connection
with Loans made or Letters of Credit issued hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.

(b)           Indemnification by the Borrowers.  The Borrowers shall indemnify the
Administrative Agent (and any sub-agent thereof), each Lender and the L/C
Issuer, and each Related Party of any of the foregoing Persons (each such
Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
expenses (including the reasonable fees, charges and disbursements of any
counsel for any Indemnitee), incurred by any Indemnitee or asserted against any
Indemnitee by any third party or by any Borrower or any other Loan Party
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties
hereto of their respective obligations hereunder or thereunder or the
consummation of the transactions contemplated hereby or thereby, or, in the
case of the Administrative Agent (and any sub-agent thereof) and its Related
Parties only, the administration of this Agreement and the other Loan
Documents, (ii) any Loan or Letter of Credit or the use or proposed use of
the proceeds therefrom (including any refusal by the L/C Issuer to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such
Letter of Credit), (iii) any actual or alleged presence or release of
Hazardous Materials on or from any property owned or operated by any Borrower
or any of its Subsidiaries, or any Environmental Liability related in any way
to any Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by any Borrower or any other Loan Party or any of
such Borrower’s or Loan Party’s directors, shareholders or creditors, and
regardless of whether any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
losses, claims, damages, liabilities or related expenses (x) are
determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or 

 104
 

willful misconduct of such Indemnitee or
(y) result from a claim brought by any Borrower or any other Loan Party
against an Indemnitee for breach in bad faith of such Indemnitee’s obligations
hereunder or under any other Loan Document, if such Borrower or such Loan Party
has obtained a final and nonappealable judgment in its favor on such claim as
determined by a court of competent jurisdiction.

(c)           Reimbursement by Lenders.  To the extent that any Borrower for any
reason fails to pay any amount required under subsection (a) or (b)
of this Section to be paid by it to the Administrative Agent (or any sub-agent
thereof), the L/C Issuer or any Related Party of any of the foregoing, each
Lender severally agrees to pay to the Administrative Agent (or any such
sub-agent), the L/C Issuer or such Related Party, as the case may be, such
Lender’s Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided
that the unreimbursed expense or indemnified loss, claim, damage, liability or
related expense, as the case may be, was incurred by or asserted against the
Administrative Agent (or any such sub-agent) or the L/C Issuer in its capacity
as such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent) or L/C Issuer in connection with
such capacity.  The obligations of the
Lenders under this subsection (c) are subject to the provisions of Section 2.12(d).

(d)           Waiver of Consequential Damages, Etc.  To the fullest extent permitted by applicable
law, no Borrower shall assert, and each Borrower hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any
other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or
the use of the proceeds thereof.  No
Indemnitee referred to in subsection (b) above shall be liable for
any damages arising from the use by unintended recipients of any information or
other materials distributed to such unintended recipients by such Indemnitee
through telecommunications, electronic or other information transmission
systems in connection with this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby other than for direct or actual
damages resulting from the gross negligence or willful misconduct of such
Indemnitee as determined by a final and nonappealable judgment of a court of
competent jurisdiction.

(e)           Payments. 
All amounts due under this Section shall be payable not later than ten
Business Days after demand therefor.

(f)            Survival. 
The agreements in this Section shall survive the resignation of the
Administrative Agent and the L/C Issuer, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations.

10.05       Payments Set Aside. 
To the extent that any payment by or on behalf of any Borrower is made
to the Administrative Agent, the L/C Issuer or any Lender, or the
Administrative Agent, the L/C Issuer or any Lender exercises its right of
setoff, and such payment or the proceeds of such setoff or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required (including pursuant to any settlement 

 105
 

entered into by the Administrative Agent, the
L/C Issuer or such Lender in its discretion) to be repaid to a trustee,
receiver or any other party, in connection with any proceeding under any Debtor
Relief Law or otherwise, then (a) to the extent of such recovery, the
obligation or part thereof originally intended to be satisfied shall be revived
and continued in full force and effect as if such payment had not been made or
such setoff had not occurred, and (b) each Lender and the L/C Issuer
severally agrees to pay to the Administrative Agent upon demand its applicable
share (without duplication) of any amount so recovered from or repaid by the
Administrative Agent, plus interest thereon from the date of such demand to the
date such payment is made at a rate per annum equal to the Federal Funds Rate
from time to time in effect.  The
obligations of the Lenders and the L/C Issuer under clause (b) of the
preceding sentence shall survive the payment in full of the Obligations and the
termination of this Agreement.

10.06       Successors and Assigns. 
(a) Successors and Assigns Generally.  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, except that neither any
Borrower nor any other Loan Party may assign or otherwise transfer any of its
rights or obligations hereunder without the prior written consent of the
Administrative Agent and each Lender and no Lender may assign or otherwise
transfer any of its rights or obligations hereunder except (i) to an
assignee in accordance with the provisions of Section 10.06(b),
(ii) by way of participation in accordance with the provisions of Section 10.06(d),
or (iii) by way of pledge or assignment of a security interest subject to
the restrictions of Section 10.06(f) (and any other attempted
assignment or transfer by any party hereto shall be null and void).  Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby, Participants
to the extent provided in subsection (d) of this Section and, to
the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the L/C Issuer and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.

(b)           Assignments by Lenders.  Any Lender may at any time assign to one or
more assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment(s) and the Loans (including for
purposes of this Section 10.06(b), participations in L/C
Obligations) at the time owing to it); provided that any such assignment
shall be subject to the following conditions:

(i)            Minimum
Amounts.

(A)          in
the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment under any Facility and the Loans at the time owing to it
under such Facility or in the case of an assignment to a Lender, an Affiliate
of a Lender or an Approved Fund, no minimum amount need be assigned; and

(B)           in
any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with 

 106
 

respect to such assignment is delivered to the Administrative Agent or,
if “Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $2,000,000, in the case of any assignment in
respect of the Revolving Credit Facility, or $1,000,000, in the case of any assignment
in respect of either Term Facility, unless each of the Administrative Agent
and, so long as no Event of Default has occurred and is continuing, the
Borrowers otherwise consent (each such consent not to be unreasonably withheld
or delayed); provided, however, that concurrent assignments to
members of an Assignee Group and concurrent assignments from members of an
Assignee Group to a single Eligible Assignee (or to an Eligible Assignee and
members of its Assignee Group) will be treated as a single assignment for
purposes of determining whether such minimum amount has been met;

(ii)           Proportionate
Amounts.  Each partial assignment
shall be made as an assignment of a proportionate part of all the assigning
Lender’s rights and obligations under this Agreement with respect to the Loans
or the Commitment assigned, except that this clause (ii) shall not
prohibit any Lender from assigning all or a portion of its rights and
obligations among separate Facilities on a non-pro rata basis;

(iii)          Required
Consents.  No consent shall be
required for any assignment except to the extent required by subsection (b)(i)(B)
of this Section and, in addition:

(A)          the
consent of the Borrowers (such consent not to be unreasonably withheld or
delayed) shall be required unless (1) an Event of Default has occurred and
is continuing at the time of such assignment or (2) such assignment is to
a Lender, an Affiliate of a Lender or an Approved Fund;

(B)           the
consent of the Administrative Agent (such consent not to be unreasonably withheld
or delayed) shall be required for assignments in respect of (1) any Term
Commitment or Revolving Credit Commitment if such assignment is to a Person
that is not a Lender with a Commitment in respect of the applicable Facility,
an Affiliate of such Lender or an Approved Fund with respect to such Lender or
(2) any Term Loan to a Person that is not a Lender, an Affiliate of a
Lender or an Approved Fund; and

(C)           the
consent of the L/C Issuer (such consent not to be unreasonably withheld or
delayed) shall be required for any assignment that increases the obligation of
the assignee to participate in exposure under one or more Letters of Credit
(whether or not then outstanding).

(iv)          Assignment
and Assumption.  The parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption, together with a processing and recordation fee in the amount of
$3,500; provided, however, that the Administrative Agent may, in
its sole discretion, elect to waive such processing and recordation fee in the
case of any assignment.  The assignee, if
it is not a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.

 

 107

(v)           No Assignment to Borrowers.  No such assignment shall be made to any
Borrower or any of the Borrowers’ Affiliates or Subsidiaries.

(vi)          No Assignment to Natural Persons.  No such assignment shall be made to a natural
person.

Subject to acceptance and recording thereof by the
Administrative Agent pursuant to subsection (c) of this Section,
from and after the effective date specified in each Assignment and Assumption,
the assignee thereunder shall be a party to this Agreement 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 3.01,
3.04, 3.05 and 10.04 with respect to facts and
circumstances occurring prior to the effective date of such assignment.  Upon request, the Borrowers (at their
expense) shall execute and deliver a Note to the assignee Lender.  Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection 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 Section 10.06(d).

(c)           Register.  The Administrative Agent, acting solely for
this purpose as an agent of the Borrowers, shall maintain at the Administrative
Agent’s Office 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
Commitments of, and principal amounts 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 Borrowers, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register pursuant to the terms
hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by the Borrowers and any
Lender, at any reasonable time and from time to time upon reasonable prior
notice.

(d)           Participations.  Any Lender may at any time, without the
consent of, or notice to, the Borrowers or the Administrative Agent, sell
participations to any Person (other than a natural person or any Borrower or
any of the Borrowers’ Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion
of such Lender’s rights and/or obligations under this Agreement (including all
or a portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations) owing to it); provided that
(i) such Lender’s obligations under this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrowers,
the Administrative Agent, the Lenders and the L/C Issuer shall continue to deal
solely and directly with such Lender in connection with such Lender’s rights
and obligations under this Agreement. 
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement;

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provided
that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, waiver or other
modification described in the first proviso to Section 10.01 that
affects such Participant.  Subject to subsection
(e) of this Section, each Borrower agrees that each Participant shall be
entitled to the benefits of Sections 3.01, 3.04 and 3.05  to the same extent as if it were a Lender and had acquired
its interest by assignment pursuant to Section 10.06(b).  To the extent permitted by law, each
Participant also shall be entitled to the benefits of Section 10.08  as though it were a Lender, provided such
Participant agrees to be subject to Section 2.13 as though it were
a Lender.

(e)           Limitations
upon Participant Rights.  A
Participant shall not be entitled to receive any greater payment under Section
3.01 or 3.04  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 Borrowers’ prior written consent.  A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of Section 3.01
unless the Borrowers are notified of the participation sold to such Participant
and such Participant agrees, for the benefit of the Borrowers, to comply with Section
3.01(e) as though it were a Lender.

(f)            Certain
Pledges.  Any Lender may at any time
pledge or assign a security interest in all or any portion of its rights under
this Agreement (including under its Note, if any) to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or assignment shall release
such Lender from any of its obligations hereunder or substitute any such
pledgee or assignee for such Lender as a party hereto.

(g)           Electronic
Execution of Assignments.  The words “execution,”
“signed,” “signature,” and words of like import in any Assignment and
Assumption shall be deemed to include electronic signatures or the keeping of
records in electronic form, each of which shall be of the same legal effect,
validity or enforceability as a manually executed signature or the use of a
paper-based recordkeeping system, as the case may be, to the extent and as
provided for in any applicable law, including the Federal Electronic Signatures
in Global and National Commerce Act, the New York State Electronic Signatures
and Records Act, or any other similar state laws based on the Uniform
Electronic Transactions Act.

(h)           Resignation
as L/C Issuer after Assignment. 
Notwithstanding anything to the contrary contained herein, if at any time
Bank of America assigns all of its Revolving Credit Commitment and Revolving
Credit Loans pursuant to Section 10.06(b), Bank of America may,
upon 30 days’ notice to the Borrowers and the Lenders, resign as L/C
Issuer.  In the event of any such
resignation as L/C Issuer, the Borrowers shall be entitled to appoint from
among the Lenders a successor L/C Issuer hereunder; provided, however,
that no failure by the Borrowers to appoint any such successor shall affect the
resignation of Bank of America as L/C Issuer. 
If Bank of America resigns as L/C Issuer, it shall retain all the
rights, powers, privileges and duties of the L/C Issuer hereunder with respect
to all Letters of Credit outstanding as of the effective date of its
resignation as L/C Issuer and all L/C Obligations with respect thereto
(including the right to require the Lenders to make Base Rate Loans or fund
risk participations in Unreimbursed Amounts pursuant to Section 2.03(c)).  Upon the appointment of a successor L/C
Issuer, (a) such successor shall succeed to and become vested with all of the
rights, powers, privileges and duties 

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of the retiring L/C Issuer, and (b) the successor L/C Issuer shall
issue letters of credit in substitution for the Letters of Credit, if any,
outstanding at the time of such succession or make other arrangements
satisfactory to Bank of America to effectively assume the obligations of Bank
of America with respect to such Letters of Credit.

10.07       Treatment of
Certain Information; Confidentiality. 
Each of the Administrative Agent, the Lenders and the L/C Issuer agrees
to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents,
advisors and representatives (it being understood that the Persons to whom such
disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority purporting to have
jurisdiction over it (including any self-regulatory authority, such as the
National Association of Insurance Commissioners), (c) to the extent
required by applicable laws or regulations or by any subpoena or similar legal
process, (d) to any other party hereto, (e) in connection with the exercise of
any remedies hereunder or under any other Loan Document or any action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i)
any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement or (ii)
any actual or prospective counterparty (or its advisors) to any swap or
derivative transaction relating to any Borrower and its obligations, (g) with
the consent of the Borrowers or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to the Administrative Agent, any Lender,
the L/C Issuer or any of their respective Affiliates on a nonconfidential basis
from a source other than the Borrowers.

For purposes of this Section, “Information”
means all information received from any Loan Party or any Subsidiary thereof
relating to any Loan Party or any Subsidiary thereof or their respective
businesses, other than any such information that is available to the
Administrative Agent, any Lender or the L/C Issuer on a nonconfidential basis
prior to disclosure by any Loan Party or any Subsidiary thereof, provided
that, in the case of information received from a Loan Party or any such
Subsidiary after the date hereof, such information is clearly identified at the
time of delivery as confidential.  Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

Each of the Administrative Agent, the Lenders and the
L/C Issuer acknowledges that (a) the Information may include material
non-public information concerning a Borrower or a Subsidiary, as the case may
be, (b) it has developed compliance procedures regarding the use of material
non-public information and (c) it will handle such material non-public
information in accordance with applicable Law, including United States Federal
and state securities Laws.

10.08       Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender, the L/C Issuer and each of their respective
Affiliates is hereby authorized at any time and from time to time, after
obtaining the prior written consent of the Administrative Agent, 

 110
 

to the fullest extent permitted by applicable law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final,
in whatever currency) at any time held and other obligations (in whatever
currency) at any time owing by such Lender, the L/C Issuer or any such
Affiliate to or for the credit or the account of any Borrower or any other Loan
Party against any and all of the obligations of such Borrower or such Loan
Party now or hereafter existing under this Agreement or any other Loan Document
to such Lender or the L/C Issuer, irrespective of whether or not such Lender or
the L/C Issuer shall have made any demand under this Agreement or any other
Loan Document and although such obligations of such Borrower or such Loan Party
may be contingent or unmatured or are owed to a branch or office of such Lender
or the L/C Issuer different from the branch or office holding such deposit or
obligated on such indebtedness.  The
rights of each Lender, the L/C Issuer and their respective Affiliates under
this Section are in addition to other rights and remedies (including other
rights of setoff) that such Lender, the L/C Issuer or their respective
Affiliates may have.  Each Lender and the
L/C Issuer agrees to notify the Borrowers and the Administrative Agent promptly
after any such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application.  Notwithstanding the provisions of this Section 10.08,
if at any time any Lender, the L/C Issuer or any of their respective Affiliates
maintains one or more deposit accounts for any Borrower or any other Loan Party
into which Medicare and/or Medicaid receivables are deposited, such Person
shall waive the right of setoff set forth herein.

10.09       Interest Rate
Limitation.  Notwithstanding anything
to the contrary contained in any Loan Document, the interest paid or agreed to
be paid under the Loan Documents shall not exceed the maximum rate of
non-usurious interest permitted by applicable Law (the “Maximum Rate”).  If the Administrative Agent or any Lender
shall receive interest in an amount that exceeds the Maximum Rate, the excess
interest shall be applied to the principal of the Loans or, if it exceeds such
unpaid principal, refunded to the Borrowers. 
In determining whether the interest contracted for, charged, or received
by the Administrative Agent or a Lender exceeds the Maximum Rate, such Person
may, to the extent permitted by applicable Law, (a) characterize any payment
that is not principal as an expense, fee, or premium rather than interest, (b)
exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the contemplated term of the Obligations hereunder.

10.10       Counterparts;
Integration; Effectiveness.  This
Agreement may be executed in counterparts (and by different parties hereto in
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract.  This Agreement and the other Loan Documents
constitute the entire contract among the parties relating to the subject matter
hereof and supersede any and all previous agreements and understandings, oral
or written, relating to the subject matter hereof.  Except as provided in Section 4.01,
this Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof that, when taken together, bear the signatures of each of
the other parties hereto.  Delivery of an
executed counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this Agreement.

10.11       Survival of
Representations and Warranties.  All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or 

 111
 

thereto or in connection herewith or therewith shall survive the
execution and delivery hereof and thereof. 
Such representations and warranties have been or will be relied upon by
the Administrative Agent and each Lender, regardless of any investigation made
by the Administrative Agent or any Lender or on their behalf and
notwithstanding that the Administrative Agent or any Lender may have had notice
or knowledge of any Default at the time of any Credit Extension, and shall
continue in full force and effect as long as any Loan or any other Obligation
hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall
remain outstanding.

10.12       Severability.  If any provision of this Agreement or the
other Loan Documents is held to be illegal, invalid or unenforceable, (a) the
legality, validity and enforceability of the remaining provisions of this
Agreement and the other Loan Documents shall not be affected or impaired
thereby and (b) the parties shall endeavor in good faith negotiations to
replace the illegal, invalid or unenforceable provisions with valid provisions
the economic effect of which comes as close as possible to that of the illegal,
invalid or unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

10.13       Replacement of
Lenders.  If any Lender requests
compensation under Section 3.04, or if the Borrowers are required
to pay any additional amount to any Lender or any Governmental Authority for
the account of any Lender pursuant to Section 3.01, or if any
Lender is a Defaulting Lender, then the Borrowers may, at their sole expense
and effort, upon notice to such Lender and the Administrative Agent, require
such Lender to assign and delegate, without recourse (in accordance with and
subject to the restrictions contained in, and consents required by, Section 10.06),
all of its interests, rights and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which
assignee may be another Lender, if a Lender accepts such assignment), provided
that:

(a)           the
Borrowers shall have paid to the Administrative Agent the assignment fee
specified in Section 10.06(b);

(b)           such
Lender shall have received payment of an amount equal to the outstanding
principal of its Loans and L/C Advances, accrued interest thereon, accrued fees
and all other amounts payable to it hereunder and under the other Loan
Documents (including any amounts under Section 3.05) from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrowers (in the case of all other amounts);

(c)           in
the case of any such assignment resulting from a claim for compensation under Section
3.04 or payments required to be made pursuant to Section 3.01,
such assignment will result in a reduction in such compensation or payments
thereafter; and

(d)           such
assignment does not conflict with applicable Laws.

A Lender shall not be required to make any such
assignment or delegation if, prior thereto, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrowers to require such
assignment and delegation cease to apply.

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10.14       Governing Law;
Jurisdiction; Etc.

(a)           GOVERNING
LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
CALIFORNIA.

(b)           SUBMISSION
TO JURISDICTION.  EACH BORROWER AND
EACH OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND
ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF
CALIFORNIA SITTING IN LOS ANGELES COUNTY AND OF THE UNITED STATES DISTRICT
COURT OF THE SOUTHERN DISTRICT OF CALIFORNIA, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH CALIFORNIA STATE COURT OR, TO THE FULLEST EXTENT PERMITTED
BY APPLICABLE LAW, IN SUCH FEDERAL COURT. 
EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH
ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER
JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY
LAW.  NOTHING IN THIS AGREEMENT OR IN ANY
OTHER LOAN DOCUMENT SHALL AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY
LENDER OR THE L/C ISSUER MAY OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AGAINST ANY BORROWER OR
ANY OTHER LOAN PARTY OR ITS PROPERTIES IN THE COURTS OF ANY JURISDICTION.

(c)           WAIVER
OF VENUE.  EACH BORROWER AND EACH
OTHER LOAN PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO
THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN
PARAGRAPH (B) OF THIS SECTION.  EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

(d)           SERVICE
OF PROCESS.  EACH PARTY HERETO
IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES
IN SECTION 10.02.  NOTHING IN
THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY APPLICABLE LAW

10.15       California Judicial
Reference.  If any action or
proceeding is filed in a court of the State of California by or against any
party hereto in connection with any of the transactions contemplated by this
Agreement or any other Loan Document, (a) the court shall, and is hereby 

 113
 

directed to, make a general reference pursuant to California Code of
Civil Procedure Section 638 to a referee (who shall be a single active or
retired judge) to hear and determine all of the issues in such action or
proceeding (whether of fact or of law) and to report a statement of decision,
provided that at the option of any party to such proceeding, any such issues
pertaining to a “provisional remedy” as defined in California Code of Civil
Procedure Section 1281.8 shall be heard and determined by the court, and (b)
without limiting the generality of Section 10.04, the Borrowers
shall be solely responsible to pay all fees and expenses of any referee
appointed in such action or proceeding.

10.16       No Advisory or
Fiduciary Responsibility.  In connection with all aspects of
each transaction contemplated hereby (including in connection with any
amendment, waiver or other modification hereof or of any other Loan Document),
each Borrower acknowledges and agrees, and acknowledges its Affiliates’
understanding, that: (i) (A) the arranging and other services regarding this
Agreement provided by the Administrative Agent and the Arranger are arm’s-length
commercial transactions between the Borrowers and their respective Affiliates,
on the one hand, and the Administrative Agent and the Arranger, on the other
hand, (B) each Borrower has consulted its own legal, accounting, regulatory and
tax advisors to the extent it has deemed appropriate, and (C) each Borrower is
capable of evaluating, and understands and accepts, the terms, risks and
conditions of the transactions contemplated hereby and by the other Loan
Documents; (ii) (A) the Administrative Agent and the Arranger each is and has
been acting solely as a principal and, except as expressly agreed in writing by
the relevant parties, has not been, is not, and will not be acting as an
advisor, agent or fiduciary for any Borrower or any of their respective Affiliates,
or any other Person and (B) neither the Administrative Agent nor the Arranger
has any obligation to any Borrower or any of their respective Affiliates with
respect to the transactions contemplated hereby except those obligations
expressly set forth herein and in the other Loan Documents; and (iii) the
Administrative Agent and the Arranger and their respective Affiliates may be
engaged in a broad range of transactions that involve interests that differ
from those of the Borrowers and their respective Affiliates, and neither any
Administrative Agent nor the Arranger has any obligation to disclose any of
such interests to the Borrowers or any of their respective Affiliates.  To the fullest extent permitted by law, each
Borrower hereby waives and releases any claims that it may have against the
Administrative Agent and the Arranger with respect to any breach or alleged
breach of agency or fiduciary duty in connection with any aspect of any
transaction contemplated hereby.

10.17       USA PATRIOT Act
Notice.  Each Lender that is subject
to the Act (as hereinafter defined) and the Administrative Agent (for itself
and not on behalf of any Lender) hereby notifies the Borrowers that pursuant to
the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed
into law October 26, 2001)) (the “Act”), it is required to obtain,
verify and record information that identifies each Loan Party, which
information includes the name and address of each Loan Party and other
information that will allow such Lender or the Administrative Agent, as
applicable, to identify each Loan Party in accordance with the Act.

 114

IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be duly executed as of the date first
above written.

PROSPECT MEDICAL HOLDINGS, INC.

By:                                                                                                          

Name:                                                                                                     

Title:                                                                                                       

PROSPECT MEDICAL GROUP, INC.

By:                                                                                                          

Name:                                                                                                     

Title:                                                                                                       

 S-1
 

BANK OF AMERICA, N.A., as Administrative Agent

By:                                                                                                          

Name:                                                                                                     

Title:                                                                                                       

 S-2
 

BANK OF AMERICA, N.A., as a Lender and 

L/C Issuer 

By:                                                                                                          

Name:                                                                                                     

Title:                                                                                                       

 S-3
 

BANC OF AMERICA CAPITAL SOLUTIONS LLC, as a Lender

By:                                                                                                          

Name:                                                                                                     

Title:                                                                                                       

 

 S-4

SCHEDULE
2.01

COMMITMENTS

AND APPLICABLE PERCENTAGES

Revolving Credit Commitments

	
  Revolving Credit Lender

  	
   

  	
  Revolving Credit 

  Commitment

  	
   

  	
  Applicable

  Percentage

  	
   

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  100.000000000

  	
  %

  
	
  Total

  	
   

  	
  $

  	
  5,000,000

  	
   

  	
  100.000000000

  	
  %

  

 

Term Commitments

	
  Term Lender

  	
   

  	
  Term Commitment

  	
   

  	
  Applicable

  Percentage

  	
   

  
	
  Banc of America Capital
  Solutions LLC

  	
   

  	
  $

  	
  28,000,000

  	
   

  	
  58.33333333

  	
  %

  
	
  Bank of America, N.A.

  	
   

  	
  $

  	
  20,000,000

  	
   

  	
  41.66666667

  	
  %

  
	
  Total

  	
   

  	
  $

  	
  50,000,000

  	
   

  	
  100.000000000

  	
  %

  

 

 Schedule 2.01
 1

 

SCHEDULE
7.06

1.                                       Amended and Restated
Management Services Agreement, made as of September 15, 1998 and deemed to
have been effective as of June 4, 1996, between Prospect Medical Systems, Inc.
and Prospect Medical Group, Inc.

a.                                       Amendment to
Management Services Agreement, made as of October 1, 1998, between
Prospect Medical Systems, Inc. and Prospect Medical Group, Inc.

2.                                       Management Agreement dated
as of January 1, 2003 between Pinnacle Health Resources and StarCare
Medical Group, Inc., dba Gateway Medical Group, Inc.

a.                                       Amendment to Management
Agreement effective February 1, 2004, between Pinnacle Health Resources
and StarCare Medical Group, Inc., dba Gateway Medical Group, Inc.

b.                                      Assignment of
Management Agreement effective December 12, 2005 between Pinnacle Health
Resources and Prospect Medical Systems, Inc.

3.                                       Management Agreement dated
as of January 1, 2003 between Pinnacle Health Resources and APAC Medical Group,
Inc., dba Gateway Physicians Medical Associates, Inc.

a.                                       Amendment to
Management Agreement effective February 1, 2004, between Pinnacle Health
Resources and APAC Medical Group, Inc., dba Gateway Physicians Medical
Associates, Inc.

b.                                      Assignment of
Management Agreement effective December 12, 2005 between Pinnacle Health
Resources and Prospect Medical Systems, Inc.

4.                                       Management Services
Agreement, made as of August 1, 1999, between Prospect Medical Systems, Inc.
and Nuestra Familia Medical Group.

5.                                       Management Services
Agreement, made as of July 1, 1999, between Prospect Medical Systems, Inc. and
AMVI/Prospect Medical Group.

6.                                       Management Services
Agreement dated as of January 1, 2001 between Prospect Medical Systems, Inc.
and Prospect Health Source Medical Group, Inc.

a.                                       Amendment to
Management Services Agreement dated as of November 1, 2002 between Prospect
Medical Systems, Inc. and Prospect Health Source Medical Group, Inc.

7.                                       Management Services
Agreement dated as of October 1, 2003, by and between Prospect Medical Systems,
Inc. and Prospect Professional Care Medical Group, Inc.

8.                                       Management Services
Agreement dated as of March 1, 2004 by and between Prospect Medical Systems,
Inc. and Prospect NWOC Medical Group, Inc.

 Schedule 7.06
 1
 

9.                                       Second Amended and Restated
Management Services Agreement, made as of September 15, 1998 and deemed to have
been effective as of September 25, 1997, between Sierra Medical Management,
Inc. and Sierra Primary Care Medical Group, Inc.

a.                                       Amendment to
Management Services Agreement, made as of October 1, 1998, between Sierra
Medical Management, Inc. and Sierra Primary Care Medical Group, Inc.

10.                                 Amended and Restated
Management Services Agreement, made as of September 15, 1998 and deemed to have
been effective as of October 31, 1997, by and between Sierra Medical
Management, Inc. and Pegasus Medical Group, Inc.

a.                                       Amendment to
Management Services Agreement made as of October 1, 1998, by and between Sierra
Medical Management, Inc. and Pegasus Medical Group, Inc.

11.                                 Management Services
Agreement effective as of May 19, 2003 between Sierra Medical Management, Inc.,
and Antelope Valley Medical Associates, Inc.

12.                                  Management Services
Agreement dated as of July 14, 1997 between Prospect Medical Systems, Inc., and
Santa Ana/Tustin Physicians Group Inc.

13.                                 Management Agreement dated
November 1, 2006 between Prospect Medical Systems, Inc. and Genesis Healthcare
of Southern California, a Medical Group.

14.                                 Management Services
Agreement effective as of October 1, 2002 between ProMed Health Care
Administrators and Upland Medical Group, A Professional Medical Corporation.

15.                                 Management Services
Agreement effective as of October 1, 1998 between ProMed Health Care
Administrators and Pomona Valley Medical Group, Inc.

 Schedule 7.06
 2

SCHEDULE
10.02

ADMINISTRATIVE AGENT’S OFFICE:

Administrative Agent’s
Office 

(for payments and Requests for Credit Extensions):

Bank of America, N.A.

Credit Services West

Mail Code:  CA4-702-02-25

2001 Clayton Road, Floor 2,
Building B

Concord, CA 94520

Attention:            Adam Stoner

Telephone: 
(925)-675-8825

Telecopier: 
888-206-6220

Electronic Mail: 
adam.j.stoner@bankofamerica.com

Wire Instruction:

Bank of America, New York, NY

ABA# 026009593

Account Name: 
Corporate FTA

Account No.: 
3750836479

Attention:  Adam
Stoner

Ref.:  Prospect
Medical Holdings, Inc.

Other Notices as Administrative Agent:

Bank of America, N.A.

Agency Management

Mail Code:  WA1-501-32-37

800 Fifth Avenue, Floor 32

Seattle, WA 98104

Attention:            Tiffany Shin

Telephone: 
(206)358-0078

Telecopier: 
(206)358-0971

Electronic Mail: 
tiffany.shin@bankofamerica.com

 Schedule 10.02
 1
 

L/C ISSUER:

Standby Letters of Credit:

Bank of America, N.A.

Trade Operations-Standby LC

Mail Code: CA9-705-07-05

1000 West Temple Street, Floor 7

Los Angeles, CA 
90012-1514

Attention:            Tai
Lu

Telephone: 
213-481-7840

Telecopier: 
213-580-8442

Electronic Mail: 
tai_anh.lu@bankofamerica.com

 

 Schedule 10.02
 2

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