Document:

<PAGE>

                                                                   EXHIBIT 10.19

                                 $400,000,000

                               CREDIT AGREEMENT

                            Dated as of May 3, 2001

                                     Among

                                  DAVITA INC.

                                  as Borrower
                                  -- --------

                                      and

                 THE INITIAL LENDERS, INITIAL ISSUING BANK AND
                         SWING LINE BANK NAMED HEREIN

         as Initial Lenders, Initial Issuing Bank and Swing Line Bank
         -- ------- -------  ------- ------- ---- --- ----- ---- ----

                                      and

                             BANK OF AMERICA, N.A.,

                             as Administrative Agent
                             -- -------------- -----

                                       and

                         BANC OF AMERICA SECURITIES LLC

                                       and

                           CREDIT SUISSE FIRST BOSTON

                 as Joint Lead Arrangers and Joint Book Managers
                 -- ----- ---- --------- --- ----- ---- --------

                                       and

                           CREDIT SUISSE FIRST BOSTON

                              as Syndication Agent
                              -- ----------- -----

                                      and

        THE BANK OF NEW YORK, THE BANK OF NOVA SCOTIA and SUNTRUST BANK

                            as Documentation Agents
                            -- ------------- ------

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section                                                                                  Page
-------                                                                                  ----

                                   ARTICLE I

                       DEFINITIONS AND ACCOUNTING TERMS
<S>                                                                                      <C>
SECTION 1.01. Certain Defined Terms.....................................................   1
SECTION 1.02. Computation of Time Periods; Other Definitional Provisions................  29
SECTION 1.03. Accounting Terms..........................................................  29
SECTION 1.04. Currency Equivalents Generally............................................  29

                                   ARTICLE II

           AMOUNTS AND TERMS OF THE ADVANCES AND THE LETTERS OF CREDIT

SECTION 2.01. The Advances and the Letters of Credit....................................  30
SECTION 2.02. Making the Advances.......................................................  32
SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of Credit........  35
SECTION 2.04. Repayment of Advances.....................................................  37
SECTION 2.05. Termination or Reduction of the Commitments...............................  40
SECTION 2.06. Prepayments...............................................................  41
SECTION 2.07. Interest..................................................................  44
SECTION 2.08. Fees......................................................................  45
SECTION 2.09. Conversion of Advances....................................................  45
SECTION 2.10. Increased Costs, Etc......................................................  47
SECTION 2.11. Evidence of Debt..........................................................  49
SECTION 2.12. Payments and Computations.................................................  49
SECTION 2.13. Taxes.....................................................................  52
SECTION 2.14. Sharing of Payments, Etc..................................................  55
SECTION 2.15. Use of Proceeds...........................................................  55
SECTION 2.16. Defaulting Lenders........................................................  55

                                  ARTICLE III

              CONDITIONS OF LENDING AND ISSUANCES OF LETTERS OF CREDIT

SECTION 3.01. Conditions Precedent to Initial Extension of Credit.......................  58
SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance and Renewal...........  61
SECTION 3.03. Determinations Under Section 3.01.........................................  62

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

SECTION 4.01. Representations and Warranties of the Borrower............................  62
</TABLE>

<PAGE>

                                      ii

<TABLE>

                                   ARTICLE V

                           COVENANTS OF THE BORROWER
<S>                                                                                  <C>
SECTION 5.01. Affirmative Covenants................................................  67
SECTION 5.02. Negative Covenants...................................................  70
SECTION 5.03. Reporting Requirements...............................................  80
SECTION 5.04. Financial Covenants..................................................  82

                                  ARTICLE VI

                               EVENTS OF DEFAULT

SECTION 6.01. Events of Default....................................................  84
SECTION 6.02. Actions in Respect of the Letters of Credit upon Default ............  87

                                  ARTICLE VII

                                  THE AGENTS

SECTION 7.01. Appointment, Powers and Immunity.....................................  88
SECTION 7.02. Reliance by Agent....................................................  89
SECTION 7.03. Defaults.............................................................  89
SECTION 7.04. BofA, BAS and Affiliates.............................................  89
SECTION 7.05. Indemnification......................................................  90
SECTION 7.06. Non-Reliance on Agent and Other Lender Parties.......................  91
SECTION 7.07. Resignation of Administrative Agent..................................  91
SECTION 7.08. Release of Collateral................................................  92
SECTION 7.09. Release of Guarantor.................................................  92

                                 ARTICLE VIII

                                 MISCELLANEOUS

SECTION 8.01. Amendments, Etc......................................................  92
SECTION 8.02. Notices, Etc.........................................................  94
SECTION 8.03. No Waiver; Remedies..................................................  94
SECTION 8.04. Costs and Expenses...................................................  94
SECTION 8.05. Right of Set-off.....................................................  96
SECTION 8.06. Binding Effect.......................................................  96
SECTION 8.07. Assignments and Participations.......................................  97
SECTION 8.08. Execution in Counterparts............................................ 101
SECTION 8.09. No Liability of the Issuing Bank..................................... 101
SECTION 8.10. Confidentiality...................................................... 101
SECTION 8.11. Execution in Counterparts............................................ 102
SECTION 8.12. Governing Law, Jurisdiction, Etc..................................... 102
SECTION 8.13. Designation as Designated Senior Debt................................ 102
SECTION 8.14. WAIVER OF JURY TRIAL................................................. 104
</TABLE>

<PAGE>

                         iii

SCHEDULES
---------

Schedule I         -     Commitments and Applicable Lending Offices

Schedule II        -     Existing Letters of Credit

Schedule 4.01(b)   -     Subsidiaries

Schedule 4.01(d)   -     Authorizations

Schedule 4.01(f)   -     Litigation

Schedule 4.01(o)   -     Environmental Laws

Schedule 4.01(p)   -     Open Years

Schedule 4.01(q)   -     Liens

Schedule 4.01(r)   -     Investments

Schedule 4.01(s)   -     Facilities

Schedule 5.02 (b)  -     Debt

EXHIBITS
--------

Exhibit A-1       -      Form of Term A Note

Exhibit A-2       -      Form of Term B Note

Exhibit A-3       -      Form of Revolving Credit Note

Exhibit B-1       -      Form of Notice of Borrowing

Exhibit B-2       -      Form of Notice of Swing Line Borrowing

Exhibit B-3       -      Form of Notice of Conversion

Exhibit C         -      Form of Assignment and Acceptance

Exhibit D         -      Form of Security Agreement

Exhibit E         -      Form of Subsidiary Guaranty

Exhibit F         -      Form of Opinion of Borrower's General Counsel

Exhibit G         -      Form of Opinion of Riordan & McKinzie

Exhibit H         -      Entities that are not Subsidiaries

<PAGE>

                               CREDIT AGREEMENT

               CREDIT AGREEMENT dated as of May 3, 2001 among DAVITA INC., a
Delaware corporation (the "Borrower"), the banks, financial institutions and
other institutional lenders listed on the signature pages hereof under the
caption "Initial Lenders" (the "Initial Lenders"), BANK OF AMERICA, N.A.
("BofA"), as the initial issuer of Letters of Credit (as hereinafter defined)
hereunder (the "Initial Issuing Bank"), and as the provider of the Swing Line
Facility (as hereinafter defined) hereunder (the "Swing Line Bank"), THE BANK OF
NEW YORK ("BONY"), as Issuing Bank (as hereinafter defined), BANC OF AMERICA
SECURITIES LLC ("BAS") and CREDIT SUISSE FIRST BOSTON ("CSFB"), as the joint
book managers and joint lead arrangers (the "Book Managers") for the Facilities
(as hereinafter defined), BofA as the administrative agent (together with any
successor thereto appointed pursuant to Article VII, the "Administrative Agent")
for the Lender Parties (as hereinafter defined), BONY, THE BANK OF NOVA SCOTIA
AND SUNTRUST BANK, as documentation agents (the "Documentation Agents") and
CSFB, as syndication agent (the "Syndication Agent").

                            PRELIMINARY STATEMENTS:

               The Borrower has requested that the Lender Parties provide credit
facilities in an aggregate amount of $400,000,000 as provided herein, and the
Lender Parties have agreed to provide such credit facilities on the terms and
conditions of this Agreement.

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

                                   ARTICLE I

                       DEFINITIONS AND ACCOUNTING TERMS

          SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
          -----------------------------------
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and the plural forms of the terms defined):

               "Administrative Agent" has the meaning specified in the recital
          of parties to this Agreement.

               "Administrative Agent's Account" means the account of the
          Administrative Agent maintained by the Administrative Agent at its
          office at 101 North Tryon Street, 15th Floor, NC1-001-15-04,
          Charlotte, North Carolina 28255, ABA No. 053-000-196, Account No.
          13662122506, Reference: DaVita Inc., Attention: Corporate Credit
          Services, or such other account maintained by the Administrative Agent
          and designated by the Administrative Agent from time to time as such
          in a written notice to the Borrower and each of the Lender Parties.

               "Advance" means a Term A Advance, a Term B Advance, a Revolving
          Credit Advance, a Swing Line Advance or a Letter of Credit Advance, as
          the context may require.

               "Affiliate" means, with respect to any Person, any other Person
          that, directly or indirectly, controls, is controlled by or is under
          common control with such Person or is a director or officer of such
          Person. For purposes of this definition, the term "control" (including
          the terms "controlling," "controlled by" and "under common control
          with") of a Person means the possession, direct or indirect, of the
          power to vote 10% or more of the Voting Interests in such
<PAGE>

                                       2

          Person or to direct or cause the direction of the management and
          policies of such Person, whether through the ownership of Voting
          Interests, by contract or otherwise.

               "Agents" means, collectively, the Administrative Agent, the Book
          Managers, the Syndication Agent, the Documentation Agents and each co-
          agent or sub-agent appointed by the Administrative Agent from time to
          time pursuant to Section 7.01(b).

               "Agreement" means this Credit Agreement, as the same may be
          amended, restated, supplemented or otherwise modified from time to
          time.

               "Agreement Value" means, for each Hedge Agreement, on any date of
          determination, an amount reasonably determined by the Administrative
          Agent equal to: (a) in the case of a Hedge Agreement documented
          pursuant to the Master Agreement (Multicurrency-Cross Border)
          published by the International Swap and Derivatives Association, Inc.
          (the "Master Agreement"), the amount, if any, that would be payable by
          any Loan Party to its counterparty in respect of such Hedge Agreement,
          as if (i) such Hedge Agreement was being terminated early on such date
          of determination, (ii) such Loan Party was the sole "Affected Party",
          and (iii) the Administrative Agent was the sole party determining such
          payment amount (with the Administrative Agent making such
          determination pursuant to the provisions of that specific form of
          Master Agreement); or (b) in the case of a Hedge Agreement traded on
          an exchange, the mark-to-market value of such Hedge Agreement, which
          will be the unrealized gain or loss on such Hedge Agreement to the
          Loan Party to such Hedge Agreement reasonably determined by the
          Administrative Agent based on the settlement price of such Hedge
          Agreement on such date of determination, or (c) in all other cases,
          the mark-to-market value of such Hedge Agreement, which will be the
          unrealized gain or loss on such Hedge Agreement to the Loan Party to
          such Hedge Agreement reasonably determined by the Administrative Agent
          as the amount, if any, by which (i) the present value of the future
          cash flows to be paid by such Loan Party exceeds (ii) the present
          value of the future cash flows to be received by such Loan Party
          pursuant to such Hedge Agreement; capitalized terms used and not
          otherwise defined in this definition shall have the respective
          meanings set forth in the above described Master Agreement.

               "Ancillary Services" means services relating to the needs of
          patients with "End Stage Renal Disease" and ancillary to the provision
          of Dialysis Services, including, but not limited to, the
          administration of erythropoietin, intradialytic parenteral nutrition,
          bone densitometry studies, EKGs, nerve conduction studies, Doppler
          Flow Testing, blood transfusions, pharmacy and laboratory services,
          technical services with respect to equipment used in connection with
          the provision of Dialysis Services and management services with
          respect to the provision of Dialysis Services.

               "Applicable Lending Office" means (a) with respect to each of the
          Lenders, the Base Rate Lending Office of such Lender in the case of a
          Base Rate Advance and the Eurodollar Lending Office of such Lender in
          the case of a Eurodollar Rate Advance and (b) with respect to the
          Issuing Bank and the Swing Line Bank, the Base Rate Lending Office of
          the Issuing Bank and the Swing Line Bank, respectively, for all
          purposes of this Agreement.

               "Applicable Margin" means (i) at any time during the period from
          the date of this Agreement through the date of receipt by the
          Administrative Agent of the Required Financial Information for the
          Measurement Period ending March 31, 2001, 1.75% per annum for Base
          Rate Advances under the Term A Facility and the Revolving Credit
          Facility and 1.75% per annum for Base Rate Advances under the Term B
          Facility and 2.75% per annum for Eurodollar Rate Advances under the
          Term A Facility and the Revolving Credit Facility and 2.75% per annum
          for
<PAGE>

                                       3

          Eurodollar Rate Advances under the Term B Facility and (ii) at any
          time and from time to time thereafter, on any date of determination, a
          percentage per annum equal to the applicable percentage for the
          Performance Level set forth below as determined by reference to the
          Leverage Ratio for the most recently completed Measurement Period:

<TABLE>
<CAPTION>
======================================================================================================================
                                                   Base Rate Advances                        Eurodollar Rate Advances
----------------------------------------------------------------------------------------------------------------------
                                                 Term A                                     Term A            Term
Performance          Leverage          Facility/Revolving Credit         Term B       Facility/Revolving       B
   Level               Ratio                    Facility                Facility       Credit Facility      Facility
----------------------------------------------------------------------------------------------------------------------
<S>                 <C>                <C>                             <C>            <C>                   <C>
I                   Less than          0.75%                           1.75%          1.75%                 2.75%
                    1.75x
----------------------------------------------------------------------------------------------------------------------
II                  Greater than or    1.25%                           1.75%          2.25%                 2.75%
                    equal to 1.75x
                    but less than
                    2.25x
----------------------------------------------------------------------------------------------------------------------
III                 Greater than or    1.50%                           1.75%          2.50%                 2.75%
                    equal to 2.25x
                    but less than
                    3.0x
----------------------------------------------------------------------------------------------------------------------
IV                  Greater than or    1.75%                           1.75%          2.75%                 2.75%
                    equal to 3.0x
                    but less than
                    3.75x
----------------------------------------------------------------------------------------------------------------------
V                   Greater than or    2.00%                           1.75%          3.00%                 2.75%
                    equal to 3.75x
======================================================================================================================
</TABLE>

               For the purposes of:

                         (A)  clause (ii) of the immediately preceding sentence,
                    the Applicable Margin for each Base Rate Advance shall be
                    determined by reference to the Performance Level in effect
                    from time to time and the Applicable Margin for each
                    Eurodollar Rate Advance shall be determined by reference to
                    the Performance Level in effect on the first day of each
                    Interest Period for such Eurodollar Rate Advance; and

                         (B)  determining the Performance Level in respect of
                    the Applicable Margin at any date of determination, changes
                    in the Performance Level shall be effective on the date on
                    which the Administrative Agent and the Lender Parties
                    receive the Required Financial Information reflecting such
                    change; provided, however, that if the Borrower has not
                    delivered to the Administrative Agent and the Lender Parties
                    all of the information required under this clause (B) within
                    five Business Days after the date on which such information
                    is otherwise required under Section 5.03(b) or 5.03(c), as
                    applicable, the Performance Level shall be deemed to be at
                    Performance Level IV for so long as such information has not
                    been submitted;
<PAGE>

                                       4

               "Applicable Percentage" means, with respect to the Commitment
          Fee, (a) at any time during the period from the date of this Agreement
          through the date of receipt by the Administrative Agent of the
          Required Financial Information for the Measurement Period ending March
          31, 2001, 0.50% per annum and (b) at any time and from time to time
          thereafter, a rate per annum equal to the percentage set forth below
          opposite the applicable Performance Level as determined by reference
          to the Leverage Ratio for the most recently completed Measurement
          Period:

<TABLE>
<CAPTION>
          ============================================================================================================
                Performance Level                   Leverage Ratio                         Commitment Fee
          ------------------------------------------------------------------------------------------------------------
                <S>                     <C>                                                <C>
                        I                Less than 1.75x                                       0.375%
          ------------------------------------------------------------------------------------------------------------
                       II                Greater than or equal to 1.75x but                    0.375%
                                         less than 2.25x
          ------------------------------------------------------------------------------------------------------------
                       III               Greater than or equal to 2.25x but                    0.375%
                                         less than 3.0x
          ------------------------------------------------------------------------------------------------------------
                       IV                Greater than or equal to 3.0x but                     0.500%
                                         less than 3.75x
          ------------------------------------------------------------------------------------------------------------
                        V                Greater than or equal to 3.75x                        0.500%
          ============================================================================================================
</TABLE>

          For the purposes of:

                         (A)  clause (b) of the immediately preceding sentence,
                    the Applicable Percentage for the Commitment Fee shall be
                    determined by reference to the Performance Level in effect
                    from time to time; and

                         (B)  determining the Performance Level in respect of
                    the Applicable Percentage at any date of determination,
                    changes in the Performance Level shall be effective on the
                    date on which the Administrative Agent and the Lender
                    Parties receive the Required Financial Information
                    reflecting such change; provided, however, that if the
                    Borrower has not delivered to the Administrative Agent and
                    the Lender Parties all of the information required under
                    this clause (B) within five Business Days after the date on
                    which such information is otherwise required under Section
                    5.03(b) or 5.03(c), as applicable, the Performance Level
                    shall be deemed to be at Performance Level IV for so long as
                    such information has not been submitted;

               "Appropriate Lender" means, at any time, (a) with respect to the
          Term A Facility, the Term B Facility or the Revolving Credit Facility,
          a Lender that has a Commitment with respect to such Facility at such
          time, (b) with respect to the Letter of Credit Facility, (i) the
          Issuing Bank and (ii) if the Revolving Credit Lenders have made Letter
          of Credit Advances pursuant to Section 2.03(c) that are outstanding at
          such time, each such Revolving Credit Lender and (c) with respect to
          the Swing Line Facility, (i) the Swing Line Bank and (ii) if the
          Revolving Credit Lenders have made Swing Line Advances pursuant to
          Section 2.02(b) that are outstanding at such time, each such Revolving
          Credit Lender.

               "Approved Fund" means any Person (other than a natural Person)
          that (i) is (or will be) an "accredited investor" (as defined in
          Regulation D under the Securities Act) engaged in making, purchasing,
          holding or otherwise investing in commercial loans and similar
          extensions of credit in the ordinary course of its business and (ii)
          is administered, advised or managed by (a) a Lender, (b) an Affiliate
          of a Lender or (c) an entity or an Affiliate of an entity that
          administers, advises or manages a Lender.
<PAGE>

                                       5

               "Assignment and Acceptance" means an assignment and acceptance
          entered into by a Lender Party and an Eligible Assignee, and accepted
          by the Administrative Agent and, if applicable, the Borrower, in
          accordance with Section 8.07 and in substantially the form of Exhibit
          C hereto.

               "Assuming Lender" means an Eligible Assignee not previously a
          Lender that becomes a Lender hereunder pursuant to Section 2.05(d) and
          is acceptable to the Administrative Agent (whose acceptance shall not
          be unreasonably withheld or delayed) and to each Issuing Bank (in the
          sole discretion of each Issuing Bank).

               "Assumption Agreement" means an agreement by which an Eligible
          Assignee agrees to become a Lender hereunder pursuant to Section
          2.05(d), agreeing to be bound by all obligations of a Lender
          hereunder.

               "Available Amount" of any Letter of Credit means, at any time,
          the maximum amount available to be drawn under such Letter of Credit
          at such time (assuming compliance at such time with all conditions to
          drawing).

               "Base Rate" means a fluctuating interest rate per annum in effect
          from time to time, which rate per annum shall at all times be equal to
          the higher of:

                    (a)  the rate of interest established by BofA from time to
               time as its prime rate (which rate of interest may not be the
               lowest rate of interest charged by BofA to its customers); and

                    (b)  the Federal Funds Rate plus 0.50%.

               Any change in the Base Rate resulting from a change in the prime
          rate established by BofA shall become effective on the Business Day on
          which such change in the prime rate is announced by BofA.

               "Base Rate Advance" means an Advance that bears interest as
          provided in Section 2.07(a)(i).

               "Base Rate Lending Office" means, with respect to each of the
          Lender Parties, the office of such Lender Party specified as its "Base
          Rate Lending Office" opposite its name on Schedule I hereto or in the
          Assignment and Acceptance pursuant to which it became a Lender Party,
          as the case may be, or such other office of such Lender Party as such
          Lender Party may from time to time specify to the Borrower and the
          Administrative Agent for such purpose.

               "Borrower's Account" means such account of the Borrower as is
          agreed from time to time in writing between the Borrower and the
          Administrative Agent.

               "Borrower's Percentage" means, in respect of the sale or issuance
          of Equity Interests by any Subsidiary of the Borrower, the percentage
          of the common Equity Interests of such Subsidiary beneficially owned
          directly or indirectly by the Borrower after giving effect to such
          sale or issuance.

               "Borrowing" means a Term A Borrowing, a Term B Borrowing, a
          Revolving Credit Borrowing or a Swing Line Borrowing, as the context
          may require.
<PAGE>

                                       6

               "Business Day" means a day of the year on which banks are not
          required or authorized by law to close in New York, New York or
          Charlotte, North Carolina, and, if the applicable Business Day relates
          to any Eurodollar Rate Advances, on which dealings are carried on in
          U.S. dollar deposits in the London interbank market.

               "Capital Assets" means, with respect to any Person, all
          equipment, fixed assets and real property or improvements of such
          Person, or replacements or substitutions therefor or additions
          thereto, that, in accordance with GAAP, have been or should be
          reflected as additions to property, plant or equipment on the balance
          sheet of such Person.

               "Capital Expenditures" means, with respect to any Person for any
          period, all expenditures made directly or indirectly by such Person
          during such period for Capital Assets (whether paid in cash or other
          consideration or accrued as a liability and including, without
          limitation, all expenditures for maintenance and repairs which are
          required, in accordance with GAAP, to be capitalized on the books of
          such Person). For purposes of this definition, the purchase price of
          equipment or other fixed assets that are purchased simultaneously with
          the trade-in of existing assets or with insurance proceeds shall be
          included in Capital Expenditures only to the extent of the gross
          amount by which such purchase price exceeds the credit granted by the
          seller of such assets for the assets being traded in at such time or
          the amount of such insurance proceeds, as the case may be.

               "Capitalized Lease" means any lease with respect to which the
          lessee is required to recognize concurrently the acquisition of
          property or an asset and the incurrence of a liability in accordance
          with GAAP.

               "Capitalized Lease Obligations" means, with respect to any
          Capitalized Lease, the amount required to be capitalized in the
          financial statements of the lessee in accordance with GAAP.

               "Cash Distributions" means, with respect to any Person for any
          period, all dividends and other distributions on any of the
          outstanding Equity Interests in such Person, all purchases,
          redemptions, retirements, defeasances or other acquisitions of any of
          the outstanding Equity Interests in such Person and all returns of
          capital to the stockholders, partners or members (or the equivalent
          persons) of such Person, in each case to the extent paid in cash by or
          on behalf of such Person during such period.

               "Cash Equivalents" means (a) securities with maturities of one
          year or less from the date of acquisition, issued, fully guaranteed or
          insured by the United States Government, (b) securities with
          maturities of one year or less from the date of acquisition issued,
          fully guaranteed or insured by any State of the United States of
          America or any political subdivision thereof rated at least AA- by
          S&P's Ratings Services or Aa3 by Moody's, or carrying an equivalent
          rating by a nationally recognized rating agency if both of the two
          named rating agencies cease publishing ratings of investments, (c)
          certificates of deposit, time deposits, overnight bank deposits,
          bankers' acceptances and repurchase agreements issued by a Qualified
          Issuer having maturities of 270 days or less from the date of
          acquisition, (d) commercial paper of an issuer rated at least A-2 by
          S&P's Ratings Services or P-2 by Moody's, or carrying an equivalent
          rating by a nationally recognized rating agency if both of the two
          named rating agencies cease publishing ratings of investments, and
          having maturities of 270 days or less from the date of acquisition,
          (e) money market accounts or funds, a substantial portion of the
          assets of which constitute Cash Equivalents described in clauses (a)
          through (d) above, with, issued by or managed by Qualified Issuers,
          and (f) money market accounts or funds, a substantial portion of the
          assets of which constitute Cash
<PAGE>

                                       7

          Equivalents described in clauses (a) through (d) above, which money
          market accounts or funds have net assets of not less than $500,000,000
          and have the highest rating available of either S&P's Ratings Services
          or Moody's, or carrying an equivalent rating by a nationally
          recognized rating agency if both of the two named rating agencies
          cease publishing ratings of investments.

               "CERCLA" means the Comprehensive Environmental Response,
          Compensation and Liability Act of 1980, as amended from time to time.

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

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

               "Change of Control" means, at any time:

               (a)  any "person" or "group" (each as used in Sections 13(d)(3)
          and 14(d)(2) of the Exchange Act) (i) becomes the "beneficial owner"
          (as defined in Rule 13d-3 of the Exchange Act), directly or
          indirectly, of Voting Interests in the Borrower (including through
          securities convertible into or exchangeable for such Voting Interests)
          representing 35% or more of the combined voting power of all of the
          Voting Interests in the Borrower (on a fully diluted basis) or (ii)
          otherwise has the ability, directly or indirectly, to elect a majority
          of the board of directors of the Borrower; or

               (b)  during any period of 24 consecutive months, whether
          commencing before or after the date of this Agreement, individuals who
          at the beginning of such 24-month period were Continuing Directors
          shall cease for any reason to constitute a majority of the board of
          directors of the Borrower;

               "Closing Date" means the first date on which all of the
          conditions precedent to the Initial Extension of Credit set forth in
          Article III are satisfied, which date shall occur on or prior to May
          4, 2001.

               "Collateral" means all of the "Collateral" referred to in the
          Collateral Documents and all of the other property and assets that are
          or are 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 Documents" means, collectively, the Security
          Agreement, collateral assignments, Security Agreement Supplements,
          security agreements, pledge agreements or other similar agreements
          delivered to the Administrative Agent and the Lender Parties pursuant
          to Section 3.01(a) or Section 5.01(j), 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.

               "Commitment" means a Revolving Credit Commitment, a Swing Line
          Commitment or a Letter of Credit Commitment, as the context may
          require.

               "Commitment Fee" has the meaning specified in Section 2.08(a).
<PAGE>

                                       8

               "Confidential Information" means information that is furnished to
          the Administrative Agent or any of the Lender Parties by or on behalf
          of the Borrower or any of its Subsidiaries in a writing that is marked
          as confidential or otherwise on an expressly confidential basis, but
          does not include any such information that (a) is or becomes generally
          available to the public (other than as a result of a breach by the
          Administrative Agent or such Lender Party of its confidentiality
          obligations under this Agreement) or (b) is or becomes available to
          the Administrative Agent or such Lender Party from a source other than
          the Borrower or any of its Subsidiaries that is not, to the knowledge
          of the Administrative Agent or such Lender Party, acting in violation
          of a confidentiality agreement with the Borrower or any such
          Subsidiary.

               "Consolidated" refers to the consolidation of accounts in
          accordance with GAAP.

               "Consolidated Cash Taxes" means, with respect to any Person for
          any period, (a) the aggregate amount of all payments in respect of
          income taxes made in cash by such Person and its Subsidiaries to any
          applicable Governmental Authority during such period less (b) the
          aggregate amount of all cash refunds in respect of income taxes
          received by such Person and its Subsidiaries from any applicable
          Governmental Authority during such period, after giving effect, to the
          extent available, to the application of net operating losses available
          to such Person or any such Subsidiary.

               "Consolidated EBITDA" means, with respect to any Person for any
          period, the amount equal to (I) the sum of (a) the Consolidated Net
          Income of such Person and its Subsidiaries for such period plus (b)
          the sum of each of the following expenses that have been deducted in
          the determination of the Consolidated Net Income of such Person and
          its Subsidiaries for such period: (i) the Consolidated Interest
          Expense of such Person and its Subsidiaries for such period, (ii) all
          income tax expense (whether federal, state, local, foreign or
          otherwise) of such Person and its Subsidiaries for such period, (iii)
          all depreciation expense of such Person and its Subsidiaries for such
          period, (iv) all amortization expense of such Person and its
          Subsidiaries for such period and (v) all non-cash charges otherwise
          deducted in determining the Consolidated Net Income of such Person and
          its Subsidiaries for such period less all extraordinary gains added in
          determining the Consolidated Net Income of such Person and its
          Subsidiaries for such period; provided that for any period, the amount
          of non-cash charges arising from the write-off of current assets shall
          not be included in this subclause (v) plus (c) for each such period
          ending during the twelve-month period immediately following the
          closing of any acquisition permitted under Section 5.02(f), an amount
          equal to the Consolidated EBITDA (calculated on the basis as provided
          herein) for each such acquisition calculated on a pro forma basis as
          if such acquisition had occurred on the first day of the twelve-month
          period then ended, minus (d) any cash expenditures for such period
          relating to the non-cash charges set forth in subclause (b)(v) hereof,
          whether for such period or any prior period, plus (e) non-recurring
          charges incurred during such period not exceeding in the aggregate
          during the period from April 1, 2000 and continuing through the term
          of this Agreement $45,000,000 resulting from the write-off of accounts
          receivable and other related charges as a result of the pending third
          party carrier review of claims for Medicare reimbursement submitted by
          the Subsidiary of the Borrower operating the Borrower's Florida
          laboratory or other Governmental Reimbursement Program Costs, minus
          (II) in respect of (a) any Subsidiary sold in such period or (b) any
          assets sold or disposed of in such period as to which EBITDA
          attributable thereto can be determined, an amount equal to the
          Consolidated EBITDA (calculated on the basis as provided herein) for
          each such sale or disposition otherwise included in Consolidated
          EBITDA for such period.

               "Consolidated Interest Expense" means, with respect to any Person
          for any period, the gross interest expense accrued on all Debt of such
          Person and its Subsidiaries during such period,
<PAGE>

                                       9

          determined on a Consolidated basis and in accordance with GAAP for
          such period, including, without limitation, (a) in the case of the
          Borrower, all fees paid or payable pursuant to Section 2.08(a), (b)
          commissions, discounts and other fees and charges paid or payable in
          connection with letters of credit (including, without limitation, the
          Letters of Credit), (c) all amortization of original issue discount in
          respect of all Debt of such Person and its Subsidiaries, (d) all
          dividends on Redeemable Preferred Interests, to the extent paid or
          payable in cash, and (e) the net payment, if any, paid or payable in
          connection with Hedge Agreements less the net credit, if any, received
          in connection with Hedge Agreements.

               "Consolidated Net Income" means, for any period, the net income
          (or net loss) of any Person and its Subsidiaries for such period,
          determined on a Consolidated basis and in accordance with GAAP.

               "Consolidated Pre-Minority EBITDA" means Consolidated EBITDA plus
          minority interests in income of consolidated Subsidiaries of the
          Borrower to the extent deducted in determining net income of the
          Borrower and its Subsidiaries on a Consolidated basis in the
          calculation of Consolidated EBITDA.

               "Constitutive Documents" means, with respect to any Person, the
          certificate of incorporation or registration (including, if
          applicable, certificate of change of name), articles of incorporation
          or association, memorandum of association, charter, bylaws,
          certificate of limited partnership, partnership agreement, trust
          agreement, joint venture agreement, certificate of formation, articles
          of organization, limited liability company operating or members
          agreement, joint venture agreement or one or more similar agreements,
          instruments or documents constituting the organization or formation of
          such Person.

               "Contingent Obligation" means, with respect to any Person, any
          Obligation or arrangement of such Person to guarantee or intended to
          guarantee any Debt, leases, dividends or other obligations ("primary
          obligations") of any other Person (the "primary obligor") in any
          manner, whether directly or indirectly, including, without limitation,
          (a) the direct or indirect guarantee, endorsement (other than for
          collection or deposit in the ordinary course of business), co-making,
          discounting with recourse or sale with recourse by such Person of the
          Obligation of a primary obligor, (b) the Obligation to make take-or-
          pay or similar payments, if required, regardless of nonperformance by
          any other party or parties to an agreement or (c) any Obligation of
          such Person, whether or not contingent, (i) to purchase any such
          primary obligation or any property constituting direct or indirect
          security therefor, (ii) to advance or supply funds (A) for the
          purchase or payment of any such primary obligation or (B) to maintain
          working capital, equity capital, net worth or other balance sheet
          condition or any income statement condition of the primary obligor or
          otherwise to maintain the solvency of the primary obligor, (iii) to
          purchase, lease or otherwise acquire property, assets, securities or
          services primarily for the purpose of assuring the owner of any such
          primary obligation of the ability of the primary obligor to make
          payment of such primary obligation or (iv) otherwise to assure or hold
          harmless the holder of such primary obligation against loss in respect
          thereof. The amount of any Contingent Obligation shall be deemed to be
          an amount equal to the stated or determinable amount of the primary
          obligation in respect of which such Contingent Obligation is made (or,
          if less, the maximum amount of such primary obligation for which such
          Person may be liable pursuant to the terms of the agreement,
          instrument or other document evidencing such Contingent Obligation)
          or, if not stated or determinable, the maximum reasonably anticipated
          liability in respect thereof (assuming such Person is required to
          perform thereunder), as determined by such Person in good faith.
<PAGE>

                                       10

               "Continuing Director" means, for any period, an individual who is
          a member of the board of directors of the Borrower on the first day of
          such period or who has been nominated to the board of directors of the
          Borrower by a majority of the other Continuing Directors who were
          members of the board of directors of the Borrower at the time of such
          nomination.

               "Conversion", "Convert" and "Converted" each refer to a
          conversion of Advances of one Type into Advances of the other Type
          pursuant to Section 2.09 or 2.10.

               "Current Assets" means, with respect to any Person, all assets of
          such Person that, in accordance with GAAP, would be classified as
          current assets on the balance sheet of a company conducting a business
          the same as or similar to that of such Person, after deducting
          appropriate and adequate reserves therefrom in each case in which a
          reserve is proper in accordance with GAAP.

               "Current Liabilities" means, with respect to any Person, (a) all
          Debt of such Person that by its terms is payable on demand or matures
          within one year after the date of determination (excluding any Debt
          renewable or extendible, at the option of such Person, to a date more
          than one year from such date or arising under a revolving credit or
          similar agreement that obligates the lender or lenders to extend
          credit during a period of more than one year from such date), (b) all
          amounts of Funded Debt of such Person required to be paid or prepaid
          within one year after such date and (c) all other items (including,
          without limitation, taxes accrued as estimated and trade payables
          otherwise excluded from Debt under clause (b) of the definition
          thereof) that, in accordance with GAAP, would be classified on the
          balance sheet of such Person as current liabilities of such Person.

               "Debt" means, with respect to any Person (without duplication)
          (a) all indebtedness of such Person for borrowed money, (b) all
          Obligations of such Person for the deferred purchase price of property
          or services (other than unsecured trade payables incurred in the
          ordinary course of such Person's business, provided that at all times
          during which the aggregate amount of such payables exceed 50% of
          Consolidated EBITDA for the most recent Measurement Period, "Debt"
          shall include all such payables which are past due for more than 60
          days (excluding payables being contested in good faith) after the date
          on which such payable was first past due), (c) all Obligations of such
          Person evidenced by notes, bonds, debentures or other similar
          instruments, or upon which interest payments are customarily made, (d)
          all Obligations of such Person created or arising under any
          conditional sale or other title retention agreement with respect to
          property acquired by such Person (even though the rights and remedies
          of the seller or lender under such agreement in the event of default
          are limited to repossession or sale of such property), (e) all
          Capitalized Lease Obligations of such Person, (f) all Obligations,
          contingent or otherwise, of such Person under acceptance, letter of
          credit or similar facilities, (g) all Obligations of such Person to
          purchase, redeem, retire, defease or otherwise make any payment in
          respect of any preferred Equity Interests in such Person or any other
          Person, valued, at the greater of its voluntary or involuntary
          liquidation preference plus accrued and unpaid dividends, (h) all
          Obligations of such Person in respect of Hedge Agreements, take-or-pay
          agreements or other similar arrangements, valued, in the case of Hedge
          Agreements, at the Agreement Value thereof, (i) all Obligations of
          such Person under any synthetic lease, tax retention operating lease,
          off-balance sheet loan or similar off-balance sheet financing if the
          transaction giving rise to such Obligation is considered indebtedness
          for borrowed money for tax purposes but is classified as an operating
          lease in accordance with GAAP; (j) all Contingent Obligations, and (k)
          all indebtedness and other payment Obligations referred to in clauses
          (a) through (j) above of another Person secured by (or for which the
          holder of such indebtedness or other payment Obligations has an
          existing right, contingent or otherwise, to be secured by) any Lien on
          property (including, without limitation,
<PAGE>

                                       11

          accounts and contract rights) owned by such Person, even though such
          Person has not assumed or become liable for the payment of such
          indebtedness or other payment Obligations: provided that for the
          purposes of this subclause (k) the amount thereof shall be equal to
          the lesser of (i) the amount of such indebtedness or other payment
          Obligations and (ii) the fair market value of the property subject to
          such Lien.

               "Default" means any Event of Default or any event or condition
          that would constitute an Event of Default but for the requirement that
          notice be given or time elapse or both.

               "Defaulted Advance" means, with respect to any Lender Party at
          any time, the portion of any Advance required to be made by such
          Lender Party to the Borrower pursuant to Section 2.01 or 2.02 at or
          prior to such time that has not been made by such Lender Party or by
          the Administrative Agent for the account of such Lender Party pursuant
          to Section 2.02(e) as of such time. In the event that a portion of a
          Defaulted Advance shall be deemed made pursuant to Section 2.16(a),
          the remaining portion of such Defaulted Advance shall be considered a
          Defaulted Advance originally required to be made pursuant to Section
          2.01 on the same date as the Defaulted Advance so deemed made in part.

               "Defaulted Amount" means, with respect to any Lender Party at any
          time, any amount required to be paid by such Lender Party to the
          Administrative Agent or any other Lender Party hereunder or under any
          other Loan Document at or prior to such time that has not been so paid
          as of such time, including, without limitation, any amount required to
          be paid by such Lender Party to (a) the Swing Line Bank pursuant to
          Section 2.02(b) to purchase a portion of a Swing Line Advance made by
          the Swing Line Bank, (b) the Issuing Bank pursuant to Section 2.03(b)
          to purchase a portion of a Letter of Credit Advance made by the
          Issuing Bank, (c) the Administrative Agent pursuant to Section 2.02(e)
          to reimburse the Administrative Agent for the amount of any Advance
          made by the Administrative Agent for the account of such Lender Party,
          (d) any other Lender Party pursuant to Section 2.14 to purchase any
          participation in Advances owing to such other Lender Party and (e) the
          Administrative Agent or the Issuing Bank pursuant to Section 7.05 to
          reimburse the Administrative Agent or the Issuing Bank for such Lender
          Party's ratable share of any amount required to be paid by the Lender
          Parties to the Administrative Agent or the Issuing Bank as provided
          therein. In the event that a portion of a Defaulted Amount shall be
          deemed paid pursuant to Section 2.16(b), the remaining portion of such
          Defaulted Amount shall be considered a Defaulted Amount originally
          required to be paid hereunder or under any other Loan Document on the
          same date as the Defaulted Amount so deemed paid in part.

               "Defaulting Lender" means, at any time, any Lender Party that, at
          such time, (a) owes a Defaulted Advance or a Defaulted Amount or (b)
          shall take any action or be the subject of any action or proceeding of
          a type described in Section 6.01(f).

               "Dialysis Services" means hemodialysis services and peritoneal
          dialysis services, hemoperfusion, plasmapheresis, continuous
          arteriovenous hemofiltration and bio-medical services related to the
          foregoing.

               "Documentation Agents" has the meaning specified in the recital
          of parties to this Agreement.

               "Domestic Person" means a Person that is organized under the laws
          of, or whose property is located in, a jurisdiction within the United
          States.
<PAGE>

                                      12

                  "Domestic Subsidiary" means, at any time, any of the direct or
         indirect Subsidiaries of the Borrower that is incorporated or organized
         under the laws of any state of the United States of America or the
         District of Columbia.

                  "Eligible Assignee" means (a) with respect to any Facility
         (other than the Letter of Credit Facility), (i) a Lender; (ii) an
         Affiliate of a Lender or an Approved Fund of a Lender; (iii) a
         commercial bank organized under the laws of the United States, or any
         State thereof having a combined capital and surplus of at least
         $100,000,000; (iv) a savings and loan association or savings bank
         organized under the laws of the United States, or any State thereof
         having a combined capital and surplus of at least $100,000,000; (v) a
         commercial bank organized under the laws of any other country which is
         a member of the OECD, or a political subdivision of any such country,
         and having a combined capital and surplus of at least $100,000,000,
         provided that such bank is acting through a branch, agency or Affiliate
         located in the United States or managed and controlled by a branch,
         agency or affiliate located in the United States; (vi) the central bank
         of any country that is a member of the OECD; (vii) a finance company,
         insurance company or other financial institution, fund (whether a
         corporation, partnership, trust or other entity) or other entity that
         is engaged in making, purchasing or otherwise investing in commercial
         loans in the ordinary course of its business and having total assets
         (inclusive of assets of Affiliates or Approved Funds thereof) of at
         least $100,000,000; and (viii) any other Person approved by the
         Administrative Agent and, provided no Event of Default is continuing,
         the Borrower, provided that the approval of the Administrative Agent
         and the Borrower, when required, shall not be unreasonably withheld or
         delayed, and (b) with respect to the Letter of Credit Facility, a
         Person that is an Eligible Assignee under subclause (iii) or (v) of
         clause (a) of this definition and is approved by the Administrative
         Agent (such approval not to be unreasonably withheld or delayed);
         provided, however, that neither any Loan Party nor any Affiliate of a
         Loan Party shall qualify as an Eligible Assignee under this definition.

                  "Environmental Action" means any outstanding action, suit,
         demand, demand letter, claim, notice of noncompliance or violation,
         notice of liability or potential liability, investigation, proceeding,
         consent order or consent agreement, abatement order or other order or
         directive (conditional or otherwise) relating in any way to any
         Environmental Law, any Environmental Permit or any Hazardous Materials
         or arising from alleged injury or threat to health, safety, natural
         resources or the environment, including, without limitation, (a) by any
         Governmental Authority for enforcement, cleanup, removal, response,
         remedial or other actions or damages and (b) by any applicable
         Governmental Authority or any other third party for damages,
         contribution, indemnification, cost recovery, compensation or
         injunctive relief.

                  "Environmental Law" means any Requirement of Law relating to
         (a) the generation, use, handling, transportation, treatment, storage,
         disposal, release or discharge of Hazardous Materials, (b) pollution or
         the protection of the environment, health, safety or natural resources
         or (c) occupational safety and health, industrial hygiene, land use or
         the protection of human, plant or animal health or welfare, including,
         without limitation, CERCLA, in each case as amended from time to time,
         and including the regulations promulgated and the rulings issued from
         time to time thereunder.

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

                  "Equipment" has the meaning specified in Section 1(a) of the
         Security Agreement.
<PAGE>

                                      13

                  "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 other 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 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 other
         acquisition from such Person of such shares (or such other interests),
         and all of the other ownership or profit interests in such Person
         (including, without limitation, partnership, member or trust interests
         therein), whether voting or nonvoting, and whether or not such shares,
         warrants, options, rights or other interests are authorized or
         otherwise existing on any date of determination.

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

                  "ERISA Affiliate" means any Person that for purposes of Title
         IV of ERISA is a member of the controlled group of any Loan Party, or
         under common control with any Loan Party, within the meaning of Section
         414 of the Internal Revenue Code.

                  "ERISA Event" means (a)(i) the occurrence of a reportable
         event, within the meaning of Section 4043 of ERISA, with respect to any
         Plan unless the 30-day notice requirement with respect to such event
         has been waived by the PBGC or (ii) the requirements of Section 4043(b)
         of ERISA are met with respect to a contributing sponsor, as defined in
         Section 4001(a)(13) of ERISA, of a Plan, and an event described in
         paragraph (9), (10), (11), (12) or (13) of Section 4043(c) of ERISA
         could reasonably be expected to occur with respect to such Plan within
         the following 30 days; (b) the application for a minimum funding waiver
         with respect to a Plan; (c) the provision by the administrator of any
         Plan of a notice of intent to terminate such Plan pursuant to Section
         4041(a)(2) of ERISA (including any such notice with respect to a plan
         amendment referred to in Section 4041(e) of ERISA); (d) the cessation
         of operations at a facility of any Loan Party or any ERISA Affiliate in
         the circumstances described in Section 4062(e) of ERISA; (e) the
         partial or complete withdrawal by any Loan Party or any ERISA Affiliate
         from a Plan or a Multiple Employer Plan; (f) the conditions for
         imposition of a lien under Section 302(f) of ERISA shall have been met
         with respect to any Plan; (g) the adoption of an amendment to a Plan
         requiring the provision of security to such Plan pursuant to Section
         307 of ERISA; or (h) the institution by the PBGC of proceedings to
         terminate a Plan pursuant to Section 4042 of ERISA, or the occurrence
         of any event or condition described in Section 4042 of ERISA, that
         constitutes grounds for the termination of, or the appointment of a
         trustee to administer, a Plan.

                  "ESRD-Related Business" means the business of providing
         Dialysis Services and/or Ancillary Services.

                  "Eurocurrency Liabilities" has the meaning specified in
         Regulation D of the Board of Governors of the Federal Reserve System,
         as in effect from time to time.

                  "Eurodollar Lending Office" means, with respect to each of the
         Lenders, the office of such Lender specified as its "Eurodollar Lending
         Office" opposite its name on Schedule I hereto or in the Assignment and
         Acceptance pursuant to which it became a Lender, as the case may be
         (or, if no such office is specified, its Base Rate Lending Office), or
         such other office of such Lender as such Lender may from time to time
         specify to the Borrower and the Administrative Agent for such purpose.
<PAGE>

                                      14

                  "Eurodollar Rate" means, for any Interest Period for all
         Eurodollar Rate Advances comprising part of the same Borrowing, an
         interest rate per annum equal to the rate per annum obtained by
         dividing (a) the rate per annum (rounded upwards, if necessary, to the
         nearest 1/100 of 1%) at which deposits in U.S. dollars appear on page
         3750 (or any successor page thereto) of the Dow Jones Telerate Screen
         two Business Days before the first day of such Interest Period and for
         a term comparable to such Interest Period or, if such rate does not so
         appear on the Dow Jones Telerate Screen on any date of determination,
         on the Reuters Screen LIBO Page two Business Days before the first day
         of such Interest Period and for a term comparable to such Interest
         Period by (b) a percentage equal to 100% minus the Eurodollar Rate
         Reserve Percentage for such Interest Period; provided, however, that if
         the Reuters Screen LIBO Page is being used to determine the Eurodollar
         Rate at any date of determination and more than one rate is specified
         thereon as the London interbank offered rate for deposits in U.S.
         dollars, the applicable rate shall be the average of all such rates
         (rounded upward, if necessary, to the nearest whole multiple of 1/100
         of 1% per annum).

                  "Eurodollar Rate Advance" means an Advance that bears interest
         as provided in Section 2.07(a)(ii).

                  "Eurodollar Rate Reserve Percentage" for any Interest Period
         for all Eurodollar Rate Advances comprising part of the same Borrowing
         means the reserve percentage applicable two Business Days before the
         first day of such Interest Period under regulations issued from time to
         time by the Board of Governors of the Federal Reserve System (or any
         successor thereto) for determining the maximum reserve requirement
         (including, without limitation, any emergency, supplemental or other
         marginal reserve requirement) for a member bank of the Federal Reserve
         System in New York, New York, with respect to liabilities or assets
         consisting of or including Eurocurrency Liabilities (or with respect to
         any other category of liabilities that includes deposits by reference
         to which the interest rate on Eurodollar Rate Advances is determined)
         having a term equal to such Interest Period.

                  "Events of Default" has the meaning specified in Section 6.01.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
         amended from time to time, and the regulations promulgated and the
         rulings issued thereunder.

                  "Existing Credit Agreement" means (a) the Second Amended and
         Restated Revolving Credit Agreement, dated as of July 14, 2000, as
         amended, between Total Renal Care Holdings, Inc., the lender parties
         thereto, DLJ Capital Funding, Inc., as Syndication Agent, First Union
         National Bank, as Documentation Agent, and The Bank of New York, as the
         Administrative Agent and (b) the Second Amended and Restated Term Loan
         Agreement, dated as of July 14, 2000, as amended, between Total Renal
         Care Holdings, Inc., the lender parties thereto, DLJ Capital Funding,
         Inc., as Syndication Agent, and The Bank of New York, as the
         Administrative Agent.

                  "Existing Letters of Credit" means all letters of credit
         issued under the Existing Credit Agreement and outstanding on the
         Closing Date, as more fully described on Schedule II hereto.

                  "Facility" means the Term A Facility, the Term B Facility, the
         Revolving Credit Facility, the Swing Line Facility or the Letter of
         Credit Facility, as the context may require.

                  "Federal Funds Rate" means, for any period, a fluctuating
         interest rate per annum equal for each day during such period to the
         weighted average of the rates on overnight federal funds
<PAGE>

                                      15

         transactions with members of the Federal Reserve System arranged by
         federal funds brokers, as published for such day (or, if such day is
         not a Business Day, for the immediately preceding Business Day) by the
         Federal Reserve Bank of New York or, if such rate is not so published
         for any day that is a Business Day, the average rate charged to the
         Administrative Agent (in its individual capacity) on such day on such
         transactions as determined by the Administrative Agent.

                  "Fiscal Quarter" means, with respect to the Borrower or any of
         its Subsidiaries, the period commencing January 1 in any Fiscal Year
         and ending on the next succeeding March 31, the period commencing April
         1 in any Fiscal Year and ending on the next succeeding June 30, the
         period commencing July 1 in any Fiscal Year and ending on the next
         succeeding September 30 or the period commencing October 1 in any
         Fiscal Year and ending on the next succeeding December 31, as the
         context may require, or, if any such Subsidiary was not in existence on
         the first day of any such period, the period commencing on the date on
         which such Subsidiary is incorporated, organized, formed or otherwise
         created and ending on the last day of such period.

                  "Fiscal Year" means, with respect to the Borrower or any of
         its Subsidiaries, the period commencing on January 1 in any calendar
         year and ending on the next succeeding December 31 or, if any such
         Subsidiary was not in existence on January 1 in any calendar year, the
         period commencing on the date on which such Subsidiary is incorporated,
         organized, formed or otherwise created and ending on the next
         succeeding December 31.

                  "Fixed Charge Coverage Ratio" means, for any period, the ratio
         of (a) the amount equal to (i) the sum of (A) Consolidated Pre-Minority
         EBITDA and (B) Lease Expense less (ii) Capital Expenditures, in each
         case for the Borrower and its Subsidiaries for such period, to (b) the
         sum of (i) Consolidated Interest Expense, (ii) the aggregate principal
         amount (or the equivalent thereto) of all Required Principal Payments,
         (iii) the aggregate amount of all Consolidated Cash Taxes, and (iv)
         Lease Expense, in each case for the Borrower and its Subsidiaries for
         such period.

                  "Foreign Subsidiary" means, at any time, any direct or
         indirect Subsidiary of the Borrower that is not a Domestic Subsidiary.

                  "Funded Debt" of any Person means all Debt of such Person that
         by its terms matures more than one year after the date of determination
         or matures within one year from such date but is renewable or
         extendible, at the option of such Person, to a date more than one year
         after such date or arises under a revolving credit or similar agreement
         that obligates the lender or lenders to extend credit during a period
         of more than one year after such date, in each case determined on a
         Consolidated basis in accordance with GAAP, including, without
         limitation, (i) the aggregate amount of Governmental Reimbursement
         Program Costs (exclusive of, with respect to the determination of
         Funded Debt in any period, the portion of Governmental Reimbursement
         Program Costs paid in such period) and (ii) in the case of the
         Borrower, the Advances; provided, however, that the term "Funded Debt"
         shall not include (x) any Contingent Obligations of such Person (if and
         to the extent such Contingent Obligations would otherwise be included
         in such term on any date of determination) that are incurred solely to
         support Debt or Governmental Reimbursement Program Costs of the
         Borrower or one or more Subsidiaries of the Borrower to the extent such
         Contingent Obligations are otherwise expressly permitted to be incurred
         under Section 5.02(b), and (y) all Obligations of such Person to
         purchase, redeem, retire, defease or otherwise make any payment in
         respect of any Redeemable Preferred Interests.

                  "GAAP" has the meaning specified in Section 1.03.
<PAGE>

                                      16

                  "Governmental Authority" means any nation or government, any
         state, province, city, municipal entity or other political subdivision
         thereof, and any governmental, executive, legislative, judicial,
         administrative or regulatory agency, department, authority,
         instrumentality, commission, board or similar body, whether federal,
         state, provincial, territorial, local or foreign.

                  "Governmental Authorization" means any authorization,
         approval, consent, franchise, license, covenant, order, ruling, permit,
         certification, exemption, notice, declaration or similar right,
         undertaking or other action of, to or by, or any filing, qualification
         or registration with, any Governmental Authority.

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

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

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

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

                  "Guarantee Supplement" has the meaning specified in the
         Subsidiary Guaranty.

                  "Guaranteed Obligations" has the meaning specified in the
         Subsidiary Guaranty.

                  "Guarantor" means each Subsidiary of the Borrower party to the
         Subsidiary Guarantee or, as the case may be, a Guarantee Supplement.

                  "Hazardous Materials" means (a) petroleum or petroleum
         products, by-products or breakdown products, radioactive materials,
         asbestos-containing materials, polychlorinated biphenyls and radon gas
         and (b) any other chemicals, materials or substances designated,
         classified or regulated as hazardous or toxic or as a pollutant or
         contaminant under any Environmental Law.

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

                  "Hedge Bank" means any Person that is a Lender Party or an
         Affiliate of a Lender Party, in its capacity as a party to a Hedge
         Agreement.

                  "Indemnified Party" has the meaning specified in Section
         8.04(b).

                  "Information Memorandum" means the information memorandum
         dated March 2001 used by the Book Managers in connection with the
         syndication of the Commitments.
<PAGE>

                                      17

                  "Initial Extension of Credit" means, collectively, the initial
         Borrowings under one or more of the Facilities, and/or the initial
         issuances of one or more Letters of Credit, made on the Closing Date.

                  "Initial Issuing Bank" has the meaning specified in the
         recital of parties to this Agreement.

                  "Initial Lenders" has the meaning specified in the recital of
         parties to this Agreement.

                  "Insufficiency" means, with respect to any Plan, the amount,
         if any, of its unfunded benefit liabilities, as defined in Section
         4001(a)(18) of ERISA.

                  "Interest Period" means, for each Eurodollar Rate Advance
         comprising part of the same Borrowing, the period commencing on the
         date of such Eurodollar Rate Advance or the date of the Conversion of
         any Base Rate Advance into such Eurodollar Rate Advance, and ending on
         the last day of the period selected by the Borrower pursuant to the
         provisions below and, thereafter, each subsequent period commencing on
         the last day of the immediately preceding Interest Period and ending on
         the last day of the period selected by the Borrower pursuant to the
         provisions below. The duration of each such Interest Period shall be
         one, two, three or six months, as the Borrower may, upon notice
         received by the Administrative Agent not later than 2:00 P.M.
         (Charlotte, North Carolina time) on the third Business Day prior to the
         first day of such Interest Period, select; provided, however, that:

                       (a)   the Borrower may not select any Interest Period
                  with respect to any Eurodollar Rate Advance under a Facility
                  that ends after any principal repayment installment date for
                  such Facility unless, after giving effect to such selection,
                  the aggregate principal amount of Base Rate Advances and of
                  Eurodollar Rate Advances having Interest Periods that end on
                  or prior to such principal repayment installment date for such
                  Facility shall be at least equal to the aggregate principal
                  amount of Advances under such Facility due and payable on or
                  prior to such date;

                       (b)   Interest Periods commencing on the same date for
                  Eurodollar Rate Advances comprising part of the same Borrowing
                  shall be of the same duration;

                       (c)   whenever the last day of any Interest Period would
                  otherwise occur on a day other than a Business Day, the last
                  day of such Interest Period shall be extended to occur on the
                  next succeeding Business Day; provided, however, that, if such
                  extension would cause the last day of such Interest Period to
                  occur in the next following calendar month, the last day of
                  such Interest Period shall occur on the immediately preceding
                  Business Day; and

                       (d)   whenever the first day of any Interest Period
                  occurs on a day of an initial calendar month for which there
                  is no numerically corresponding day in the calendar month that
                  succeeds such initial calendar month by the number of months
                  equal to the number of months in such Interest Period, such
                  Interest Period shall end on the last Business Day of such
                  succeeding calendar month.

                  "Internal Revenue Code" means the Internal Revenue Code of
         1986, as amended from time to time, and the regulations promulgated and
         the rulings issued thereunder.

<PAGE>

                                      18

               "Investment" means, with respect to any Person, any loan or
          advance to such Person, any purchase or other acquisition of Equity
          Interests in or Debt of, or the property and assets comprising a
          division or business unit or all or a substantial part of the business
          of, such Person, any capital contribution to such Person or any other
          investment in such Person, including, without limitation, any
          acquisition by way of a merger or consolidation (or similar
          transaction) and any arrangement pursuant to which the investor incurs
          Debt of the types referred to in clause (j) or (k) of the definition
          of "Debt" set forth in this Section 1.01 in respect of such Person.

               "ISDA Master Agreement" means the Master Agreement
          (Multicurrency-Cross Border) published by the International Swap and
          Derivatives Association, Inc., as in effect from time to time.

               "Issuing Bank" means the Initial Issuing Bank and each other
          Person to which the Letter of Credit Commitment hereunder has been
          assigned pursuant to Section 8.07, in each case for so long as the
          Initial Issuing Bank or such other Person, as the case may be, shall
          be a party to this Agreement in such capacity, and solely with respect
          to the Existing Letters of Credit, means The Bank of New York.

               "L/C Cash Collateral Account" has the meaning specified in the
          Preliminary Statements to the Security Agreement.

               "L/C Related Documents" has the meaning specified in Section
          2.03(b)(ii).

               Lease Expense" means, with respect to any Person, for any period
          for such Person and its subsidiaries on a Consolidated basis, lease
          and rental expense accrued during such period under all leases and
          rental agreements, other than Capitalized Leases and leases of
          personal property, of renal treatment centers, determined in
          conformity with GAAP.

               "Lender Party" means any Lender, the Issuing Bank or the Swing
          Line Bank.

               "Lenders" means, collectively, the Initial Lenders and each
          Person that becomes a Lender pursuant to Section 8.07 for so long as
          such Initial Lender or Person, as the case may be, shall be a party to
          this Agreement.

               "Letter of Credit" has the meaning specified in Section 2.01(e).

               "Letter of Credit Advance" means an advance made by the Issuing
          Bank or any Revolving Credit Lender pursuant to Section 2.03(b).

               "Letter of Credit Agreement" has the meaning specified in
          Section 2.03(a).

               "Letter of Credit Commitment" means, with respect to the Issuing
          Bank at any time, the amount set forth opposite the Issuing Bank's
          name on Part B of Schedule I hereto under the caption "Letter of
          Credit Commitment" or, if the Issuing Bank has entered into one or
          more Assignment and Acceptances, the amount set forth for the Issuing
          Bank in the Register maintained by the Administrative Agent pursuant
          to Section 8.07(d) as the Issuing Bank's "Letter of Credit
          Commitment", as such amount may be reduced at or prior to such time
          pursuant to Section 2.05.
<PAGE>

                                      19

               "Letter of Credit Facility" means, at any time, an amount equal
          to the lesser of (a) the amount of the Issuing Bank's Letter of Credit
          Commitment at such time and (b) $50,000,000, as such amount may be
          reduced at or prior to such time pursuant to Section 2.05.

               "Leverage Ratio" means, at any date of determination, the ratio
          of (a) (i) all Funded Debt of the Borrower and its Subsidiaries plus
          (ii) to the extent not otherwise included in subclause (a)(i) of this
          definition, the face amount of all Letters of Credit issued for the
          account of the Borrower or any of its Subsidiaries minus (iii) cash
          and cash equivalents of the Borrower and its Subsidiaries on a
          Consolidated basis to (b) Consolidated Pre-Minority EBITDA of the
          Borrower and its Subsidiaries for the most recently completed
          Measurement Period prior to such date.

               "Lien" means, with respect to any Person, (a) any mortgage, lien
          (statutory or other), pledge, hypothecation, security interest, charge
          or encumbrance of any kind (including, without limitation, any
          agreement to give any of the foregoing), (b) any sale of accounts
          receivable or chattel paper, or any assignment, deposit arrangement or
          lease intended as, or having the effect of, security, (c) any
          easement, right of way or other encumbrance on title to real property
          or (d) any other interest or title of any vendor, lessor, lender or
          other secured party to or of such Person under any conditional sale or
          other title retention agreement or any Capitalized Lease or upon or
          with respect to any property or asset of such Person (including, in
          the case of Equity Interests, voting trust agreements and other
          similar arrangements).

               "Loan Documents" means, collectively, this Agreement, the Notes,
          the Subsidiary Guaranty, the Collateral Documents, each Letter of
          Credit Agreement and each Incremental Facility Agreement pursuant to
          Section 2.05(d)(ii), in each case as amended, supplemented or
          otherwise modified hereafter from time to time in accordance with the
          terms thereof and Section 8.01.

               "Loan Parties" means, collectively, the Borrower and each of the
          Subsidiaries of the Borrower party to the Subsidiary Guaranty or any
          of the Collateral Documents.

               "Margin Stock" means `margin stock' as defined in Regulation U of
          the Board of Governors of the Federal Reserve System, as the same may
          be amended or supplemented from time to time.

               "Material Adverse Change" means any material adverse change in
          the business, condition (financial or otherwise), operations,
          performance, properties or prospects of the Borrower and its
          Subsidiaries, taken as a whole; provided that the occurrence or
          subsistence of any such material adverse change which has been
          disclosed by the Borrower in any filing made with the Securities and
          Exchange Commission prior to the date of this Agreement shall not
          constitute a Material Adverse Change.

               "Material Adverse Effect" means a material adverse effect on (a)
          the business, condition (financial or otherwise), operations,
          performance, properties or prospects of the Borrower and its
          Subsidiaries taken as a whole, (b) the rights and remedies of the
          Administrative Agent or any Lender Party under any Loan Document or
          any Related Document or (c) the ability of any Loan Party to perform
          its Obligations under any Loan Document to which it is or is to be a
          party; provided that the occurrence or subsistence of any such
          material adverse effect which has been disclosed by the Borrower in
          any filing made with the Securities and Exchange Commission prior to
          the date of this Agreement shall not constitute a Material Adverse
          Effect.
<PAGE>

                                      20

               "Material Subsidiaries" means, as of any date, any Subsidiary or
          Subsidiaries of the Borrower that either individually or taken as a
          whole accounted for more than 5% of Consolidated Net Income of the
          Borrower and its Subsidiaries for the most recently completed Fiscal
          Quarter on or prior to such date, in each case as reflected in the
          Required Financial Information most recently delivered to the
          Administrative Agent and the Lender Parties on or prior to such date
          and determined in accordance with GAAP for such period.

               "Measurement Period" means, at any date of determination, the
          most recently completed four consecutive Fiscal Quarters ended prior
          to such date for which financial information is available.

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

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

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

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

               "Multiemployer Plan" means a multiemployer plan (as defined in
          Section 4001(a)(3) of ERISA) to which any Loan Party or any ERISA
          Affiliate is making or accruing an obligation to make contributions,
          or has within any of the preceding five plan years made or accrued an
          obligation to make contributions.

               "Multiple Employer Plan" means a single employer plan (as defined
          in Section 4001(a)(15) of ERISA) that (a) is maintained for employees
          of any Loan Party or any ERISA Affiliate and at least one Person other
          than the Loan Parties and the ERISA Affiliates or (b) was so
          maintained and in respect of which any Loan Party or any ERISA
          Affiliate could reasonably be expected to have liability under Section
          4064 or 4069 of ERISA in the event such plan has been or were to be
          terminated.

               "Net Cash Proceeds" means, with respect to any sale, lease,
          transfer or other disposition of any property or asset, or the
          incurrence or issuance of any Debt, or the sale or issuance of any
          Equity Interests (including, without limitation, any capital
          contribution) in any Person, the aggregate amount of cash received
          from time to time (whether as initial consideration or through payment
          or disposition of deferred consideration) by or on behalf of such
          Person for its own account in connection with any such transaction,
          after deducting therefrom only (without duplication):

                    (a)  out-of-pocket expenses, including brokerage
               commissions, underwriting fees and discounts, legal fees,
               finder's fees and other similar fees and commissions;
<PAGE>

                                      21

                    (b)  the amount of taxes payable in connection with or as a
               result of such transaction, and if not paid at the time of the
               respective transaction, the amount thereof reserved in accordance
               with GAAP as in effect on the date of determination;

                    (c)  in the case of any sale, lease, transfer or other
               disposition of any property or asset, the outstanding principal
               amount of, the premium or penalty, if any, on, and any accrued
               and unpaid interest on, any Debt (other than the Debt outstanding
               under the Loan Documents) that is secured by a Lien on the
               property and assets subject to such sale, lease, transfer or
               other disposition and is required to be repaid under the terms
               thereof as a result of such sale, lease, transfer or other
               disposition;

                    (d)  in the case of any sale, lease, transfer or other
               disposition of any property or asset, an amount reserved, in
               accordance with GAAP as in effect on the date on which the Net
               Cash Proceeds from such sale, lease, transfer or other
               disposition are determined, and so reserved, against liabilities
               under indemnification obligations, liabilities related to
               environmental matters or other liabilities associated with the
               property and assets subject to such sale, lease, transfer or
               other disposition that are required to be so provided for under
               the terms of the documentation for such sale, lease, transfer or
               other disposition; and

                    (e)  in the case of any sale, lease, transfer or other
               disposition of any property or asset by a Subsidiary, the amount
               of any payments or distributions required to be made in respect
               of such transaction to owners of Equity Interests in such
               Subsidiary other than the Borrower or any other Subsidiary;

          provided, however, in the case of clauses (b) and (d) of this
          definition, that if, at the time such taxes or such contingent
          liabilities are actually paid or otherwise satisfied, the amount of
          the reserve therefor exceeds the amount paid or otherwise satisfied,
          then the Borrower shall prepay the outstanding Advances in accordance
          with the terms of Section 2.06(b), in an amount equal to the amount of
          such excess reserve.

               "Note" means a Term A Note, a Term B Note or a Revolving Credit
          Note, as the context may require.

               "Notice of Borrowing" has the meaning specified in Section
          2.02(a).

               "Notice of Conversion" has the meaning specified in Section
          2.09(a).

               "Notice of Issuance" has the meaning specified in Section
          2.03(a).

               "Notice of Renewal" has the meaning specified in Section
          2.01(e).

                "Notice of Swing Line Borrowing" has the meaning specified in
          Section 2.02(b).

                "Notice of Termination" has the meaning specified in Section
          2.01(e).

               "NPL" means the National Priorities List under CERCLA.

               "Obligation" means, with respect to any Person, any payment,
          performance or other obligation of such Person of any kind, including,
          without limitation, any liability of such Person on any claim, whether
          or not the right of any creditor to payment in respect of such claim
          is
<PAGE>

                                      22

          reduced to judgment, liquidated, unliquidated, fixed, contingent,
          matured, disputed, undisputed, legal, equitable, secured or unsecured,
          and whether or not such claim is discharged, stayed or otherwise
          affected by any proceeding referred to in Section 6.01(f). Without
          limiting the generality of the foregoing, the Obligations of the Loan
          Parties under the Loan Documents include (a) the obligation to pay
          principal, interest, Letter of Credit commissions, charges, expenses,
          fees, attorneys' fees and disbursements, indemnity payments and other
          amounts payable by any Loan Party under any Loan Document and (b) the
          obligation of any Loan Party to reimburse any amount in respect of any
          of the foregoing items that any Lender Party, in its sole discretion,
          may elect to pay or advance on behalf of such Loan Party.

               "OECD" means the Organization for Economic Cooperation and
          Development.

               "Open Year" means, with respect to any Person, any year for
          which United States federal income tax returns have been filed by or
          on behalf of such Person and for which the expiration of the
          applicable statute of limitations for assessment or collection has not
          occurred (whether by reason of extension or otherwise).

               "Other Taxes" has the meaning specified in Section 2.13(b).

               "PBGC" means the Pension Benefit Guaranty Corporation or any
          successor thereto.

               "Performance Level" means Performance Level I, Performance
          Level II, Performance Level III, Performance Level IV or Performance
          Level V, as identified in the definition of "Applicable Margin" and
          Applicable Percentage", as the context may require.

               "Permitted Liens" means the following types of Liens (excluding
          any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the
          Internal Revenue Code or by ERISA or any such Lien relating to or
          imposed in connection with any Environmental Action): (a) Liens for
          taxes, assessments and governmental charges or levies to the extent
          not otherwise required to be paid under Section 5.01(b); (b) Liens
          imposed by law, such as materialmen's, mechanics', carriers',
          landlords', workmen's and repairmen's Liens and other similar Liens
          arising in the ordinary course of business securing obligations (other
          than Debt for borrowed money) (i) that are not overdue for a period of
          more than 60 days or (ii) the amount, applicability or validity of
          which are being contested in good faith and by appropriate proceedings
          diligently conducted and with respect to which the Borrower or any of
          its Subsidiaries, as the case may be, has established reserves in
          accordance with GAAP; (c) pledges or deposits to secure obligations
          incurred in the ordinary course of business under workers'
          compensation laws, unemployment insurance or similar social security
          legislation (other than in respect of employee benefit plans subject
          to ERISA) or to secure public or statutory obligations; (d) Liens,
          pledges and deposits securing the performance of, or payment in
          respect of, bids, tenders, leases, contracts (other than for the
          repayment of borrowed money), surety and appeal bonds, letters of
          credit, and other obligations of a similar nature incurred in the
          ordinary course of business; (e) any interest or title of a lessor or
          sublessor and any restriction or encumbrance to which the interest or
          title of such lessor or sublessor may be subject that is incurred in
          the ordinary course of business and, either individually or when
          aggregated with all other Permitted Liens in effect on any date of
          determination, could not be reasonably expected to have a Material
          Adverse Effect; (f) Liens in favor of customs and revenue authorities
          arising as a matter of law or pursuant to a bond to secure payment of
          customs duties in connection with the importation of goods; (g) Liens
          arising out of judgments or awards that do not constitute an Event of
          Default under Section 6.01(g) or 6.01(h) and in respect of which the
          Borrower or any of its Subsidiaries subject thereto shall be
          prosecuting an appeal or proceedings for review in good faith and,
          pending such appeal or
<PAGE>

                                      23

          proceedings, shall have secured within 30 days after the entry thereof
          a subsisting stay of execution and shall be maintaining reserves, in
          accordance with GAAP, with respect to any such judgment or award; (h)
          unperfected Liens of suppliers and vendors to secure the purchase
          price of the property or assets sold; (i) protective Uniform
          Commercial Code filings by lessors under operating leases; and (j) any
          easements, rights of way, restrictions, defects, encroachments and
          other encumbrances on title to real property which either individually
          or when aggregated with all other permitted Liens, would not be
          reasonably expected to have a Material Adverse Effect.

               "Person" means an individual, partnership, corporation (including
          a business trust), limited liability company, unlimited liability
          company, joint stock company, trust, unincorporated association, joint
          venture or other entity, or a government or any political subdivision
          or agency thereof.

               "Plan" means a Single Employer Plan or a Multiple Employer Plan.

               "Pledged Debt" has the meaning specified in Section 1 of the
          Security Agreement.

               "Pledged Shares" has the meaning specified in Section 1 of the
          Security Agreement.

               "primary obligation" has the meaning specified in the definition
          of "Contingent Obligation" set forth in this Section 1.01.

               "primary obligor" has the meaning specified in the definition of
          "Contingent Obligation" set forth in this Section 1.01.

               "Pro Rata Share" of any amount means, with respect to any of the
          Lenders at any time, the product of (a) a fraction the numerator of
          which is the amount of such Lender's Commitment(s) under the
          applicable Facility or Facilities at such time (or, if the Commitments
          shall have been terminated pursuant to Section 2.05 or 6.01 at or
          prior to such time, such Lender's Commitment(s) under the applicable
          Facility or Facilities as in effect immediately prior to such
          termination) and the denominator of which is the aggregate amount of
          such Facility or Facilities at such time (or, if the Commitments shall
          have been terminated pursuant to Section 2.05 or 6.01 at or prior to
          such time, the applicable Facility or Facilities as in effect
          immediately prior to such termination) multiplied by (b) such amount.

               "Qualified Issuer" means (a) any Lender hereunder and (b) any
          commercial bank that has a combined capital and surplus in excess of
          $100,000,000.

               "Reedemable Preferred Interest" means with respect to any Person,
          (a) any Equity Interest of such Person that, by its terms or by the
          terms of any security into which it is convertible, exercisable or
          exchangeable, is, or upon the happening of an event or the passage of
          time or both would be, required to be redeemed or repurchased
          (including at the option of the holder thereof) by such Person or any
          of its Subsidiaries, in whole or in part, not earlier than July 1,
          2007, and (b) any Equity Interest of any Subsidiary of such Person
          other than any common equity with no preferences, privileges, and no
          redemption or repayment provisions; provided, however, that any Equity
          Interest that would constitute a Redeemable Preferred Interest solely
          because the holders thereof have the right to require the issuer to
          repurchase such a Redeemable Preferred Interest upon the occurrence of
          a change of control shall not be so treated if the terms thereof (a)
          do not trigger any rights upon any circumstance constituting a change
          of control under such Redeemable Preferred Interest that would not
          constitute a Change of Control under this Agreement and (b) do not
          permit either any repurchase by such Person or any rights of

<PAGE>

                                      24

          the holder of such Equity Interest to assert any claim in respect of
          such failure to purchase as long as any Event of Default exists
          hereunder.

               "Reduction Amount" has the meaning specified in Section
          2.06(b)(iv).

               "Register" has the meaning specified in Section 8.07(d).

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

               "Required Financial Information" means, at any date of
          determination, the Consolidated financial statements of the Borrower
          and its Subsidiaries most recently delivered to the Administrative
          Agent and the Lender Parties on or prior to such date pursuant to, and
          satisfying all of the requirements of, Section 5.03(b) or 5.03(c) and
          accompanied by the certificates and other information required to be
          delivered therewith.

               "Required Lenders" means, at any time, Lenders owed or holding at
          least a majority in interest of the sum of (a) the aggregate principal
          amount of the Advances outstanding at such time, (b) the aggregate
          Available Amount of all Letters of Credit outstanding at such time,
          and (c) the aggregate Unused Revolving Credit Commitments at such
          time; provided, however, that if any Lender shall be a Defaulting
          Lender at such time, there shall be excluded from the determination of
          Required Lenders at such time (A) the aggregate principal amount of
          the Advances owing to such Lender (in its capacity as a Lender) and
          outstanding at such time, (B) such Lender's Pro Rata Share of the
          aggregate Available Amount of all Letters of Credit issued by such
          Lender and outstanding at such time, and (C) the Unused Revolving
          Credit Commitment of such Lender at such time. For purposes of this
          definition, the aggregate principal amount of Swing Line Advances
          owing to the Swing Line Bank and of Letter of Credit Advances owing to
          the Issuing Bank and the Available Amount of each Letter of Credit
          shall be considered to be owed to the Revolving Credit Lenders ratably
          in accordance with their respective Revolving Credit Commitments.

               "Required Principal Payments" means, with respect to any Person
          for any period, the sum of all regularly scheduled principal payments
          or redemptions and all required prepayments, repurchases, redemptions
          or similar acquisitions for value of outstanding Funded Debt made
          during such period.

               "Requirements of Law" means, with respect to any Person, all
          laws, constitutions, statutes, treaties, ordinances, rules and
          regulations, all orders, writs, decrees, injunctions, judgments,
          determinations and awards of an arbitrator, a court or any other
          Governmental Authority, and all Governmental Authorizations, binding
          upon or applicable to such Person or to any of its properties, assets
          or businesses.

               "Responsible Officer" means, with respect to the Borrower or any
          of its Subsidiaries, the chief executive officer, the president, the
          chief financial officer, the principal accounting officer or the
          treasurer (or the equivalent of any of the foregoing) or any other
          officer, partner or member (or person performing similar functions) of
          the Borrower or any such Subsidiary responsible for overseeing the
          administration of, or reviewing compliance with, all or any portion of
          this Agreement or any of the other Loan Documents.

               "Revolving Credit Advance" has the meaning specified in Section
          2.01(c).
<PAGE>

                                      25

               "Revolving Credit Borrowing" means a borrowing consisting of
          simultaneous Revolving Credit Advances of the same Type made by the
          Revolving Credit Lenders.

               "Revolving Credit Commitment" means, with respect to any
          Revolving Credit Lender at any time, the amount set forth opposite
          such Revolving Credit Lender's name on Part B of Schedule I hereto
          under the caption "Revolving Credit Commitment" or, if such Revolving
          Credit Lender has entered into one or more Assignment and Acceptances,
          the amount set forth for such Revolving Credit Lender in the Register
          maintained by the Administrative Agent pursuant to Section 8.07(d) as
          such Revolving Credit Lender's "Revolving Credit Commitment", as such
          amount may be reduced at or prior to such time pursuant to Section
          2.05.

               "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 Note" means a promissory note of the Borrower
          payable to the order of any Revolving Credit Lender, in substantially
          the form of Exhibit A-3 hereto, evidencing the aggregate indebtedness
          of the Borrower to such Revolving Credit Lender resulting from the
          Revolving Credit Advances made by such Revolving Credit Lender.

               "S&P" means Standard & Poor's, a division of The McGraw-Hill
          Companies, Inc.

               "Secured Obligations" has the meaning specified in Section 2 of
          the Security Agreement.

               "Secured Parties" means, collectively, the Agents, the Lender
          Parties, 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.

               "Securities Act" means the Securities Act of 1933, as amended,
          and the regulations promulgated and the rulings issued thereunder.

               "Security Agreement" has the meaning specified in Section
          3.01(a)(ii).

               "Security Agreement Supplement" has the meaning specified in
          Section 24 of the Security Agreement.

               "Share Repurchase Ratio" means, at any date of determination,
          the ratio of (a) (i) all Funded Debt of the Borrower and its
          Subsidiaries plus (ii) to the extent not otherwise included in
          subclause (a)(i) of this definition, the face amount of all
          outstanding Letters of Credit issued for the account of the Borrower
          or any of its Subsidiaries minus (iii) cash and cash equivalents of
          the Borrower and its Subsidiaries on a Consolidated basis minus (iv)
          the outstanding principal amount of Subordinated Debt of the Borrower
          and its Subsidiaries to (b) Consolidated Pre-Minority EBITDA of the
          Borrower and its Subsidiaries on an annualized basis determined by
          such Consolidated Pre-Minority EBITDA for the two Fiscal Quarters
          immediately preceding such date.

               "Single Employer Plan" means a single employer plan (as defined
          in Section 4001(a)(15) of ERISA) that (a) is maintained for employees
          of any Loan Party or any ERISA Affiliate and no Person other than the
          Loan Parties and the ERISA Affiliates or (b) was so
<PAGE>

                                      26

          maintained and in respect of which any Loan Party or any ERISA
          Affiliate could have liability under Section 4069 of ERISA in the
          event such plan has been or were to be terminated.

               "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 and assets of such Person is greater than the total amount of
          liabilities (including, without limitation, contingent liabilities),
          of such Person, (b) the present fair salable value of the property and
          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
          and (d) such Person is not engaged in business or in a transaction,
          and is not about to engage in business or in a transaction, for which
          such Person's property and assets would constitute an unreasonably
          small capital. The amount of contingent liabilities of any such Person
          at any time shall be computed as the amount that, in the light of all
          of the facts and circumstances existing at such time, represents the
          amount that can reasonably be expected to become an actual or matured
          liability.

               "Subordinated Debt" means the subordinated debt evidenced by the
          Subordinated Notes or other subordinated Debt issued or incurred by
          the Borrower subordinated in right of payment to the payment in full
          of the Obligations of the Borrower to the Loan Parties under the Loan
          Documents and other senior obligations of the Borrower; provided that
          (i) the negative covenants in such subordinated Debt are less
          burdensome than the negative covenants in this Agreement as in effect
          at the time such subordinated Debt is incurred, (ii) the affirmative
          covenants in such subordinated Debt are no more burdensome than the
          affirmative covenants in this Agreement as in effect at the time such
          subordinated Debt is incurred, (iii) the events of default in such
          subordinated Debt relating to insolvency and nonpayment of amounts
          owed thereunder are no more restrictive than the corresponding
          defaults in this Agreement as in effect at the time such subordinated
          Debt is incurred, (iv) such subordinated Debt does not cross-default
          to other Debt (but may cross-accelerate to other Debt of Borrower or
          any Subsidiary that has guaranteed such subordinated Debt), (v) the
          subordination provisions in such subordinated Debt are either (A)
          reasonably satisfactory to the Administrative Agent or (B) confirmed
          by a nationally recognized investment bank (that is not the
          Administrative Agent) as market terms and conditions at such time for
          similar debt securities issued by Persons whose debt securities have
          credit ratings not greater than that of the Borrower, and (vi) such
          subordinated Debt does not provide for any scheduled payment or
          mandatory prepayment of principal earlier than July 1, 2007, other
          than (x) redemptions made at the option of the holders of such
          subordinated Debt upon a change in control of the Borrower in
          circumstances that would also constitute a Change of Control under
          this Agreement (provided that any such redemption cannot be made fewer
          than 30 days after such change in control and that any such redemption
          is fully and absolutely subordinated to the indefeasible payment in
          full of all principal, interest and other amounts under the Loan
          Documents) and (y) mandatory prepayments required as a result of asset
          dispositions if such subordinated Debt allows the Borrower to satisfy
          such mandatory prepayment requirement by prepayment of Loans under
          this Agreement or other senior obligations of the Borrower or
          reinvestment of the asset disposition proceeds within a specified
          period of time.

               "Subordinated Notes" means (i) the 5 5/8% convertible
          subordinated notes of Renal Treatment Centers, Inc. due 2006 in the
          aggregate principal amount of $125,000,000 issued pursuant to the
          Indenture dated June 12, 1996 between Rental Treatment Centers, Inc.
          and PNC Bank, National Association as trustee; (ii) the 7% convertible
          subordinated notes of the Borrower (f/k/a Total Renal Care Holdings,
          Inc.) due 2009 in the aggregate principal amount of $345,000,000
          issued pursuant to the Indenture dated November 18, 1998 between Total
          Renal

<PAGE>

                                      27

          Care Holdings, Inc. and United States Trust Company of New York as
          trustee; and (iii) the 9 1/4% senior subordinated notes of the
          Borrower due April 15, 2011, in the aggregate principal amount of
          $225,000,000 issued pursuant to the Indenture dated April 11, 2001
          between the Borrower, certain of its Subsidiaries and U.S. Trust
          Company of Texas, N.A.

               "Subordinated Notes Documents" means the Subordinated Notes, any
          indentures or other agreements, instruments and other documents
          pursuant to which the Subordinated Notes or other Subordinated Debt
          have been or will be issued or otherwise setting forth the terms of
          the Subordinated Notes or such Subordinated Debt, including guarantees
          in respect of the Subordinated Debt referred to in clauses (i) and
          (iii) of the definition of "Subordinated Notes," in each case as such
          agreement, instrument or other document may be amended, supplemented
          or otherwise modified from time to time in accordance with the terms
          thereof, but only to the extent permitted under the terms of the Loan
          Documents.

               "Subsidiary Guaranty" has the meaning specified in Section
          3.01(a)(iii).

               "Subsidiary" of any Person means any corporation, partnership,
          joint venture, limited liability company, unlimited liability company,
          trust or estate of which (or in which) more than 50% of (a) the issued
          and outstanding shares of capital stock having ordinary voting power
          to elect a majority of the board of directors of such corporation
          (irrespective of whether at the time shares of capital stock of any
          other class or classes of such corporation shall or might have voting
          power upon the occurrence of any contingency), (b) the interest in the
          capital or profits of such partnership, joint venture, limited
          liability company or unlimited liability company or (c) the beneficial
          interest in such trust or estate, is at the time directly or
          indirectly owned or controlled by such Person, by such Person and one
          or more of its other Subsidiaries or by one or more of such Person's
          other Subsidiaries, provided however, that the entities listed on
          Exhibit H attached hereto shall not be Subsidiaries.

               "Swing Line Advance" means an advance made by (a) the Swing Line
          Bank pursuant to Section 2.01(d) or (b) simultaneous Swing Line
          Advances made by the Revolving Credit Lenders pursuant to Section
          2.02(b).

               "Swing Line Bank" has the meaning specified in the recital of
          parties to this Agreement.

               "Swing Line Borrowing" means a borrowing consisting of a Swing
          Line Advance made by the Swing Line Bank.

               "Swing Line Commitment" means, with respect to the Swing Line
          Bank at any time, the amount set forth opposite the Swing Line Bank's
          name on Part B of Schedule I hereto under the caption "Swing Line
          Commitment", as such amount may be reduced at or prior to such time
          pursuant to Section 2.05.

               "Swing Line Facility" means, at any time, an amount equal to the
          lesser of (a) the amount of the Swing Line Commitment at such time and
          (b) $25,000,000, as such amount may be reduced at or prior to such
          time pursuant to Section 2.05.

               "Taxes" has the meaning specified in Section 2.13(a).

               "Term Advance" means a Term A Advance or a Term B Advance.

               "Term A Advance" has the meaning specified in Section 2.01(a).
<PAGE>

                                      28

                  "Term A Borrowing" means a borrowing consisting of
         simultaneous Term A Advances of the same Type made by the Term A
         Lenders.

                  "Term A Facility" means, at any time, the aggregate Term A
         Advances of all Term A Lenders at such time.

                  "Term A Lender" means, at any time, any Lender that has a Term
         A Advance outstanding at such time.

                  "Term A Note" means a promissory note of the Borrower payable
         to the order of any Term A Lender, in substantially the form of Exhibit
         A-1 hereto, evidencing the indebtedness of the Borrower to such Term A
         Lender resulting from the Term A Advance made by such Term A Lender.

                  "Term B Advance" has the meaning specified in Section 2.01(b).

                  "Term B Borrowing" means a borrowing consisting of
         simultaneous Term B Advances of the same Type made by the Term B
         Lenders.

                  "Term B Facility" means, at any time, the aggregate Term B
         Advances of all Term B Lenders at such time.

                  "Term B Lender" means, at any time, any Lender that has a Term
         B Advance outstanding at such time.

                  "Term B Note" means a promissory note of the Borrower payable
         to the order of any Term B Lender, in substantially the form of Exhibit
         A-2 hereto, evidencing the indebtedness of the Borrower to such Term B
         Lender resulting from the Term B Advance made by such Term B Lender.

                  "Term Facility" means a Term A Facility or a Term B Facility,
         as the context requires.

                  "Term Lender" means a Term A Lender or a Term B Lender, as the
         context requires.

                  "Termination Date" means the earlier of (a) May 4, 2006 and
         (b) the date of termination in whole of the Letter of Credit
         Commitments, the Swing Line Commitments and the Revolving Credit
         Commitments pursuant to Section 2.05 or 6.01.

                  "Transaction" means, collectively, (a) the entering into by
         the Loan Parties of the Loan Documents, to which they are or are
         intended to be a party, (b) the refinancing of certain outstanding Debt
         of the Borrower and its Subsidiaries and the termination of all
         commitments thereunder, and (c) the payment of the fees and expenses
         incurred in connection with the consummation of the foregoing.

                  "TRC" means Total Renal Care, Inc., a California corporation.

                  "Type" refers to the distinction between Advances bearing
         interest at the Base Rate and Advances bearing interest at the
         Eurodollar Rate.

                  "Unused Revolving Credit Commitment" means, with respect to
         any Revolving Credit Lender at any time, (a) such Revolving Credit
         Lender's Revolving Credit Commitment at such
<PAGE>

                                       29

         time minus (b) the sum of (i) the aggregate principal amount of all
         Revolving Credit Advances, Swing Line Advances and Letter of Credit
         Advances made by such Revolving Credit Lender (in its capacity as a
         Lender) and outstanding at such time and (ii) such Lender's Pro Rata
         Share of (A) the aggregate Available Amount of all Letters of Credit
         outstanding at such time, (B) the aggregate principal amount of all
         Letter of Credit Advances made by the Issuing Bank pursuant to Section
         2.03(c) and outstanding at such time and (C) the aggregate principal
         amount of all Swing Line Advances made by the Swing Line Bank pursuant
         to Section 2.01(d) and outstanding at such time.

                  "Voting Interests" means shares of capital stock issued by a
         corporation, or equivalent Equity Interests in any other Person, the
         holders of which are ordinarily, in the absence of contingencies,
         entitled to vote for the election of directors (or persons performing
         similar functions) of such Person, even if the right so to vote has
         been suspended by the happening of such a contingency.

                  "Welfare Plan" means a welfare plan (as defined in Section
         3(1) of ERISA) that is maintained for employees of any Loan Party or in
         respect of which any Loan Party could reasonably be expected to have
         liability.

                  "Weighted Average Life to Maturity" means, on any date and
         with respect to the Term A Facility, the Term B Facility or any
         Incremental Loans (as defined in Section 2.05(d)) to supplement either
         such Facility, an amount equal to (i) the sum of the products of (x)
         the amount of each scheduled repayment of the Term A Facility, the Term
         B Facility or Incremental Facility (as defined in Section 2.05(d)), as
         the case may be, to be made after such date, multiplied by (y) the
         number of days from such date to the date of such scheduled repayment
         divided by (ii) the aggregate outstanding principal amount of such Term
         A Facility, Term B Facility or Incremental Facility, as the case may
         be.

                  "Withdrawal Liability" has the meaning specified in Part I of
         Subtitle E of Title IV of ERISA.

         SECTION 1.02. Computation of Time Periods; Other Definitional
         -------------------------------------------------------------
Provisions. In In this Agreement and the other Loan Documents, in the
----------
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including", the word "through" means "through
and including" and the words "to" and "until" each means "to but excluding."
References in this Agreement or any of the other Loan Documents to any
agreement, instrument or other document "as amended" shall mean and be a
reference to such agreement , instrument or other document as amended, amended
and restated, supplemented or otherwise modified hereafter from time to time in
accordance with its terms, but solely to the extent permitted hereunder. In this
Agreement, the words "herein," "hereof" and words of similar import refer to the
entirety of this Agreement and not to any particular Section, subsection, or
Article of this Agreement.

         SECTION 1.03. Accounting Terms. All accounting terms not specifically
         ------------------------------
defined herein shall be construed in accordance with generally accepted
accounting principles consistent with those applied in the preparation of the
Consolidated financial statements of the Borrower and its Subsidiaries as at
December 31, 2000 and for the Fiscal Year then ended referred to in Section
4.01(g) ("GAAP").

         SECTION 1.04. Currency Equivalents Generally. Any amount specified in
         --------------------------------------------
this Agreement (other than in Articles II, VII and VIII) or any of the other
Loan Documents to be in U.S. dollars shall also include the equivalent of such
amount in any currency other than U.S. dollars, such equivalent amount to be
determined at the rate of exchange quoted by BofA in Charlotte, North Carolina
at the close
<PAGE>

                                       30

of business on the Business Day immediately preceding any date of determination
thereof, to prime banks in New York, New York for the spot purchase in the New
York foreign exchange market of such amount in U.S. dollars with such other
currency.

                                  ARTICLE II

                       AMOUNTS AND TERMS OF THE ADVANCES
                           AND THE LETTERS OF CREDIT

         SECTION 2.01. The Advances and the Letters of Credit.
         ----------------------------------------------------

               (a)  The Term A Advances. Each Term A Lender severally agrees, on
                    -------------------
         the terms and conditions hereinafter set forth, to make a single
         advance (a "Term A Advance") in U.S. dollars to the Borrower on the
         Closing Date in an amount equal to the respective amount set forth
         opposite such Term A Lender's name on Schedule I hereto. The Term A
         Borrowing shall consist of Term A Advances made simultaneously by the
         Term A Lenders in accordance with their respective Pro Rata Shares of
         the Term A Facility. Amounts borrowed under this Section 2.01(a) and
         repaid or prepaid may not be reborrowed.

               (b)  The Term B Advances. Each Term B Lender severally agrees, on
                    -------------------
         the terms and conditions hereinafter set forth, to make a single
         advance (a "Term B Advance") in U.S. dollars to the Borrower on the
         Closing Date in an amount equal to the respective amount set forth
         opposite such Term B Lender's name on Schedule I hereto. The Term B
         Borrowing shall consist of Term B Advances made simultaneously by the
         Term B Lenders in accordance with their respective Pro Rata Shares of
         the Term B Facility. Amounts borrowed under this Section 2.01(b) and
         repaid or prepaid may not be reborrowed.

               (c)  The Revolving Credit Advances.
                    -----------------------------

                    (i)   Each Revolving Credit Lender severally agrees, on the
               terms and conditions hereinafter set forth, to make advances
               (each a "Revolving Credit Advance") in U.S. dollars to the
               Borrower from time to time on the Closing Date until the
               Termination Date, in each case in an amount not to exceed the
               Unused Revolving Credit Commitment of such Revolving Credit
               Lender at such time. Each Revolving Credit Borrowing shall be in
               an aggregate amount of $5,000,000 or an integral multiple of
               $1,000,000 in excess thereof (other than a Borrowing the proceeds
               of which shall be used solely to repay or prepay in full
               outstanding Swing Line Advances or the outstanding Letter of
               Credit Advances) or, if less, the amount of the aggregate Unused
               Revolving Credit Commitments at such time. Each Revolving Credit
               Borrowing shall consist of Revolving Credit Advances made
               simultaneously by the Revolving Credit Lenders in accordance with
               their respective Pro Rata Shares of the Revolving Credit
               Facility. Within the limits of each Revolving Credit Lender's
               Unused Revolving Credit Commitment in effect from time to time,
               the Borrower may borrow under this Section 2.01(c), prepay
               pursuant to Section 2.06(a) and reborrow under this Section
               2.01(c).

                    (ii)  The Revolving Credit Commitment of each of the
               Revolving Credit Lenders shall be deemed utilized for the 60-day
               period immediately following the date of each purchase by the
               Borrower of any of its Equity Interests pursuant to Section
               5.02(g)(iv)(B) or (C) by such Revolving Credit Lender's pro rata
               share of $75,000,000.
<PAGE>

                                       31

               (d)  The Swing Line Advances. The Borrower may request the Swing
                    -----------------------
         Line Bank to make, and the Swing Line Bank shall on the terms and
         conditions hereinafter set forth, make Swing Line Advances to the
         Borrower from time to time on any Business Day during the period from
         the Closing Date until the Termination Date (i) in an aggregate amount
         not to exceed $25,000,000 at any time outstanding (the "Swing Line
         Facility") and (ii) in an amount for each such Swing Line Borrowing not
         to exceed the aggregate Unused Revolving Credit Commitments of the
         Revolving Credit Lenders at such time. No Swing Line Advance shall be
         used for the purpose of funding the payment of principal of any other
         Swing Line Advance. Each Swing Line Borrowing shall be in an amount of
         $500,000 or an integral multiple of $250,000 in excess thereof and
         shall bear interest at a rate to be agreed on by the Borrower and the
         Swing Line Bank. Within the limits of the first sentence of this
         Section 2.01(d), the Borrower may borrow under this Section 2.01(d),
         repay pursuant to Section 2.04(c), prepay pursuant to Section 2.06(a)
         and reborrow under this Section 2.01(d).

               (e)  Letters of Credit.
                    -----------------

                    (i)   The Borrower, the Bank of New York as Issuing Bank and
               each of the Revolving Credit Lenders hereby agree that each of
               the Existing Letters of Credit shall, on and after the Closing
               Date, be deemed for all purposes of this Agreement to be a Letter
               of Credit issued and outstanding under the terms of this
               Agreement. The Issuing Bank agrees, on the terms and conditions
               hereinafter set forth, to issue letters of credit (the "Letters
               of Credit") in U.S. dollars for the account of the Borrower from
               time to time on any Business Day during the period from the date
               hereof until five Business Days before the scheduled Termination
               Date (A) in an Available Amount for each such Letter of Credit of
               the Revolving Credit Lenders not to exceed at any time the Unused
               Letter of Credit Commitment at such time and (B) in an aggregate
               Available Amount for all Letters of Credit not to exceed the
               lesser of (1) the Letter of Credit Facility at such time and (2)
               the aggregate Unused Revolving Credit Commitments at such time.
               No Letter of Credit shall have an expiration date (including all
               rights of the Borrower or the beneficiary of such Standby Letter
               of Credit to require renewal) later than the earlier of (x) five
               Business Days prior to the scheduled Termination Date and (y) one
               year after the date of issuance thereof, but any such Letter of
               Credit may by its terms be renewable annually on the terms set
               forth in clause (ii) of this Section 2.01(e). Within the limits
               of the Letter of Credit Facility, and subject to the limits
               referred to above, the Borrower may request the issuance of
               Letters of Credit under this Section 2.01(e)(i), repay any Letter
               of Credit Advances resulting from drawings thereunder pursuant to
               Section 2.03(c) and request the issuance of additional Letters of
               Credit under this Section 2.01(e)(i).

                    (ii)  Each Letter of Credit may by its terms be renewable
               annually upon notice (a "Notice of Renewal") given to the Issuing
               Bank and the Administrative Agent on or prior to any date for
               notice of renewal set forth in such Letter of Credit but in any
               event at least three Business Days prior to the date of the
               proposed renewal of such Letter of Credit and upon fulfillment of
               the applicable conditions set forth in Article III unless such
               Issuing Bank has notified the Borrower (with a copy to the
               Administrative Agent) on or prior to the date for notice of
               termination set forth in such Letter of Credit but in any event
               at least 30 Business Days prior to the date of automatic renewal
               of its election not to renew such Letter of Credit (a "Notice of
               Termination"); provided that the terms of each Letter of Credit
               that is automatically renewable annually (A) shall require the
               Issuing Bank to give the beneficiary of such Letter of Credit
               notice of any Notice of Termination, (B) shall permit such
               beneficiary, upon receipt of such notice, to draw under such
               Letter of Credit prior to the date such Letter of Credit
               otherwise would have been
<PAGE>

                                       32

               automatically renewed and (C) shall not permit the expiration
               date (after giving effect to any renewal) of such Letter of
               Credit in any event to be extended to a date later than five
               Business Days prior to the scheduled Termination Date. If either
               a Notice of Renewal is not given by the Borrower or a Notice of
               Termination is given by the Issuing Bank pursuant to the
               immediately preceding sentence, such Letter of Credit shall
               expire on the date on which it otherwise would have been
               automatically renewed; provided, however, that in the absence of
               receipt of a Notice of Renewal the Issuing Bank may in its
               discretion, unless instructed to the contrary by the
               Administrative Agent or the Borrower deem that a Notice of
               Renewal had been timely delivered and, in such case, a Notice of
               Renewal shall be deemed to have been so delivered for all
               purposes under this Agreement.

         SECTION 2.02. Making the Advances.
         ---------------------------------

               (a)  Except as otherwise provided in Section 2.02(b) or 2.03 or
         in respect of any Borrowing requested to be made on the date of the
         Initial Extension of Credit, in which case notice will be given not
         later than one Business Day prior to the date of the Initial Extension
         of Credit and which Borrowing shall be comprised of Base Rate Advances,
         each Borrowing (other than a Swing Line Borrowing) shall be made on
         notice, given not later than 2:00 P.M. (Charlotte, North Carolina time)
         on the third Business Day prior to the date of the proposed Borrowing
         in the case of a Borrowing comprised of Eurodollar Rate Advances, or on
         the first Business Day prior to the date of the proposed Borrowing in
         the case of a Borrowing comprised of Base Rate Advances, by the
         Borrower to the Administrative Agent, which shall give prompt notice
         thereof to each Appropriate Lender by telecopier. Each notice of a
         Borrowing (a "Notice of Borrowing") shall be by telephone, confirmed
         immediately in writing, or by telecopier, in substantially the form of
         Exhibit B-1 hereto, shall be duly executed by a Responsible Officer of
         the Borrower, and shall specify therein: (i) the requested date of such
         Borrowing (which shall be a Business Day); (ii) the Facility under
         which such Borrowing is requested to be made; (iii) the Type of
         Advances requested to comprise such Borrowing; (iv) the requested
         aggregate amount of such Borrowing; and (v) in the case of a Borrowing
         comprised of Eurodollar Rate Advances, the requested duration of the
         initial Interest Period for each such Advance. Each Appropriate Lender
         shall, before 2:00 P.M. (Charlotte, North Carolina time) on the date of
         such Borrowing, make available for the account of its Applicable
         Lending Office to the Administrative Agent at the Administrative
         Agent's Account, in same day funds, such Lender's Pro Rata Share of
         such Borrowing. After the Administrative Agent's receipt of such funds
         and upon fulfillment of the applicable conditions set forth in Article
         III, the Administrative Agent will make such funds available to the
         Borrower by crediting the Borrower's Account; provided, however, that,
         in the case of any Revolving Credit Borrowing, the Administrative Agent
         shall first make a portion of such funds equal to the aggregate
         principal amount of any Swing Line Advances and Letter of Credit
         Advances made by the Swing Line Bank or the Issuing Bank, as the case
         may be, and by any Revolving Credit Lender and outstanding on the date
         of such Revolving Credit Borrowing, plus accrued and unpaid interest
         thereon to and as of such date, available to the Swing Line Bank or the
         Issuing Bank, as applicable, and such other Revolving Credit Lenders
         for repayment of such Swing Line Advances and Letter of Credit
         Advances.

                    (a)   Each Swing Line Borrowing shall be made on notice,
               given not later than 2:00 P.M. (Charlotte, North Carolina time)
               on the date of the proposed Swing Line Borrowing, by the Borrower
               to the Swing Line Bank and the Administrative Agent. Each notice
               of a Swing Line Borrowing (a "Notice of Swing Line Borrowing")
               shall be by telephone, confirmed immediately in writing, or
               telecopier, shall be in substantially the form of Exhibit B-2
               hereto and duly executed by a Responsible Officer of the
               Borrower,
<PAGE>

                                       33

               and shall specify therein: (A) the requested date of such
               Borrowing (which shall be a Business Day); (B) the requested
               amount of such Borrowing; and (C) the requested maturity of such
               Borrowing (which maturity shall be no later than the seventh day
               after the requested date of such Borrowing). The Swing Line Bank
               will make the amount thereof available for the account of its
               Applicable Lending Office to the Administrative Agent at the
               Administrative Agent's Account, in same day funds. After the
               Administrative Agent's receipt of such funds and upon fulfillment
               of the applicable conditions set forth in Article III, the
               Administrative Agent will make such funds available to the
               Borrower by crediting the Borrower's Account.

                    (i)   Upon demand by the Swing Line Bank, with a copy of
               such demand to the Administrative Agent (which shall give prompt
               notice thereof to each Revolving Credit Lender), each Revolving
               Credit Lender shall purchase from the Swing Line Bank, and the
               Swing Line Bank shall sell and assign to each such Revolving
               Credit Lender, such Revolving Credit Lender's Pro Rata Share of
               such outstanding Swing Line Borrowing as of the date of such
               demand, by making available for the account of its Applicable
               Lending Office to the Administrative Agent at the Administrative
               Agent's Account for the account of the Swing Line Bank, in same
               day funds, an amount equal to such Pro Rata Share. Promptly after
               receipt of such funds, the Administrative Agent shall transfer
               such funds to the Swing Line Bank at its Applicable Lending
               Office. Each Revolving Credit Lender hereby agrees to purchase
               its Pro Rata Share of an outstanding Swing Line Borrowing on (A)
               the Business Day on which demand therefor is made by the Swing
               Line Bank so long as notice of such demand is given not later
               than 12:00 Noon (Charlotte, North Carolina time) on such Business
               Day or (B) the first Business Day next succeeding such demand if
               notice of such demand is given after such time. The Borrower
               hereby agrees to each such sale and assignment. Upon any such
               assignment by the Swing Line Bank to any Revolving Credit Lender
               of a portion of a Swing Line Borrowing, the Swing Line Bank
               represents and warrants to such Revolving Credit Lender that the
               Swing Line Bank is the legal and beneficial owner of such
               interest being assigned by it, but makes no other representation
               or warranty and assumes no responsibility with respect to such
               Swing Line Borrowing, the Loan Documents or any Loan Party. If
               and to the extent that any Revolving Credit Lender shall not have
               so made its Pro Rata Share of any applicable Swing Line Borrowing
               available to the Administrative Agent in accordance with the
               foregoing provisions of this Section 2.02(b)(ii), such Revolving
               Credit Lender hereby agrees to pay to the Administrative Agent
               forthwith on demand the amount of its Pro Rata Share, together
               with interest thereon, for each day from the date of demand by
               the Swing Line Bank therefor until the date such amount is paid
               to the Administrative Agent, at the Federal Funds Rate. If such
               Lender shall pay to the Administrative Agent the amount of its
               Pro Rata Share for the account of the Swing Line Bank on any
               Business Day, such amount so paid in respect of principal shall
               constitute a Swing Line Advance made by such Lender on such
               Business Day for all purposes of this Agreement, and the
               outstanding principal amount of the Swing Line Advance made by
               the Swing Line Bank shall be reduced by such amount on such
               Business Day.

                    (ii)  The obligation of each Revolving Credit Lender to
               purchase its Pro Rata Share of each outstanding Swing Line
               Borrowing upon demand by the Swing Line Bank therefor pursuant to
               clause (ii) of this Section 2.02(b) shall be absolute,
               unconditional and irrevocable, and shall be made strictly in
               accordance with the terms of clause (ii) of this Section 2.02(b)
               under all circumstances, including, without limitation, the
               following circumstances:
<PAGE>

                                       34

                    (A)   any lack of validity or enforceability of any Loan
               Document or any other agreement or instrument relating thereto;

                    (B)   the existence of any claim, set-off, defense or other
               right that such Revolving Credit Lender may have at any time
               against the Swing Line Bank, the Borrower or any other Person,
               whether in connection with the transactions contemplated by the
               Loan Documents or any unrelated transaction;

                    (C)   the occurrence and continuance of any Default or Event
               of Default; or

                    (D)   any other circumstance or happening whatsoever,
               whether or not similar to any of the foregoing.

         (c)   Anything in subsection (a) of this Section 2.02 to the contrary
notwithstanding, (i) the Borrower may not select Eurodollar Rate Advances if the
obligation of the Appropriate Lenders to make Eurodollar Rate Advances shall
then be suspended pursuant to Section 2.09 or 2.10. In addition, the Term
Advances may not be outstanding as part of more than 10 separate Borrowings and
the Revolving Credit Advances may not be outstanding as part of more than 10
separate Borrowings.

         (d)   Each Notice of Borrowing and Notice of Swing Line Borrowing shall
be irrevocable and binding on the Borrower. In the case of any Borrowing that
the related Notice of Borrowing specifies is to be comprised of Eurodollar Rate
Advances, the Borrower shall indemnify each Appropriate Lender against any loss,
cost or expense incurred by such Lender as a result of any failure to fulfill on
or before the date specified in such Notice of Borrowing for such Borrowing the
applicable conditions set forth in Article III, including, without limitation,
any loss, cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Lender to fund the Eurodollar Rate
Advance to be made by such Lender as part of such Borrowing when such Advance,
as a result of such failure, is not made on such date. A certificate of the
Lender requesting compensation pursuant to this subsection (d) submitted to the
Borrower by such Lender (with a copy to the Administrative Agent) and specifying
therein the amount of such additional compensation (including the basis of
calculation thereof) shall be conclusive and binding for all purposes, absent
manifest error.

         (e)   Unless the Administrative Agent shall have received notice from
an Appropriate Lender prior to the date of any Borrowing under a Facility under
which such Lender has a Commitment that such Lender will not make available to
the Administrative Agent such Lender's Pro Rata Share of such Borrowing, the
Administrative Agent may assume that such Lender has made the amount of such Pro
Rata Share available to the Administrative Agent on the date of such Borrowing
in accordance with subsection (a) or (b) of this Section 2.02, as applicable,
and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If and to the
extent that such Lender shall not have so made the amount of such Pro Rata Share
available to the Administrative Agent, such Lender and the Borrower severally
agree to repay or to pay to the Administrative Agent forthwith on demand such
corresponding amount, together with interest thereon, for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid or paid to the Administrative Agent, at (i) in the case of the Borrower,
the interest rate applicable at such time under Section 2.07 to Advances
comprising such Borrowing and (ii) in the case of such Lender, the Federal Funds
Rate. If such Lender shall pay to the Administrative Agent such corresponding
<PAGE>

                                       35

amount, such amount so paid shall constitute such Lender's Advance as part of
such Borrowing for all purposes under this Agreement.

         (f)   The failure of any Lender to make the Advance to be made by it as
part of any Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its Advance on the date of such Borrowing, but no Lender
shall be responsible for the failure of any other Lender to make the Advance to
be made by such other Lender on the date of any Borrowing.

SECTION 2.03. Issuance of and Drawings and Reimbursement Under Letters of
-------------------------------------------------------------------------
Credit.
------

         (a)   Request for Issuance. Each Letter of Credit shall be issued upon
               --------------------
notice, given not later than 2:00 P.M. (Charlotte, North Carolina time) on the
fifth Business Day prior to the date of the proposed issuance of such Letter of
Credit (or such later day as the Issuing Bank in its sole discretion shall
agree), by the Borrower to the Issuing Bank, which shall give to the
Administrative Agent and each Revolving Credit Lender prompt notice thereof by
telecopier. Each notice of issuance of a Letter of Credit (a "Notice of
Issuance") shall be by telephone, confirmed immediately in writing, or by
telecopier, shall be duly executed by a Responsible Officer of the Borrower, and
shall specify therein: (i) the requested date of such issuance (which shall be a
Business Day); (ii) the requested Available Amount of such Letter of Credit;
(iii) the requested expiration date of such Letter of Credit (which shall comply
with the requirements of Section 2.01(e)); (iv) the name and address of the
proposed beneficiary of such Letter of Credit; and (v) the proposed form of such
Letter of Credit, and shall be accompanied by such application and agreement for
letters of credit as the Issuing Bank may specify to the Borrower for use in
connection with such requested Letter of Credit (such applications and
agreements, and all similar agreements entered into in connection with an
Existing Letter of Credit, a "Letter of Credit Agreement"). If the requested
form of such Letter of Credit is acceptable to the Issuing Bank in its sole
discretion, the Issuing Bank will, upon fulfillment of the applicable conditions
set forth in Article III, make such Letter of Credit available to the Borrower
at its office referred to in Section 8.02 or as otherwise agreed with the
Borrower in connection with the issuance of such Letter of Credit. If and to the
extent that the provisions of any Letter of Credit Agreement shall conflict with
this Agreement, the provisions of this Agreement shall govern.

         (b)   Drawing and Reimbursement.
               -------------------------

               (i)  The obligation of the Borrower to reimburse the Issuing Bank
         for each payment made by the Issuing Bank under any Letter of Credit,
         and to pay interest thereon as provided herein, shall be absolute,
         unconditional and irrevocable, without regard to any circumstances,
         including, without limitation, those referred to in Section 2.04(d)
         below. The payment by the Issuing Bank of a draft drawn under any
         Letter of Credit shall constitute for all purposes of this Agreement
         the making by the Issuing Bank of a Letter of Credit Advance, which
         shall be a Base Rate Advance, in the amount of such draft; provided
         that such payment shall not be deemed a Base Rate Advance if the
         Borrower reimburses the Issuing Bank therefor prior to 2:00 P.M.
         (Charlotte, North Carolina time) on the date of such payment, or if
         such payment by the Issuing Bank is made on or after 2:00 P.M.
         (Charlotte, North Carolina time), then prior to 2:00 P.M. (Charlotte,
         North Carolina time), on the Business Day immediately succeeding the
         date of such payment, together with interest thereon from the date of
         such payment to the date of such reimbursement at a rate per annum
         equal to the sum of the Base Rate then in effect from time to time and
         the Applicable Margin for Base Rate Advances that are Revolving Credit
         Advances then in effect from time to time. Upon demand by the
<PAGE>

                                       36

         Issuing Bank, with a copy of such demand to the Administrative Agent,
         each Revolving Credit Lender shall purchase from the Issuing Bank, and
         the Issuing Bank shall sell and assign to each such Revolving Credit
         Lender, such Lender's Pro Rata Share of such outstanding Letter of
         Credit Advance as of the date of such purchase, by making available for
         the account of its Applicable Lending Office to the Administrative
         Agent for the account of the Issuing Bank, at the Administrative
         Agent's Account, in same day funds, an amount equal to the portion of
         the outstanding principal amount of such Letter of Credit Advance to be
         purchased by such Lender. Promptly after receipt thereof, the
         Administrative Agent shall transfer such funds to the Issuing Bank. The
         Borrower hereby agrees to each such sale and assignment. Each Revolving
         Credit Lender agrees to purchase its Pro Rata Share of an outstanding
         Letter of Credit Advance on (A) the Business Day on which demand
         therefor is made by the Issuing Bank so long as notice of such demand
         is given not later than 2:00 P.M. (Charlotte, North Carolina time) on
         such Business Day or (B) the first Business Day next succeeding such
         demand if notice of such demand is given after such time. Upon any such
         assignment by the Issuing Bank to any other Revolving Credit Lender of
         a portion of a Letter of Credit Advance, the Issuing Bank represents
         and warrants to such other Lender that the Issuing Bank is the legal
         and beneficial owner of such interest being assigned by it, free and
         clear of any liens, but makes no other representation or warranty and
         assumes no responsibility with respect to such Letter of Credit
         Advance, the Loan Documents or any Loan Party. If and to the extent
         that any Revolving Credit Lender shall not have so made the amount of
         such Letter of Credit Advance available to the Administrative Agent,
         such Revolving Credit Lender agrees to pay to the Administrative Agent
         forthwith on demand such amount, together with interest thereon, for
         each day from the date of demand by the Issuing Bank until the date
         such amount is paid to the Administrative Agent, at the Federal Funds
         Rate, for its account or the account of the Issuing Bank, as
         applicable. If such Revolving Credit Lender shall pay to the
         Administrative Agent such amount for the account of the Issuing Bank on
         any Business Day, such amount so paid in respect of principal shall
         constitute a Letter of Credit Advance made by such Revolving Credit
         Lender on such Business Day for all purposes of this Agreement, and the
         outstanding principal amount of the Letter of Credit Advance made by
         the Issuing Bank shall be reduced by such amount on such Business Day.

               (ii) The Obligation of each Revolving Credit Lender to purchase
         its Pro Rata Share of each outstanding Letter of Credit Advance upon
         demand by the Issuing Bank therefor pursuant to clause (i) of this
         Section 2.03(c) shall be absolute, unconditional and irrevocable, and
         shall be made strictly in accordance with the terms of clause (i) of
         this Section 2.03(c) under all circumstances, including, without
         limitation, the following circumstances:

                    (A)   any lack of validity or enforceability of any Loan
               Document, any Letter of Credit Agreement, any Letter of Credit or
               any other agreement or instrument relating thereto (collectively,
               the "L/C Related Documents");

                    (B)   the existence of any claim, set-off, defense or other
               right that such Revolving Credit Lender may have at any time
               against any beneficiary or any transferee of a Letter of Credit
               (or any Person for whom any such beneficiary or any such
               transferee may be acting), the Issuing Bank, the Borrower or any
               other Person, whether in connection with the transactions
               contemplated by the L/C Related Documents or any unrelated
               transaction;
<PAGE>

                                       37

               (C)  the occurrence and continuance of any Default or Event of
         Default; or

               (D)  any other circumstance or happening whatsoever, whether or
         not similar to any of the foregoing.

     (c) Failure to Make Letter of Credit Advances. The failure of any Revolving
         -----------------------------------------
Credit Lender to make the Letter of Credit Advance to be made by it on the date
specified in Section 2.03(b) shall not relieve any other Revolving Credit Lender
of its obligation hereunder to make its Letter of Credit Advance on such date,
but no Revolving Credit Lender shall be responsible for the failure of any other
Revolving Credit Lender to make the Letter of Credit Advance to be made by such
other Revolving Credit Lender on such date.

SECTION 2.04.  Repayment of Advances.
-------------------------------------

     (a) Term Advances.
         -------------
         (i)   Subject to Section 2.04(a)(ii) with respect to the Term B
     Facility, the Borrower shall repay to the Administrative Agent for the
     ratable account of the Appropriate Lenders the aggregate principal amount
     of all Term Advances 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 2.05):

<TABLE>
<CAPTION>
       =====================================================================
              DATE                                AMOUNT
       ---------------------------------------------------------------------
                                   Term A Facility        Term B Facility
       ---------------------------------------------------------------------
       <S>                         <C>                    <C>
       June 30, 2001               $2,500,000             $500,000
       ---------------------------------------------------------------------
       September 30, 2001          $2,500,000             $500,000
       ---------------------------------------------------------------------
       December 31, 2001           $2,500,000             $500,000
       ---------------------------------------------------------------------
       March 31, 2002              $2,500,000             $500,000
       ---------------------------------------------------------------------
       June 30, 2002               $2,500,000             $500,000
       ---------------------------------------------------------------------
       September 30, 2002          $2,500,000             $500,000
       ---------------------------------------------------------------------
       December 31, 2002           $2,500,000             $500,000
       ---------------------------------------------------------------------
       March 31, 2003              $2,500,000             $500,000
       ---------------------------------------------------------------------
       June 30, 2003               $2,500,000             $500,000
       ---------------------------------------------------------------------
       September 30, 2003          $2,500,000             $500,000
       ---------------------------------------------------------------------
       December 31, 2003           $2,500,000             $500,000
       ---------------------------------------------------------------------
       March 31, 2004              $2,500,000             $500,000
       ---------------------------------------------------------------------
       June 30, 2004               $2,500,000             $500,000
       ---------------------------------------------------------------------
       September 30, 2004          $2,500,000             $500,000
       ---------------------------------------------------------------------
       December 31, 2004           $2,500,000             $500,000
       ---------------------------------------------------------------------
       March 31, 2005              $2,500,000             $500,000
       ---------------------------------------------------------------------
       June 30, 2005               $2,500,000             $500,000
       ---------------------------------------------------------------------
       September 30, 2005          $2,500,000             $500,000
       ---------------------------------------------------------------------
       December 31, 2005           $2,500,000             $500,000
       ---------------------------------------------------------------------
       March 31, 2006              $2,500,000             $190,500,000
       =====================================================================
</TABLE>
<PAGE>

                                       38

          provided, however, that the final principal installment of the
          respective Term Advances shall be in an amount equal to the aggregate
          principal amount of all such Term Advances then outstanding.

               (ii) Notwithstanding Section 2.04(a)(i), if the maturity of the
          subordinated notes referred to in clause (i) of the definition of
          "Subordinated Notes" has been extended by March 1, 2006 to a date not
          earlier than June 1, 2007, or if such subordinated notes have been
          converted to Equity Interests of the Borrower by March 1, 2006, then
          the Borrower shall repay to the Administrative Agent for the ratable
          account of the Term B Lenders the aggregate principal amount of all
          Term B Advances 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 2.05):

               -------------------------------------------
                        DATE                  AMOUNT
               -------------------------------------------
                                Term B Facility
               -------------------------------------------
               June 30, 2001           $500,000
               -------------------------------------------
               September 30, 2001      $500,000
               -------------------------------------------
               December 31, 2001       $500,000
               -------------------------------------------
               March 31, 2002          $500,000
               -------------------------------------------
               June 30, 2002           $500,000
               -------------------------------------------
               September 30, 2002      $500,000
               -------------------------------------------
               December 31, 2002       $500,000
               -------------------------------------------
               March 31, 2003          $500,000
               -------------------------------------------
               June 30, 2003           $500,000
               -------------------------------------------
               September 30, 2003      $500,000
               -------------------------------------------
               December 31, 2003       $500,000
               -------------------------------------------
               March 31, 2004          $500,000
               -------------------------------------------
               June 30, 2004           $500,000
               -------------------------------------------
               September 30, 2004      $500,000
               -------------------------------------------
               December 31, 2004       $500,000
               -------------------------------------------
               March 31, 2005          $500,000
               -------------------------------------------
               June 30, 2005           $500,000
               -------------------------------------------
               September 30, 2005      $500,000
               -------------------------------------------
               December 31, 2005       $500,000
               -------------------------------------------
               March 31, 2006          $500,000
               -------------------------------------------
               June 30, 2006           $500,000
               -------------------------------------------
               September 30, 2006      $500,000
               -------------------------------------------
               December 31, 2006       $500,000
               -------------------------------------------
               March 31, 2007          $188,500,000
               -------------------------------------------

          provided, however, that the final installment of the Term B Advances
          shall be in an amount equal to the aggregate principal amount of all
          Term B Advances then outstanding.

          (b)  Revolving Credit Advances. The Borrower shall repay to the
               -------------------------
     Administrative Agent for the ratable account of the Revolving Credit
     Lenders on the Termination Date the aggregate principal amount of all
     Revolving Credit Advances outstanding on such date.
<PAGE>

                                       39

          (c)  Swing Line Advances. The Borrower shall repay to the
               -------------------
     Administrative Agent for the account of the Swing Line Bank and each
     Revolving Credit Lender that has made a Swing Line Advance on the earlier
     of (i) the maturity date for each Swing Line Advance (as specified in the
     applicable Notice of Swing Line Borrowing (which maturity shall be no later
     than the seventh day after the date on which such Swing Line Borrowing was
     initially made by the Swing Line Bank) and (ii) the Termination Date, the
     principal amount of each such Swing Line Advance made by the Swing Line
     Bank and each such Revolving Credit Lender and outstanding on such date.

          (d)  Letter of Credit Advances.
               -------------------------

               (i)  The Borrower shall repay to the Administrative Agent for the
          account of the Issuing Bank and each Revolving Credit Lender that has
          made a Letter of Credit Advance on the earlier of (A) the date of
          demand therefor and (B) the Termination Date, the principal amount of
          each such Letter of Credit Advance made by the Issuing Bank and each
          such Revolving Credit Lender and outstanding on such date.

               (ii) The Obligations of the Borrower under this Agreement, any
          Letter of Credit Agreement and any other agreement or instrument
          relating to any Letter of Credit shall be absolute, unconditional and
          irrevocable, and shall be paid strictly in accordance with the terms
          of this Agreement, such Letter of Credit Agreement or such other
          agreement or instrument under all circumstances, including, without
          limitation, the following circumstances (it being understood that any
          such payment by the Borrower is without prejudice to, and does not
          constitute a waiver of, any rights the Borrower might have or might
          acquire as a result of the payment by the Issuing Bank of any draft
          drawn or the reimbursement by the Borrower thereof):

                    (A)  any lack of validity or enforceability of any L/C
               Related Document;

                    (B)  any change in the time, manner or place of payment of,
               or in any other term of, all or any of the Obligations of the
               Borrower in respect of any L/C Related Document or any other
               amendment or waiver of or any consent to departure from all or
               any of the L/C Related Documents;

                    (C)  the existence of any claim, set-off, defense or other
               right that the Borrower may have at any time against any
               beneficiary or any transferee of a Letter of Credit (or any
               Person for whom any such beneficiary or any such transferee may
               be acting), the Issuing Bank or any other Person, whether in
               connection with the transactions contemplated by the L/C Related
               Documents or any unrelated transaction;

                    (D)  any statement or any other document presented under a
               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;

                    (E)  payment by the Issuing Bank under a Letter of Credit
               against presentation of a draft, certificate or other document
               that does not strictly comply with the terms of such Letter of
               Credit;
<PAGE>

                                       40

                    (F)  any exchange, release or nonperfection of any
               Collateral or other collateral, or any release or amendment or
               waiver of or consent to departure from the Subsidiary Guaranty or
               any other guarantee, for all or any of the Obligations of the
               Borrower in respect of the L/C Related Documents; or

                    (G)  any other circumstance or happening whatsoever, whether
               or not similar to any of the foregoing, including, without
               limitation, any other circumstance that might otherwise
               constitute a defense available to, or a discharge of, the
               Borrower or a guarantor.

     SECTION 2.05. Termination or Reduction of the Commitments.
     ---------------------------------------------------------

          (a)  Optional. The Borrower may, upon at least three Business Days'
               --------
     notice to the Administrative Agent, terminate in whole or reduce in part
     the unused portions of the Letter of Credit Facility or the Unused
     Revolving Credit Commitments; provided, however, that each partial
     reduction of a Facility shall be in an aggregate amount of $5,000,000 or an
     integral multiple of $1,000,000 in excess thereof or, if less, the
     aggregate amount of such Facility.

          (b)  Mandatory.
               ---------

               (i)   The Revolving Credit Facility shall be automatically and
          permanently reduced on each date on which the prepayment of Revolving
          Credit Advances outstanding thereunder is required to be made pursuant
          to Section 2.06(b)(i) by an amount equal to the applicable Reduction
          Amount.

               (ii)  The Swing Line Facility shall be automatically and
          permanently reduced on the date of each reduction in the Revolving
          Credit Facility by the amount, if any, by which the amount of the
          Swing Line Facility on such date exceeds the amount of the Revolving
          Credit Facility on such date (after giving effect to such reduction of
          the Revolving Credit Facility on such date).

               (iii) The Letter of Credit Facility shall be automatically and
          permanently reduced on the date of each reduction in the Revolving
          Credit Facility by an amount equal to the amount, if any, by which (A)
          the Letter of Credit Facility on such date exceeds (B) the Revolving
          Credit Facility on such date, after giving effect to such reduction of
          the Revolving Credit Facility.

          (c)  Application of Commitment Reductions. Upon each reduction of a
               ------------------------------------
     Facility pursuant to this Section 2.05, the Commitment of each Appropriate
     Lender under such Facility shall be reduced by such Lender's Pro Rata Share
     of the amount by which such Facility is reduced.

          (d)  Incremental Facilities and Commitments.
               --------------------------------------

               (i)   At any time during the term of this Agreement, and so long
          as no Default or Event of Default shall have occurred and be
          continuing or would result therefrom, the Borrower may request, from
          time to time, by notice to the Administrative Agent that one or more
          Lenders (and/or one or more other Persons which shall become Lenders
          as provided in Section 2.05(d)(iii) below) provide one or more
          additional facilities to supplement the Revolving Credit Facility, the
          Term A Facility or the Term B Facility (each, an "Incremental
          Facility"), which Incremental Facilities together shall provide for
<PAGE>

                                       41

          commitments ("Incremental Commitments") for loans in an aggregate
          amount of not greater than $100,000,000 in excess of the aggregate
          outstanding amount of the Term A Advances, the Term B Advances or the
          Revolving Credit Commitment, as the case may be, at the time of the
          respective request (collectively, "Incremental Loans") provided that
          (A) no Lender shall have any obligation to provide any Incremental
          Commitment, (B) any Lender (or any other Person which becomes a Lender
          pursuant to Section 2.05(d)(iii) below) may provide Incremental
          Commitments without the consent of any other Lender and (C) each of
          the Term A Facility, the Term B Facility and the Revolving Credit
          Facility, as the case may be, may only be supplemented once as
          provided herein.

               (ii)  The maturity date, scheduled amortization and commitment
          reductions, mandatory prepayments and commitment reductions, interest
          rate, minimum borrowings and prepayments, commitment fees and other
          amounts payable in respect of any Incremental Facility, and certain
          agent determinations and other relevant provisions, shall be as set
          forth in an agreement (an "Incremental Facility Agreement") among the
          Loan Parties, the Administrative Agent, the Lenders and other Persons
          agreeing to provide Incremental Commitments thereunder; provided that
          any Incremental Loans to supplement the Term A Facility shall have a
          Weighted Average Life to Maturity of no less than the Weighted Average
          Life to Maturity of the Term A Advances then outstanding, any
          Incremental Loans to supplement the Term B Facility shall have a
          Weighted Average Life to Maturity of no less than the Weighted Average
          Life to Maturity of the Term B Advances then outstanding and any
          revolving Incremental Commitment to supplement the Revolving Credit
          Commitment shall have a termination date not later than the then
          scheduled Termination Date.

               (iii) The effectiveness of any Incremental Facility to be created
          under this Section 2.05(d), and the obligation of any Lender or other
          Person providing any Incremental Commitment thereunder to make any
          Incremental Loans pursuant thereto, is subject to, in addition to the
          conditions set forth in Article III, the satisfaction of each of the
          following conditions: (i) each Loan Party, the Administrative Agent,
          and each Lender or other Person providing Incremental Commitments
          thereunder (each, an "Incremental Lender") shall have executed and
          delivered to the Administrative Agent an Incremental Facility
          Agreement with respect to such Incremental Facility, (ii) the
          Administrative Agent shall have received for its account and for the
          respective accounts of any other agents and the Incremental Lenders,
          all fees and other amounts payable by the Borrower in respect of such
          Incremental Facility on or prior to such date of effectiveness and
          (iii) the Administrative Agent (or its counsel) shall have received
          such documents and certificates, and such legal opinions, as the
          Administration Agent or its counsel shall reasonably request,
          including documents, certificates and legal opinions relating to the
          organization, existence and good standing of each Loan Party, the
          authorization of such Incremental Facility and other legal matters
          relating to the Loan Parties or the Loan Documents (including the
          applicable Incremental Facility Agreement). The Administrative Agent
          shall notify each Lender as to the effectiveness of each Incremental
          Facility hereunder.

     SECTION 2.06. Prepayments.
     -------------------------

          ()   Optional. The Borrower may, on any Business Day, prepay all or
               --------
     any portions of any Swing Line Advance and (ii) upon at least three
     Business Days' notice to the Administrative Agent stating the Facility
     under which Advances are proposed to be prepaid and the proposed date and
     aggregate principal amount of the prepayment, and if such notice is given
     the Borrower
<PAGE>

                                       42

     shall, prepay the aggregate principal amount of the Advances comprising
     part of the same Borrowing and outstanding on such date, in whole or
     ratably in part; provided, however, that each partial prepayment of
     (i) Revolving Credit Advances shall be in an aggregate principal amount of
     $1,000,000 or an integral multiple of $250,000 in excess thereof and
     (ii) Term Advances shall be in an aggregate principal amount of $5,000,000
     or an integral multiple of $500,000 in excess thereof or, if less, the
     aggregate outstanding principal amount of such Facility. Each prepayment of
     Term Advances made pursuant to this clause (a) shall be applied against the
     principal repayment installments of the respective Term Facility designated
     by the Borrower in the respective notice of prepayment.

          (b)  Mandatory.
               ---------

               (i)  The Borrower shall, not later than one Business Day after
          the date of receipt of the Net Cash Proceeds by the Borrower or any of
          its Subsidiaries from:

                    (A)  the sale, lease, transfer or other disposition of any
               property or assets of the Borrower or any of its Subsidiaries
               (other than any property or assets expressly permitted to be
               sold, leased, transferred or otherwise disposed of pursuant to
               clause (i), (ii), (iii), (iv) or (v) of Section 5.02(e));

                    (B)  the incurrence or issuance by the Borrower or any of
               its Subsidiaries of any Debt (other than Debt expressly permitted
               to be incurred or issued pursuant to clause (i), (iii), (iv),
               (v), (vi), (vii), (viii), (ix), (x), (xi) or (xiii) of Section
               5.02(b)); and

                    (C)  the issuance or sale by the Borrower or any Subsidiary
               thereof (which is or will be as a result thereof subject to the
               Securities Exchange Act of 1934, as amended) of any Equity
               Interests therein (other than (i) the issuance by the Borrower of
               (a) its common stock to employees of the Borrower or its
               Subsidiaries pursuant to employee equity incentive or benefit
               plans, (b) Equity Interests to effect any acquisition permitted
               under Section 5.02(f) hereof, provided that in the case in which
               the proceeds of such issuance are contemplated to be used to
               effect such acquisition, then all the proceeds thereof are used
               within 180 days of such issuance to effect such acquisition, and
               any such proceeds not so used by such 180th day shall be applied
               as a prepayment as provided herein, or (c) Equity Interests in
               connection with a redemption of Subordinated Debt to the extent
               contemplated in Section 5.02(i) and, (ii) the issuance by any
               Subsidiary of the Borrower of any Equity Interests therein to the
               Borrower or to another Subsidiary thereof), prepay an aggregate
               principal amount of the Advances comprising part of the same
               Borrowings equal to (x) 100% of the amount of the Net Cash
               Proceeds in respect of any sale, lease, transfer or other
               disposition of any property or assets of the Borrower or any of
               its Subsidiaries referred to in subclause (b)(i)(A) above to the
               extent such Net Cash Proceeds have not been reinvested within the
               applicable reinvestment period as provided in
               Section 5.02(e)(vi); (y) the first $150,000,000 of Net Cash
               Proceeds from the incurrence or issuance by the Borrower or any
               of its Subsidiaries of all Debt referred to in subclause
               (b)(i)(B) above plus 50% of any such Net Cash Proceeds in excess
               of $150,000,000; and (z) 50% of the amount of the Net Cash
               Proceeds of the issuance or sale by the Borrower of any Equity
               Interests other than common Equity Interests and 25% of the
               amount of Net Cash Proceeds of the issuance or sale by the
               Borrower of any common Equity Interests referred to in subclause
               (b)(i)(C) above, and in the case of Net Cash Proceeds from the
               issuance or sale by any Subsidiary of the Borrower of Equity
               Interests
<PAGE>

                                       43

               referred to in subclause (b)(i)(C) above other than common Equity
               Interests, 50% of an amount equal to the Borrower's Percentage of
               such Net Cash Proceeds and in the case of Net Cash Proceeds from
               the issuance by any Subsidiary of the Borrower of common Equity
               Interests referred to in subclause (b)(i)(C) above, 25% of an
               amount equal to the Borrower's Percentage of such Net Cash
               Proceeds. Each prepayment of advances required to be made
               pursuant to this subclause (i) shall first be applied on a pro
               rata basis between the Term Facilities, and with respect to each
               Term Facility, applied on a pro rata basis against the respective
               principal repayment installments thereof, and thereafter applied
               to the Revolving Credit Facility in the manner set forth in this
               Section 2.06(b).

               (ii)  The Borrower shall, on each Business Day, prepay an
          aggregate principal amount of the Revolving Credit Advances comprising
          part of the same Borrowings, the Letter of Credit Advances and the
          Swing Line Advances and, if applicable, deposit an amount into the L/C
          Cash Collateral Account equal to the amount by which (A) the sum of
          (1) the aggregate principal amount of all Revolving Credit Advances,
          Letter of Credit Advances and Swing Line Advances outstanding on such
          Business Day and (2) the aggregate Available Amount of all Letters of
          Credit outstanding on such Business Day exceeds (B) the Revolving
          Credit Facility on such Business Day (after giving effect to any
          permanent reduction thereof pursuant to Section 2.05 on such Business
          Day).

               (iii) The Borrower shall, on each Business Day, pay to the
          Administrative Agent for deposit into the L/C Cash Collateral Account
          an amount sufficient to cause the aggregate amount on deposit in the
          L/C Cash Collateral Account on such Business Day to equal the amount
          by which (A) the aggregate Available Amount of all Letters of Credit
          outstanding on such Business Day exceeds (B) the Letter of Credit
          Facility on such Business Day (after giving effect to any permanent
          reduction thereof pursuant to Section 2.05 on such Business Day).

               (iv)  Prepayments of the Revolving Credit Facility made pursuant
          to clause (i), (ii), or (iii) of this Section 2.06(b), first, shall be
          applied to prepay Letter of Credit Advances outstanding at such time
          until all such Letter of Credit Advances are paid in full, second,
          shall be applied to prepay Swing Line Advances outstanding at such
          time until all such Swing Line Advances are paid in full, third, shall
          be applied to prepay Revolving Credit Advances comprising part of the
          same Borrowings and outstanding at such time until all such Revolving
          Credit Advances are paid in full and, fourth, shall be deposited into
          the L/C Cash Collateral Account to cash collateralize 100% of the
          Available Amount of all Letters of Credit outstanding at such time;
          and, in the case of prepayments of the Revolving Credit Facility
          required pursuant to clause (i) or (ii) of this Section 2.06(b), the
          amount remaining, if any, after the prepayment in full of all Advances
          outstanding at such time and the 100% cash collateralization of the
          aggregate Available Amount of all Letters of Credit outstanding at
          such time (the sum of such prepayment amounts, cash collateralization
          amounts and remaining amount being, collectively, the "Reduction
          Amount") may be retained by the Borrower for use in the ordinary
          course of its business, and the Letter of Credit Facility shall be
          automatically and permanently reduced as set forth in Section
          2.05(b)(iii). Upon the drawing of any Letter of Credit for which funds
          are on deposit in the L/C Cash Collateral Account, such
<PAGE>

                                       44

          funds shall be applied (without any further action by or notice to or
          from the Borrower or any other Loan Party) to reimburse the Issuing
          Bank or the Revolving Credit Lenders, as applicable.

          (c)  Prepayments to Include Accrued Interest, Etc. All prepayments
               --------------------------------------------
     under this Section 2.06 shall be made together with (i) accrued and unpaid
     interest to the date of such prepayment on the principal amount so prepaid
     and (ii) in the case of any such prepayment of a Eurodollar Rate Advance on
     a date other than the last day of an Interest Period therefor, any amounts
     owing in respect of such Eurodollar Rate Advance pursuant to 8.04(c).

SECTION 2.07. Interest
----------------------

          (a)  Scheduled Interest. The Borrower shall pay interest on the unpaid
               ------------------
     principal amount of each Advance owing to each Lender Party from the date
     of such Advance until such principal amount shall be paid in full, at the
     following rates per annum:

               (i)   Base Rate Advances. During such periods as such Advance is
                     ------------------
     a Base Rate Advance, a rate per annum equal at all times to the sum of (A)
     the Base Rate in effect from time to time and (B) the Applicable Margin for
     such Base Rate Advance in effect from time to time, payable in arrears
     quarterly on the last day of each March, June, September and December
     during such periods and on the date such Base Rate Advance shall be
     Converted or paid in full.

               (ii)  Eurodollar Rate Advances. During such periods as such
                     ------------------------
     Advance is a Eurodollar Rate Advance, a rate per annum equal at all times
     during each Interest Period for such Eurodollar Rate Advance to the sum of
     (A) the Eurodollar Rate for such Eurodollar Rate Advance for such Interest
     Period and (B) the Applicable Margin for such Advance in effect on the
     first day of such Interest Period, payable in arrears on the last day of
     such Interest Period and, if such Interest Period has a duration of more
     than three months, on each day that occurs during such Interest Period
     every three months from the first day of such Interest Period and on the
     date such Eurodollar Rate Advance shall be Converted or paid in full.

               (iii) Default Interest. Upon the occurrence and during the
                     ----------------
     continuance of a Default under Section 6.01(a) or 6.01(f) or an Event of
     Default, the Administrative Agent may, and upon the request of the Required
     Lenders shall, require that the Borrower pay interest on (i) the unpaid
     principal amount of each Advance owing to each Lender Party, payable in
     arrears on the dates referred to in clause (i) or (ii) of Section 2.07(a),
     as applicable, and on demand, at a rate per annum equal at all times to 2%
     per annum above the rate per annum required to be paid on such Advance
     pursuant to clause (i) or (ii) of Section 2.07(a), as applicable, and (ii)
     to the fullest extent permitted by applicable law, the amount of any
     interest, fee or other amount payable under this Agreement or any other
     Loan Document to any Agent or any Lender Party that is not paid when due,
     from the date such amount shall be due until such amount shall be paid in
     full, payable in arrears on the date such amount shall be paid in full and
     on demand, at a rate per annum equal at all times to 2% per annum above the
     rate per annum required to be paid, in the case of interest, on the Type of
     Advance on which such interest has accrued pursuant to clause (i) or (ii)
     of Section 2.07(a), as applicable, and, in all other cases, on Base Rate
     Advances pursuant to clause (i) of Section 2.07(a).
<PAGE>

                                       45

          (b)  Notice of Interest Rate. Promptly after receipt of a Notice of
               -----------------------
     Borrowing pursuant to Section 2.02(a), a Notice of Conversion pursuant to
     Section 2.09(a) or a notice of selection of an Interest Period pursuant to
     the definition of "Interest Period" set forth in Section 1.01, the
     Administrative Agent shall give notice to the Borrower and each Appropriate
     Lender of the applicable interest rate determined by the Administrative
     Agent for purposes of clause (i) or (ii) of Section 2.07(a), as applicable.

SECTION 2.08. Fees.
------------------

          (a)  Commitment Fee. The Borrower shall pay to the Administrative
               --------------
     Agent for the account of the Lenders a commitment fee (the "Commitment
     Fee"), from May 4, 2001 in the case of each Initial Lender and from the
     effective date specified in the Assignment and Acceptance pursuant to which
     it became a Lender in the case of each other Lender until, in each case,
     the Termination Date, payable in arrears on the date of the Initial
     Extension of Credit, thereafter quarterly on the last Business Day of each
     March, June, September and December, commencing June 30, 2001, and on the
     Termination Date, at the Applicable Percentage in effect from time to time
     on the sum of (i) the average daily Unused Revolving Credit Commitment of
     each Revolving Credit Lender plus (ii) such Revolving Credit Lender's Pro
     Rata Share of the average daily outstanding Swing Line Advances during such
     quarter; provided, however, that no Commitment Fee shall accrue on any of
     the Commitments of a Defaulting Lender so long as such Lender shall be a
     Defaulting Lender.

          (b)  Letter of Credit Fees, Etc.
               --------------------------

               (i)  The Borrower shall pay to the Administrative Agent for the
          account of each Revolving Credit Lender a commission, payable in
          arrears quarterly on the last Business Day of each March, June,
          September and December, commencing June 30, 2001, and on the earliest
          to occur of the full drawing, expiration, termination or cancellation
          of any such Letter of Credit and on the Termination Date, on such
          Revolving Credit Lender's Pro Rata Share of the average daily
          aggregate Available Amount of all Letters of Credit outstanding from
          time to time during such quarter at the rate per annum equal to the
          Applicable Margin in effect at such time for Eurodollar Rate Advances
          under the Revolving Credit Facility. Upon the occurrence and during
          the continuance of a Default under Section 6.01(a) or 6.01(f) or an
          Event of Default, the amount of commission payable by the Borrower
          under this clause (b)(i) shall be increased by 2% per annum.

               (ii) The Borrower shall pay to the Issuing Bank, for its own
          account, such commissions, issuance fees, fronting fees, transfer fees
          and other fees and charges in connection with the issuance or
          administration of each Letter of Credit as the Borrower and the
          Issuing Bank shall from time to time agree.

          (c)  Agents' Fees. The Borrower shall pay to the Administrative Agent
               ------------
     for the account of the Agents such fees as may from time to time be agreed
     between the Borrower and the Administrative Agent.

     SECTION 2.09. Conversion of Advances.
     ------------------------------------

          (a)  Optional. The Borrower may on any Business Day, upon notice given
               --------
     to the Administrative Agent not later than (i) 2:00 P.M. (Charlotte, North
     Carolina time) on the third Business Day prior to the date of the proposed
     Conversion in the case of a Conversion of Base
<PAGE>

                                       46

     Rate Advances into Eurodollar Rate Advances or of Eurodollar Rate Advances
     of one Interest Period into Eurodollar Rate Advances of another Interest
     Period, or (ii) 2:00 P.M. (Charlotte, North Carolina time) on the Business
     Day immediately preceding the date of the proposed Conversion in the case
     of a Conversion of Eurodollar Rate Advances into Base Rate Advances;
     provided, however, that in each case:

               (A)  any Conversion of Base Rate Advances into Eurodollar Rate
          Advances shall be made only if no Default under Section 6.01(f) or
          Event of Default shall have occurred and be continuing and shall be in
          an amount not less than the minimum amount specified in Section
          2.01(c);

               (B)  no Conversion of any Advances shall result in more separate
          Borrowings than permitted under Section 2.02(c); and

               (C)  each Conversion of Advances comprising part of the same
          Borrowing under any Facility shall be made among the Appropriate
          Lenders in accordance with their respective Pro Rata Shares of such
          Borrowing.

     Each notice of a Conversion (a "Notice of Conversion") shall be delivered
     by telephone, confirmed immediately in writing, or by telecopier, in
     substantially the form of Exhibit B-3 hereto, shall be duly executed by a
     Responsible Officer of the Borrower, and shall, within the restrictions set
     forth in the immediately preceding sentence, specify therein:

          (1)  the requested date of such Conversion (which shall be a Business
               Day);

          (2)  the Advances requested to be Converted; and

          (3)  if such Conversion is into Eurodollar Rate Advances, the
               requested duration of the Interest Period for such Eurodollar
               Rate Advances.

     The Administrative Agent shall give each of the Appropriate Lenders prompt
     notice of each Notice of Conversion received by it, by telecopier. Each
     Notice of Conversion shall be irrevocable and binding on the Borrower.

          (b)  Mandatory.
               ---------

               (i)   On the last day of any Interest Period during which the
          aggregate unpaid principal amount of Eurodollar Rate Advances
          comprising any Borrowing shall be reduced, by payment or prepayment or
          otherwise, to less than $5,000,000, such Advances shall automatically
          Convert into Base Rate Advances.

               (ii)  If the Borrower shall fail to select the duration of any
          Interest Period for any Eurodollar Rate Advances in accordance with
          the provisions contained in the definition of "Interest Period" set
          forth in Section 1.01, the Administrative Agent will forthwith so
          notify the Borrower and the Appropriate Lenders, whereupon each such
          Eurodollar Rate Advance will automatically, on the last day of the
          then existing Interest Period therefor, Convert into a Base Rate
          Advance.

               (iii) Upon the occurrence and during the continuance of any
          Default under Section 6.01(f) or any Event of Default, (A) each
          Eurodollar Rate Advance will automatically, on the last day of the
          then existing Interest Period therefor, Convert into a
<PAGE>

                                       47

          Base Rate Advance and (B) the obligation of the Lenders to make, or to
          Convert Advances into, Eurodollar Rate Advances shall be suspended.

     SECTION 2.10. Increased Costs, Etc.
     ----------------------------------

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

               (i)   subject such Lender (or its Applicable Lending Office) to
          any tax, duty, or other charge with respect to any Eurodollar Rate
          Advances, any of its Notes, or its obligation to make any Eurodollar
          Rate Advances, or change the basis of taxation of any amounts payable
          to such Lender (or its Applicable Lending Office) under this Agreement
          or its Note in respect of any Eurodollar Rate Advances (other than,
          for purposes of this Section 2.10, any such increased costs resulting
          from (A) Taxes or Other Taxes (as to which Section 2.13 shall govern),
          and (B) changes in the basis of taxation of overall net income or
          overall gross income by the United States of America or the
          jurisdiction under the laws of which such Lender Party has its
          principal office or such Applicable Lending Office);

               (ii)  shall impose, modify, or deem applicable any reserve,
          special deposit, assessment, or similar requirement (other than any
          change by way of the imposition of or increase in reserve requirements
          included in the Eurodollar Rate Reserve Percentage) relating to any
          extensions of credit or other assets of, or any deposits with or other
          liabilities or commitments of, such Lender (or its Applicable Lending
          Office), including the Commitments of such Lender hereunder; or

               (iii) shall impose on such Lender (or its Applicable Lending
          Office) or on the United States market for certificates of deposit or
          the London interbank market any other condition affecting this
          Agreement or its Note or any of such extensions of credit or
          liabilities or commitments;

     and the result of any of the foregoing is to increase the cost to such
     Lender (or its Applicable Lending Office) of making, Converting into or
     maintaining any Eurodollar Rate Advances or to reduce any sum received or
     receivable by such Lender (or its Applicable Lending Office) under this
     Agreement or its Note with respect to any Eurodollar Rate Advances, then
     the Borrower shall pay to such Lender on demand such amount or amounts as
     will compensate such Lender for such increased cost or reduction. Each
     Lender shall promptly notify the Borrower and the Administrative Agent of
     any event of which it has knowledge, occurring after the date hereof, which
     will entitle such Lender to compensation pursuant to this Section 2.10(a)
     and will designate a different Applicable Lending Office if such
     designation will avoid the need for, or reduce the amount of, such
     compensation and will not, in the judgment of such Lender, be otherwise
     disadvantageous to it (other than by reason of administrative convenience
     or preference). Any Lender claiming compensation under this Section 2.10(a)
     shall furnish to the Borrower and the Administrative Agent a statement
     setting forth the additional amount or amounts to be paid to it hereunder
     (including the method of calculation), which shall be conclusive and
     binding, absent manifest error. In determining such amount, such Lender may
     use any reasonable averaging and attribution methods. If any Lender
     requests compensation by the
<PAGE>

                                       48

     Borrower under this Section 2.10(a), the Borrower may, by notice to such
     Lender (with a copy to the Administrative Agent), suspend the obligation of
     such Lender to make or Convert Eurodollar Rate Advances, or to Convert Base
     Rate Advances into Eurodollar Rate Advances, until the event or condition
     giving rise to such request ceases to be in effect (in which case the
     provisions of Section 2.10(e) shall be applicable); provided that such
     suspension shall not affect the right of such Lender to receive the
     compensation so requested.

          (b)  If, after the date hereof, any Lender shall have determined that
     the adoption of any applicable Requirement of Law regarding capital
     adequacy or any change therein or in the interpretation or administration
     thereof by any Governmental Authority, central bank or comparable agency
     charged with the interpretation or administration thereof, or any request
     or directive regarding capital adequacy (whether or not having the force of
     law) of any such Governmental Authority, central bank or comparable agency,
     has or would have the effect of reducing the rate of return on the capital
     of such Lender or any corporation controlling such Lender as a consequence
     of such Lender's obligations hereunder to a level below that which such
     Lender or such corporation could have achieved but for such adoption,
     change, request or directive (taking into consideration its policies with
     respect to capital adequacy), then from time to time upon demand the
     Borrower shall pay to such Lender such additional amount or amounts as will
     compensate such Lender for such reduction. Each Lender shall promptly
     notify the Borrower and the Administrative Agent of any event of which it
     has knowledge, occurring after the date hereof, which will entitle such
     Lender to compensation pursuant to this Section 2.10(b) and will designate
     a different Applicable Lending Office if such designation will avoid the
     need for, or reduce the amount of, such compensation and will not, in the
     judgment of such Lender, be otherwise disadvantageous to it. Any Lender
     claiming compensation under this Section 2.10(b) shall furnish to the
     Borrower and the Administrative Agent a statement setting forth the
     additional amount or amounts to be paid to it hereunder (including the
     method of calculation), which shall be conclusive and binding, absent
     manifest error. In determining such amount, such Lender may use any
     reasonable averaging and attribution methods.

          (c)  If, on or prior to the first day of any Interest Period for any
     Eurodollar Rate Advance, the Required Lenders at any time notify the
     Administrative Agent that the Eurodollar Rate for any Interest Period for
     such Advances will not adequately and fairly reflect the cost to the
     Appropriate Lenders of funding their Eurodollar Rate Advances for such
     Interest Period, the Administrative Agent shall promptly so notify the
     Borrower and the Appropriate Lenders, whereupon (i) each such Eurodollar
     Rate Advance will automatically, on the last day of the then existing
     Interest Period therefor, Convert into a Base Rate Advance and (ii) the
     obligation of the Appropriate Lenders to make, or to Convert Advances into,
     Eurodollar Rate Advances shall be suspended until the Administrative Agent
     shall notify the Borrower (promptly following notice from the Appropriate
     Lenders) that such Lenders have determined that the circumstances causing
     such suspension no longer exist.

          (d)  Notwithstanding any other provision of this Agreement, in the
     event that it becomes unlawful for any Lender or its Applicable Lending
     Office to make, maintain, or fund Eurodollar Rate Advances hereunder, then
     such Lender shall promptly notify the Borrower thereof and such Lender's
     obligation to make Eurodollar Rate Advances and to Convert Base Rate
     Advances into Eurodollar Rate Advances shall be suspended until such time
     as such Lender may again make, maintain and fund Eurodollar Rate Advances
     (in which case the provisions of Section 2.10(e) shall be applicable).

          (e)  If the obligation of any Lender to make a Eurodollar Rate Advance
     or to Convert Base Rate Advances into Eurodollar Rate Advances shall be
     suspended pursuant to any other
<PAGE>

                                      49

     provision of this Section 2.10, such Lender's suspended Eurodollar Rate
     Advances shall be automatically Converted into Base Rate Advances on the
     last day(s) of the then current Interest Period(s) therefor (or, in the
     case of a Conversion required by Section 2.10(d), on such earlier date as
     such Lender may specify to the Borrower with a copy to the Administrative
     Agent) and, unless and until such Lender gives notice as provided below
     that the circumstances specified in such other provision of this Section
     2.10 that gave rise to such Conversion no longer exist:

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

               (ii)  all Eurodollar Rate Advances that would otherwise be made
          or Converted by such Lender shall be made instead as (or shall remain
          as) Base Rate Advances.

     If such Lender gives notice to the Borrower (with a copy to the
     Administrative Agent) that the circumstances otherwise specified in this
     Section 2.10 that gave rise to the suspension of the making of Eurodollar
     Rate Advances by such Lender no longer exist (which such Lender agrees to
     do promptly upon such circumstances ceasing to exist) at a time when
     Eurodollar Rate Advances by other Lenders with Commitments under the same
     Facility are outstanding, such Lender's Base Rate Advances shall be
     automatically Converted, on the first day(s) of the next succeeding
     Interest Period(s) therefor, to the extent necessary into Eurodollar Rate
     Advances.

     SECTION 2.11.   Evidence of Debt.
     --------------------------------

          (a)  Each Lender shall maintain in accordance with its usual practice
     an account or accounts evidencing the debt of the Borrower to such Lender
     resulting from each Advance owing to such Lender from time to time,
     including the amounts of principal and interest payable and paid to such
     Lender from time to time hereunder.

          (b)  The Register maintained by the Administrative Agent pursuant to
     Section 8.07(e) shall include accounts for each Lender, in which accounts
     (taken together) shall be recorded (i) the date and amount of each Advance
     made hereunder, (ii) the terms of each Assignment and Acceptance delivered
     to and accepted by it, (iii) the amount of any principal or interest due
     and payable or to become due and payable from the Borrower to each Lender
     hereunder and (iv) the amount of any sum received by the Administrative
     Agent from the Borrower hereunder and each Lender's share thereof.

          (c)  The entries made as provided in this Section 2.11 shall be
     conclusive and binding for all purposes, absent manifest error.

     SECTION 2.12.   Payments and Computations.
     -----------------------------------------

          (a)  The Borrower shall make each payment hereunder and under the
     Notes, irrespective of any right of counterclaim, deduction or set-off
     (except as otherwise provided in Section 2.16), not later than 2:00 P.M.
     (Charlotte, North Carolina time) on the day when due in U.S. dollars to the
     Administrative Agent at the Administrative Agent's Account in same day
     funds, with payments received by the Administrative Agent after such time
     being deemed to have been received on the next succeeding Business Day. The
     Administrative Agent will promptly thereafter cause like funds to be
     distributed (i) if such payment by the Borrower is in respect of
<PAGE>

                                      50

     principal, interest, Commitment Fees or any other Obligation then due and
     payable hereunder and under the Notes to more than one Lender Party, to
     such Lender Parties for the accounts of their respective Applicable Lending
     Offices in accordance with their respective Pro Rata Shares of the amounts
     of such respective Obligations due and payable to such Lender Parties at
     such time and (ii) if such payment by the Borrower is in respect of any
     Obligation then due and payable hereunder solely to one Lender Party, to
     such Lender Party for the account of its Applicable Lending Office, in each
     case to be applied in accordance with the terms of this Agreement. Upon its
     acceptance of an Assignment and Acceptance and recording of the information
     contained therein in the Register pursuant to Section 8.07(d), from and
     after the effective date of such Assignment and Acceptance, the
     Administrative Agent shall make all payments hereunder and under the Notes
     in respect of the interest assigned thereby to the Lender Party assignee
     thereunder, and the parties to such Assignment and Acceptance shall make
     all appropriate adjustments in such payments for periods prior to such
     effective date directly between themselves.

          (b)  The Borrower hereby authorizes each Lender Party, if and to the
     extent payment owed to such Lender Party is not made when due hereunder or,
     in the case of a Lender, under the Note held by such Lender, to charge from
     time to time against any or all of the Borrower's accounts with such Lender
     Party any amount so due.

          (c)  All computations of interest based on the Base Rate shall be made
     by the Administrative Agent on the basis of a year of 365 or 366 days, as
     the case may be, and all computations of interest based on the Eurodollar
     Rate or the Federal Funds Rate and of fees and Letter of Credit commissions
     shall be made by the Administrative Agent on the basis of a year of 360
     days, in each case for the actual number of days (including the first day
     but excluding the last day) occurring in the period for which such
     interest, fees or commissions are payable. Each determination by the
     Administrative Agent of an interest rate, fee or commission hereunder shall
     be conclusive and binding for all purposes, absent manifest error.

          (d)  Whenever any payment hereunder or under the Notes shall be stated
     to be due on a day other than a Business Day, such payment shall be made on
     the next succeeding Business Day, and such extension of time shall in such
     case be included in the computation of payment of interest or Commitment
     Fees or Letter of Credit commissions or fees, as the case may be; provided,
     however, that, if such extension would cause payment of interest on or
     principal of Eurodollar Rate Advances to be made in the next succeeding
     calendar month, such payment shall be made on the immediately preceding
     Business Day.

          (e)  Unless the Borrower or any Lender Party has notified the
     Administrative Agent prior to the date any payment is required to be made
     by it to the Administrative Agent hereunder, that the Borrower or such
     Lender Party, as the case may be, will not make such payment, the
     Administrative Agent may assume that the Borrower or such Lender Party, as
     the case may be, has timely made such payment and may (but shall not be so
     required to), in reliance thereon, make available a corresponding amount to
     the Person entitled thereto. If and to the extent that such payment was not
     in fact made to the Administrative Agent in immediately available funds,
     then:

               (i)  if the Borrower failed to make such payment, each Lender
          Party shall forthwith on demand repay to the Administrative Agent the
          portion of such assumed payment that was made available to such Lender
          Party in immediately available funds, together with interest thereon
          in respect of each day from and including the date such amount was
          made available by the Administrative Agent to such Lender Party to the
          date
<PAGE>

                                      51

          such amount is repaid to the Administrative Agent in immediately
          available funds, at the Federal Funds Rate from time to time in
          effect; and

               (ii)  if any Lender Party failed to make such payment, such
          Lender Party shall forthwith on demand pay to the Administrative Agent
          the amount thereof in immediately available funds, together with
          interest thereon for the period from the date such amount was made
          available by the Administrative Agent to the Borrower to the date such
          amount is recovered by the Administrative Agent (the "Compensation
          Period") at a rate per annum equal to the Federal Funds Rate from time
          to time in effect. If such Lender Party pays such amount to the
          Administrative Agent, then such amount shall constitute such Lender
          Party's Advance included in the applicable Borrowing. If such Lender
          Party does not pay such amount forthwith upon the Administrative
          Agent's demand therefor, the Administrative Agent may make a demand
          therefor upon the Borrower, and the Borrower shall pay such amount to
          the Administrative Agent, together with interest thereon for the
          Compensation Period at a rate per annum equal to the rate of interest
          applicable to the applicable Borrowing. Nothing herein shall be deemed
          to relieve any Lender Party from its obligation to fulfill its
          applicable Commitment or to prejudice any rights which the
          Administrative Agent or the Borrower may have against any Lender Party
          as a result of any default by such Lender Party hereunder.

     A notice from the Administrative Agent to any Lender Party with respect to
     any amount owing under this subsection (e) shall be conclusive, absent
     manifest error.

          (f)  Whenever any payment received by the Administrative Agent under
     this Agreement or any of the other Loan Documents is insufficient to pay in
     full all amounts due and payable to the Agents and the Lender Parties under
     or in respect of this Agreement and the other Loan Documents on any date,
     such payment shall be distributed by the Administrative Agent and applied
     by the Agents and the Lender Parties in the following order of priority:

               (i)   first, to the payment of all of the fees, indemnification
          payments, costs and expenses that are due and payable to the Agents
          (solely in their respective capacities as Agents) under or in respect
          of this Agreement and the other Loan Documents on such date, ratably
          based upon the respective aggregate amounts of all such fees,
          indemnification payments, costs and expenses owing to the Agents on
          such date;

               (ii)  second, to the payment of all of the fees, indemnification
          payments, costs and expenses that are due and payable to the Issuing
          Bank and the Swing Line Bank (solely in their respective capacities as
          such) under or in respect of this Agreement and the other Loan
          Documents on such date, ratably based upon the respective aggregate
          amounts of all such fees, indemnification payments, costs and expenses
          owing to the Issuing Bank and the Swing Line Bank on such date;

               (iii) third, to the payment of all of the indemnification
          payments, costs and expenses that are due and payable to the Lenders
          under Section 8.04 hereof, Section 12 of the Subsidiary Guaranty,
          Section 23 of the Security Agreement and any similar section of any of
          the other Loan Documents on such date, ratably based upon the
          respective aggregate amounts of all such indemnification payments,
          costs and expenses owing to the Lenders on such date;

               (iv)  fourth, to the payment of all of the amounts that are due
          and payable to the Administrative Agent and the Lender Parties under
          Sections 2.10 and 2.13 hereof and
<PAGE>

                                      52

          Section 5 of the Subsidiary Guaranty on such date, ratably based upon
          the respective aggregate amounts thereof owing to the Administrative
          Agent and the Lender Parties on such date;

               (v)   fifth, to the payment of all of the accrued and unpaid
          interest on the Obligations of the Borrower under or in respect of the
          Loan Documents that is due and payable to the Administrative Agent and
          the Lender Parties under Section 2.07(a) on such date and all of the
          fees that are due and payable to the Lenders under Section 2.08(a) on
          such date, ratably based upon the respective aggregate Commitments of
          the Lenders under the Facilities on such date;

               (vi)  sixth, to the payment of the principal amount of all of the
          outstanding Advances that is due and payable to the Administrative
          Agent and the Lender Parties on such date, ratably based upon the
          respective aggregate amounts of all such principal owing to the
          Administrative Agent and the Lender Parties on such date; and

               (vii) seventh, to the payment of all other Obligations of the
          Loan Parties owing under or in respect of the Loan Documents that are
          due and payable to the Administrative Agent and the other Secured
          Parties on such date, ratably based upon the respective aggregate
          amounts of all such Obligations owing to the Administrative Agent and
          the other Secured Parties on such date.

     If the Administrative Agent receives funds for application to the
     Obligations of the Loan Parties under or in respect of the Loan Documents
     under circumstances for which the Loan Documents do not specify the
     Advances or the Facility to which, or the manner in which, such funds are
     to be applied, the Administrative Agent may, but shall not be obligated to,
     elect to distribute such funds to each of the Lender Parties in accordance
     with such Lender Party's Pro Rata Share of the sum of (A) the aggregate
     principal amount of all Advances outstanding at such time and (b) the
     aggregate Available Amount of all Letters of Credit outstanding at such
     time, in repayment or prepayment of such of the outstanding Advances or
     other Obligations then owing to such Lender Party, and, in the case of the
     Term Facility, for application to such principal repayment installments
     thereof, as the Administrative Agent shall direct.

     SECTION 2.13.  Taxes.
     --------------------

          (a)  Any and all payments by the Borrower to or for the account of any
     Lender Party or any Agent hereunder or under any other Loan Document shall
     be made, in accordance with Section 2.12 or the applicable provisions of
     such other Loan Document, if any, free and clear of and without deduction
     for any and all present or future taxes, levies, imposts, deductions,
     charges or withholdings, and all liabilities with respect thereto,
     excluding, in the case of each Lender Party and each Agent, taxes that are
     imposed on its overall net income by the United States and taxes that are
     imposed on its overall net income (and franchise taxes imposed in lieu
     thereof) by the state or foreign jurisdiction under the laws of which such
     Lender Party or such Agent, as the case may be, is organized or is a
     resident, or has a fixed place of business or a permanent establishment, or
     any political subdivision of any of the foregoing, and, in the case of each
     Lender Party, taxes that are imposed on its overall net income (and
     franchise taxes imposed in lieu thereof) by the state or foreign
     jurisdiction of either of its Applicable Lending Offices or any political
     subdivision thereof (all such nonexcluded taxes, levies, imposts,
     deductions, charges, withholdings and liabilities in respect of payments
     hereunder or under the Notes being, collectively, "Taxes"). If the Borrower
     shall be required under applicable Requirements of Law to deduct any Taxes
     from or in respect of any sum payable hereunder or under any other Loan
<PAGE>

                                      53

     Document to any Lender Party or any Agent, (i) the sum payable by the
     Borrower shall be increased as necessary so that after the Borrower and the
     Administrative Agent have been made all required deductions (including
     deductions applicable to additional sums payable under this Section 2.13)
     such Lender Party or such Agent, as the case may be, receives an amount
     equal to the sum it would have received had no such deductions been made,
     (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay
     the full amount deducted to the relevant taxation authority or other
     Governmental Authority in accordance with applicable Requirements of Law
     and (iv) within 30 days after the date of any payment of Taxes, the
     Borrower shall furnish to the Administrative Agent, at its address referred
     to in Section 8.02, the original or a certified copy of a receipt
     evidencing payment thereof, to the extent such a receipt is issued
     therefor, or other written proof of payment thereof that is reasonably
     satisfactory to the Administrative Agent.

          (b)  In addition, the Borrower agrees to pay any present or future
     stamp, recording or documentary, excise, property or similar taxes, charges
     or levies that arise from any payment made hereunder or under any other
     Loan Document or from the execution, delivery of, or registration of, any
     performance under, or otherwise with respect to, this Agreement or any
     other Loan Document (collectively, "Other Taxes").

          (c)  The Borrower shall indemnify each of the Lender Parties and each
     of the Agents for, and hold each of them harmless against, the full amount
     of Taxes and Other Taxes, and the full amount of taxes of any kind imposed
     by any jurisdiction on amounts payable under this Section 2.13, imposed on
     or paid by such Lender Party or such Agent, as the case may be, and any
     liability (including penalties, additions to tax, interest and expenses)
     arising therefrom or with respect thereto. The indemnity by the Borrower
     provided for in this subsection (c) shall apply and be made whether or not
     the Taxes or Other Taxes for which indemnification hereunder is sought have
     been correctly or legally asserted; provided, however, that such Lender or
     such Agent seeking such indemnification shall take all reasonable actions
     (consistent with its internal policy and legal and regulatory restrictions)
     requested by the Borrower to assist the Borrower in recovering the amounts
     paid thereby pursuant to this subsection (c) from the relevant taxation
     authority or other Governmental Authority. Amounts payable by the Borrower
     under the indemnity set forth in this subsection (c) shall be paid within
     30 days from the date on which the applicable Lender or Agent, as the case
     may be, makes written demand therefor (including the method of
     calculation).

          (d)  In the case of any payment hereunder or under any other Loan
     Document by or on behalf of the Borrower through an account or branch
     outside the United States, or on behalf of the Borrower by a payor that is
     not a United States person, if the Borrower determines that no Taxes are
     payable in respect thereof, the Borrower shall furnish, or shall cause such
     payor to furnish, to the Administrative Agent, at its address referred to
     in Section 8.02, an opinion of counsel reasonably acceptable to the
     Administrative Agent stating that such payment is exempt from Taxes. For
     purposes of this subsection (d) and subsection (e) of this Section 2.13,
     the terms "United States" and "United States person" shall have the
     meanings specified in Section 7701 of the Internal Revenue Code.

          (e)  Each Lender Party organized under the laws of a jurisdiction
     outside the United States shall, on or prior to the date of its execution
     and delivery of this Agreement in the case of each Initial Lender, the
     Swing Line Bank or the Initial Issuing Bank, as the case may be, and on or
     prior to the date of the Assignment and Acceptance pursuant to which it
     becomes a Lender Party in the case of each other Lender Party, and from
     time to time thereafter as reasonably requested in writing by the Borrower
     (but only so long thereafter as such Lender Party remains lawfully able to
     do so), provide each of the Administrative Agent and the Borrower with two
<PAGE>

                                      54

     original Internal Revenue Service forms W-8BEN, W-8ECI or W-8IMY, or in the
     case of a Lender Party that has certified in writing to the Administrative
     Agent that it is claiming exemption from United States withholding tax
     under Section 871(h) or 881(c) of the Internal Revenue Code with respect to
     payments of "portfolio interest" from W-8BEN), (and, if such Lender Party
     delivers a form W-8BEN, a certificate representing that such Lender Party
     is not (i) a "bank" for purposes of Section 881(c) of the Internal Revenue
     Code, (ii) a ten-percent shareholder (within the meaning of Section
     871(h)(3)(B) of the Internal Revenue Code) of the Borrower or (iii) a
     controlled foreign corporation related to the Borrower (within the meaning
     of Section 864(d)(4) of the Internal Revenue Code)), as appropriate, or any
     successor or other form prescribed by the Internal Revenue Service,
     certifying that such Lender Party is exempt from or entitled to a reduced
     rate of United States withholding tax on payments pursuant to this
     Agreement or any other Loan Document or, in the case of a Lender Party
     providing a form W-8BEN, certifying that such Lender Party is a foreign
     corporation, partnership, estate or trust. If any such forms provided by a
     Lender Party at the time such Lender Party first becomes a party to this
     Agreement indicate a United States interest withholding tax rate in excess
     of zero, withholding tax at such rate shall be considered excluded from
     Taxes unless and until such Lender Party provides the appropriate form
     certifying that a lesser rate applies, whereupon withholding tax at such
     lesser rate only shall be considered excluded from Taxes solely for the
     periods governed by such forms. However, if at the date of the Assignment
     and Acceptance pursuant to which a Lender Party becomes a party to this
     Agreement, the Lender Party assignor was entitled to payments under
     subsection (a) of this Section 2.13 in respect of United States withholding
     tax with respect to interest paid at such date, then, to such extent, the
     term Taxes shall include (in addition to withholding taxes that may be
     imposed in the future or other amounts otherwise includable in Taxes)
     United States withholding tax, if any, applicable with respect to the
     Lender Party assignee on such date. None of the Lender Parties shall be
     entitled to payment pursuant to subsection (a) or (c) of this Section 2.13
     with respect to any additional Taxes that result solely and directly from a
     change in either of the Applicable Lending Offices of such Lender Party
     (other than any such additional Taxes that are imposed as a result of a
     change in the applicable Requirements of Law, or in the interpretation of
     application thereof, occurring after the date of such change), unless such
     change is made pursuant to the terms of Section 2.10(e) or subsection (g)
     this Section 2.13 or as a result of a request therefor by the Borrower.

          (f)  For any period with respect to which a Lender Party has failed to
     provide the Borrower with the appropriate form, certificate or other
     document described in subsection (e) of this Section 2.13 (other than if
     such failure is due to a change in the applicable Requirements of Law, or
     in the interpretation or application thereof, occurring after the date on
     which a form, certificate or other document originally was required to be
     provided or if such form, certificate or other document otherwise is not
     required under subsection (e) of this Section 2.13), such Lender Party
     shall not be entitled to indemnification under subsection (a) or (c) of
     this Section 2.13 with respect to Taxes imposed by the United States by
     reason of such failure; provided, however, that should a Lender Party
     become subject to Taxes because of its failure to deliver a form,
     certificate or other document required hereunder, the Borrower shall take
     such steps as such Lender Party shall reasonably request to assist such
     Lender Party in recovering such Taxes.

          (g)  Each of the Lender Parties hereby agrees that, upon the
     occurrence of any circumstances entitling such Lender Party to additional
     amounts pursuant to this Section 2.13, such Lender Party shall use
     reasonable efforts (consistent with its internal policy and legal and
     regulatory restrictions) to designate a different Applicable Lending Office
     if the making of such a change would avoid the need for, or reduce the
     amount of, any such additional amounts that may thereafter accrue and would
     not, in the reasonable judgment of such Lender Party, be otherwise
<PAGE>

                                      55

     disadvantageous to such Lender Party (other than by reason of
     administrative convenience or preference).

     SECTION 2.14.  Sharing of Payments, Etc.  If any Lender Party shall obtain
     ---------------------------------------
at any time any payment (whether voluntary, involuntary, through the exercise of
any right of setoff, or otherwise) (a) on account of Obligations due and payable
to such Lender Party under or in respect of this Agreement or any of 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
Party at such time (other than pursuant to Section 2.10, 2.13, 8.04 or 8.07) to
(ii) the aggregate amount of the Obligations due and payable to all Lender
Parties at such time) of payments on account of the Obligations due and payable
to all Lender Parties under or in respect of this Agreement and the other Loan
Documents at such time obtained by all the Lender Parties at such time or (b) on
account of Obligations owing (but not due and payable) to such Lender Party
under or in respect of this Agreement or any of the other Loan Documents at such
time in excess of its ratable share (according to the proportion of (i) the
amount of such Obligations owing to such Lender Party at such time (other than
pursuant to Section 2.10, 2.13, 8.04 or 8.07) to (ii) the aggregate amount of
the Obligations owing (but not due and payable) to all Lender Parties under or
in respect of this Agreement and the other Loan Documents at such time) of
payments on account of the Obligations owing (but not due and payable) to all
Lender Parties under or in respect of this Agreement and the other Loan
Documents at such time obtained by all of the Lender Parties at such time, such
Lender Party shall forthwith purchase from the other Lender Parties such
interests or participating interests in the Obligations due and payable or owing
to them, as the case may be, as shall be necessary to cause such purchasing
Lender Party to share the excess payment ratably with each of them; provided,
however, that if all or any portion of such excess payment is thereafter
recovered from such purchasing Lender Party, such purchase from each other
Lender Party shall be rescinded and such other Lender Party shall repay to the
purchasing Lender Party the purchase price to the extent of such Lender Party's
ratable share (according to the proportion of (A) the purchase price paid to
such Lender Party to (B) the aggregate purchase price paid to all Lender
Parties) of such recovery, together with an amount equal to such Lender Party's
ratable share (according to the proportion of (1) the amount of such other
Lender Party's required repayment to (2) the total amount so recovered from the
purchasing Lender Party) of any interest or other amount paid or payable by the
purchasing Lender Party in respect of the total amount so recovered; provided
further that, so long as the Obligations under the Loan Documents shall not have
been accelerated, any excess payment received by any Appropriate Lender shall be
shared on a pro rata basis only with other Appropriate Lenders. The Borrower
hereby agrees that any Lender Party so purchasing an interest or participating
interest from another Lender Party pursuant to this Section 2.14 may, to the
fullest extent permitted under applicable law, exercise all its rights of
payment (including the right of setoff) with respect to such an interest or
participating interest, as the case may be, as fully as if such Lender Party
were the direct creditor of the Borrower in the amount of such an interest or
participating interest.

     SECTION 2.15.  Use of Proceeds. The proceeds of the Advances and issuances
     ------------------------------
of Letters of Credit shall be available (and the Borrower agrees that it shall
use such proceeds and Letters of Credit) solely to refinance certain Debt of the
Borrower and its Subsidiaries outstanding on the date of the Initial Extension
of Credit, for acquisitions as permitted herein and for general corporate
purposes of the Borrower and its Subsidiaries, and to pay fees and expenses
incurred in connection with the consummation of the Transaction.

     SECTION 2.16.  Defaulting Lenders.
     ---------------------------------

          (a)  In the event that, at any one time, (i) any Lender Party shall be
     a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
     Advance to the Borrower and (iii) the Borrower shall be required to make
     any payment hereunder or under any other Loan Document to
<PAGE>

                                      56

     or for the account of such Defaulting Lender, then the Borrower may, so
     long as no Default shall occur or be continuing at such time and to the
     fullest extent permitted by applicable law, set off and otherwise apply the
     Obligation of the Borrower to make such payment to or for the account of
     such Defaulting Lender against the obligation of such Defaulting Lender to
     make such Defaulted Advance. In the event that, on any date, the Borrower
     shall so set off and otherwise apply its obligation to make any such
     payment against the obligation of such Defaulting Lender to make any such
     Defaulted Advance on or prior to such date, the amount so set off and
     otherwise applied by the Borrower shall constitute for all purposes of this
     Agreement and the other Loan Documents an Advance by such Defaulting Lender
     made on the date of such setoff under the Facility pursuant to which such
     Defaulted Advance was originally required to have been made pursuant to
     Section 2.01. Such Advance shall be a Base Rate Advance and shall be
     considered, for all purposes of this Agreement, to comprise part of the
     Borrowing in connection with which such Defaulted Advance was originally
     required to have been made pursuant to Section 2.01, even if the other
     Advances comprising such Borrowing shall be Eurodollar Rate Advances on the
     date such Advance is deemed to be made pursuant to this subsection (a). The
     Borrower shall notify the Administrative Agent at any time the Borrower
     exercises its right of set-off pursuant to this subsection (a) and shall
     set forth in such notice (A) the name of the Defaulting Lender and the
     Defaulted Advance required to be made by such Defaulting Lender and (B) the
     amount set off and otherwise applied in respect of such Defaulted Advance
     pursuant to this subsection (a). Any portion of such payment otherwise
     required to be made by the Borrower to or for the account of such
     Defaulting Lender which is paid by the Borrower, after giving effect to the
     amount set off and otherwise applied by the Borrower pursuant to this
     subsection (a), shall be applied by the Administrative Agent as specified
     in subsection (b) or (c) of this Section 2.16.

          (b)  In the event that, at any one time, (i) any Lender Party shall be
     a Defaulting Lender, (ii) such Defaulting Lender shall owe a Defaulted
     Amount to the Administrative Agent or any of the other Lender Parties and
     (iii) the Borrower shall make any payment hereunder or under any other Loan
     Document to the Administrative Agent for the account of such Defaulting
     Lender, then the Administrative Agent may, on its behalf or on behalf of
     such other Lender Parties and to the fullest extent permitted by applicable
     law, apply at such time the amount so paid by the Borrower to or for the
     account of such Defaulting Lender to the payment of each such Defaulted
     Amount to the extent required to pay such Defaulted Amount. In the event
     that the Administrative Agent shall so apply any such amount to the payment
     of any such Defaulted Amount on any date, the amount so applied by the
     Administrative Agent shall constitute for all purposes of this Agreement
     and the other Loan Documents payment, to such extent, of such Defaulted
     Amount on such date. Any such amount so applied by the Administrative Agent
     shall be retained by the Administrative Agent or distributed by the
     Administrative Agent to such other Lender Parties, ratably in accordance
     with the respective portions of such Defaulted Amounts payable at such time
     to the Administrative Agent and such other Lender Parties and, if the
     amount of such payment made by the Borrower shall at such time be
     insufficient to pay all Defaulted Amounts owing at such time to the
     Administrative Agent and the other Lender Parties, in the following order
     of priority:

                    (A)  first, to the Administrative Agent for any Defaulted
               Amount then owing the Administrative Agent;

                    (B)  second, to the Issuing Bank and the Swing Line Bank for
               any Defaulted Amount then owing to them, in their capacities as
               such, ratably in accordance with such respective Defaulted
               Amounts then owing to such Issuing Bank and such Swing Line Bank;
               and
<PAGE>

                                      57

                    (C)  third, to any other Lender Parties for any Defaulted
               Amounts then owing to such other Lender Parties, ratably in
               accordance with such respective Default Amounts then owing to
               such other Lender Parties; and

     Any portion of such amount paid by the Borrower for the account of such
     Defaulting Lender remaining, after giving effect to the amount applied by
     the Administrative Agent pursuant to this subsection (b), shall be applied
     by the Administrative Agent as specified in subsection (c) of this Section
     2.16.

          (c)  In the event that, at any one time, (i) any Lender Party shall be
     a Defaulting Lender, (ii) such Defaulting Lender shall not owe a Defaulted
     Advance or a Defaulted Amount and (iii) the Borrower, the Administrative
     Agent or any other Lender Party shall be required to pay or distribute any
     amount hereunder or under any other Loan Document to or for the account of
     such Defaulting Lender, then the Borrower or such other Lender Party shall
     pay such amount to the Administrative Agent to be held by the
     Administrative Agent, to the fullest extent permitted by applicable law, in
     escrow or the Administrative Agent shall, to the fullest extent permitted
     by applicable law, hold in escrow such amount otherwise held by it. Any
     funds held by the Administrative Agent in escrow under this subsection (c)
     shall be deposited by the Administrative Agent in an account with BofA, in
     the name and under the control of the Administrative Agent, but subject to
     the provisions of this subsection (c). The terms applicable to such
     account, including the rate of interest payable with respect to the credit
     balance of such account from time to time, shall be BofA's standard terms
     applicable to escrow accounts maintained with it. Any interest credited to
     such account from time to time shall be held by the Administrative Agent in
     escrow under, and applied by the Administrative Agent from time to time in
     accordance with the provisions of, this subsection (c). The Administrative
     Agent shall, to the fullest extent permitted by applicable law, apply all
     funds so held in escrow from time to time to the extent necessary to make
     any Advances required to be made by such Defaulting Lender and to pay any
     amount payable by such Defaulting Lender hereunder and under the other Loan
     Documents to the Administrative Agent or any other Lender Party, as and
     when such Advances or amounts are required to be made or paid and, if the
     amount so held in escrow shall at any time be insufficient to make and pay
     all such Advances and amounts required to be made or paid at such time, in
     the following order of priority:

               (A)  first, to the Administrative Agent for any amount then due
          and payable by such Defaulting Lender to the Administrative Agent
          hereunder;

               (B)  second, to the Issuing Bank and the Swing Line Bank for any
          amounts then due and payable to them hereunder, in their capacities as
          such, by such Defaulting Lender, ratably in accordance with such
          amounts then due and payable to such Issuing Bank and such Swing Line
          Bank;

               (C)  third, to any other Lender Parties for any amount then due
          and payable by such Defaulting Lender to such other Lender Parties
          hereunder, ratably in accordance with such respective amounts then due
          and payable to such other Lender Parties; and

               (D)  fourth, to the Borrower for any Advance then required to be
          made by such Defaulting Lender pursuant to a Commitment of such
          Defaulting Lender.
<PAGE>

                                      58

     In the event that any Lender Party that is a Defaulting Lender shall, at
     any time, cease to be a Defaulting Lender, any funds held by the
     Administrative Agent in escrow at such time with respect to such Lender
     Party shall be distributed by the Administrative Agent to such Lender Party
     and applied by such Lender Party to the Obligations owing to such Lender
     Party at such time under this Agreement and the other Loan Documents
     ratably in accordance with the respective amounts of such Obligations
     outstanding at such time.

          (d)  The rights and remedies against a Defaulting Lender under this
     Section 2.16 are in addition to other rights and remedies that the Borrower
     may have against such Defaulting Lender with respect to any Defaulted
     Advance and that the Administrative Agent or any Lender Party may have
     against such Defaulting Lender with respect to any Defaulted Amount.

                                  ARTICLE III

                           CONDITIONS OF LENDING AND
                        ISSUANCES OF LETTERS OF CREDIT

     SECTION 3.01.  Conditions Precedent to Initial Extension of Credit. The
     ------------------------------------------------------------------
obligation of each Lender to make an Advance or of the Issuing Bank to issue a
Letter of Credit on the occasion of the Initial Extension of Credit hereunder is
subject to the satisfaction of the following conditions precedent before or
concurrently with the Initial Extension of Credit:

          (a)  The Administrative Agent shall have received on or before the day
     of the Initial Extension of Credit the following, each dated such day
     (unless otherwise specified), in form and substance satisfactory to the
     Administrative Agent (unless otherwise specified) and (except for the
     Notes) in sufficient copies for each Lender Party:

               (i)  The Notes payable to the order of each respective Lender (if
          requested by any such Lender).

               (ii) A security agreement, in substantially the form of Exhibit D
          hereto (together with each other security agreement and security
          agreement supplement delivered pursuant to Section 5.01(j), in each
          case as amended, the "Security Agreement"), duly executed by each Loan
          Party, together with:

                    (A)  where applicable, certificates representing the Pledged
               Shares referred to therein accompanied by undated stock powers
               executed in blank and instruments evidencing the Pledged Debt
               referred to therein indorsed in blank,

                    (B)  proper financing statements, in form for filing, under
               the Uniform Commercial Code of all jurisdictions that the
               Administrative Agent may deem necessary or desirable in order to
               perfect and protect the first priority liens and security
               interests created under the Security Agreement, covering the
               Collateral described in the Security Agreement,

                    (C)  all other documents for recording and filing, in proper
               form, for or with respect to the Security Agreement that the
               Administrative Agent may deem necessary or desirable in order to
               perfect and protect the Liens created thereby,
<PAGE>

                                       59

                        (D) evidence of the insurance required by the terms of
               the Security Agreement,

                        (E) evidence that all other action that the
               Administrative Agent may deem necessary or desirable in order to
               perfect and protect the first priority liens and security
               interests created under the Security Agreement is ready to be
               taken concurrently with the Initial Extension of Credit
               (including, without limitation, receipt of duly executed payoff
               letters and UCC-3 termination statements with respect to the
               Existing Credit Agreement).

               (iii)    A guaranty, in substantially the form of Exhibit E
          hereto (together with each other guaranty and guaranty supplement
          delivered pursuant to Section 5.01(j), in each case as amended, the
          "Subsidiary Guaranty"), duly executed by each Subsidiary Guarantor.

               (iv)     An intellectual property security agreement, in
          substantially the form annexed to the Security Agreement (together
          with each other intellectual property security agreement and
          intellectual property security agreement supplement delivered pursuant
          to Section 5.01(j), in each case as amended, the "Intellectual
          Property Security Agreement"), duly executed by each Loan Party,
          together with evidence that all action that the Administrative Agent
          may deem necessary or desirable in order to perfect and protect the
          first priority liens and security interests created under the
          Intellectual Property Security Agreement is ready to be taken
          concurrently with the Initial Extension of Credit.

               (v)      Certified copies of the resolutions of the Board of
          Directors of each Loan Party approving the Transaction and each Loan
          Document to which it is or is to be a party, and of all documents
          evidencing other necessary Governmental Authorizations and other
          necessary corporate actions or third party approvals and consents, if
          any, with respect to the Transaction and each Loan Document to which
          it is or is to be a party.

               (vi)     A copy of a certificate of the Secretary of State of the
          jurisdiction of incorporation of each Loan Party, dated reasonably
          near the date of the Initial Extension of Credit, certifying (A) as to
          a true and correct copy of the charter (or comparable Constitutive
          Document) of such Loan Party and each amendment thereto on file in
          such Secretary's office (B) that such amendments are the only
          amendments to such Loan Party's (or comparable Constitutive Document)
          on file in such Secretary's office, and (C) such Loan Party is duly
          incorporated and in good standing or presently subsisting under the
          laws of the State of the jurisdiction of its incorporation.

               (vii)    A certificate of each Loan Party, signed on behalf of
          such Loan Party by its President or a Vice President and its Secretary
          or any Assistant Secretary, dated the date of the Initial Extension of
          Credit (the statements made in which certificate shall be true on and
          as of the date of the Initial Extension of Credit), certifying as to
          (A) the absence of any amendments to the charter (or comparable
          Constitutive Document) of such Loan Party since the date of the
          Secretary of State's certificate referred to in Section 3.01(a)(vi),
          (B) a true and correct copy of the bylaws (or comparable Constitutive
          Document) of such Loan Party as in effect on the date on which the
          resolutions referred to in Section 3.01(a)(v) were adopted and on the
          date of the Initial Extension of Credit, (C) the due incorporation and
          good standing or valid existence of such Loan Party as a corporation
          organized under the laws of the jurisdiction of its incorporation, and
          the absence of any proceeding for the dissolution or liquidation of
          such Loan Party, and (D)
<PAGE>

                                       60

          the truth of the representations and warranties contained in the Loan
          Documents as though made on and as of the date of the Initial
          Extension of Credit except for representations and warranties that by
          their terms speak as of another specific date, which shall be true as
          of such specific date.

               (viii)   A certificate of the Secretary or an Assistant Secretary
          of each Loan Party certifying the names and true signatures of the
          officers of such Loan Party authorized to sign each Loan Document to
          which it is or is to be a party and the other documents to be
          delivered hereunder and thereunder.

               (ix)     Such financial, business and other information regarding
          each Loan Party and its Subsidiaries as the Lender Parties shall have
          reasonably requested, including, without limitation, information as to
          possible contingent liabilities, tax matters, environmental matters,
          obligations under Plans, Multiemployer Plans and Welfare Plans,
          collective bargaining agreements and other arrangements with
          employees, audited annual financial statements dated December 31,
          2000, interim financial statements dated the end of the most recent
          fiscal quarter for which financial statements are available, pro forma
          financial statements as to the Borrower and forecasts prepared by
          management of the Company, of balance sheets, income statements and
          cash flow statements on a quarterly basis for the first year following
          the day of the Initial Extension of Credit and on an annual basis for
          five years thereafter.

               (x)      Evidence of insurance naming the Administrative Agent as
          additional insured and loss payee with such responsible and reputable
          insurance companies or associations, and in such amounts and covering
          such risks, as is satisfactory to the Lender Parties, including,
          without limitation, business interruption insurance.

               (xi)     A Notice of Borrowing or Notice of Issuance, as
          applicable.

               (xii)    A favorable opinion of Steven J. Udicious, general
          counsel for the Loan Parties, in substantially the form of Exhibit F
          hereto and as to such other matters as any Lender Party through the
          Administrative Agent may reasonably request.

               (xiii)   A favorable opinion of Riordan & McKinzie, special
          counsel to the Lender Parties, in substantially the form of Exhibit G
          hereto and as to such other matters as any Lender Party through the
          Administrative Agent may reasonably request.

          (b)  All Governmental Authorizations and all third party consents and
     approvals necessary in connection with the Transaction shall have been
     obtained (without the imposition of any conditions that are not acceptable
     to the Lender Parties) and shall remain in effect; and no Requirements of
     Law shall be applicable in the judgment of the Lender Parties that
     restrains, prevents or imposes materially adverse conditions upon the
     Transaction.

          (c)  The Borrower shall have paid all accrued fees of the Agents and
     the Lender Parties and all accrued expenses of the Agents.

          (d)  The Borrower shall have issued the subordinated notes referred to
     in clause (iii) of the definition of "Subordinated Notes."

          (e)  (i) All amounts owing by the Borrower or any of its Subsidiaries
     to the lenders and agents under the Existing Credit Agreement shall have
     been, or concurrently with the Initial
<PAGE>

                                       61

     Extension of Credit made on the Closing Date shall be, paid in full and
     evidenced by a payoff letter or payoff letters delivered by such lenders
     and agents to the Administrative Agent, (ii) all commitments of the lenders
     under the Existing Credit Agreement (except for the Existing Letters of
     Credit) shall have been, or concurrently with the Initial Extension of
     Credit made on the Closing Date shall be, terminated in accordance with the
     terms of the Existing Credit Agreement, (iii) the lenders or any collateral
     agent under the Existing Credit Agreement shall have executed such
     instruments (including without limitation Uniform Commercial Code
     termination statements) and agreed to take such other actions as are
     reasonably necessary to terminate or release all security interests granted
     in connection with the Existing Credit Agreement and (iv) adequate
     arrangements shall have been made with the issuer of the Existing Letters
     of Credit concerning the continuation thereof.

     SECTION 3.02. Conditions Precedent to Each Borrowing and Issuance and
     ---------------------------------------------------------------------
Renewal. The obligation of each Appropriate Lender to make an Advance (other
-------
than a Letter of Credit Advance made by the Issuing Bank or a Revolving Credit
Lender pursuant to Section 2.03(b) and a Swing Line Advance made by a Revolving
Credit Lender pursuant to Section 2.02(b)) on the occasion of each Borrowing
(including the initial Borrowing, but excluding any conversion of Advances
pursuant to Section 2.09 as provided therein), and the obligation of
the Issuing Bank to issue a Letter of Credit (including the initial issuance) or
renew a Letter of Credit and the right of the Borrower to request a Swing Line
Borrowing, shall be subject to the further conditions precedent that on the date
of such Borrowing or issuance or renewal (a) the following statements shall be
true and the Administrative Agent shall have received for the account of such
Lender or the Issuing Bank a certificate signed by a duly authorized officer of
the Borrower, dated the date of such Borrowing or issuance or renewal, stating
that (and each of the giving of the applicable Notice of Borrowing, Notice of
Swing Line Borrowing, Notice of Issuance or Notice of Renewal and the acceptance
by the Borrower of the proceeds of such Borrowing or of such Letter of Credit or
the renewal of such Letter of Credit shall constitute a representation and
warranty by the Borrower that both on the date of such notice and on the date of
such Borrowing or issuance or renewal such statements are true):

               (i)  the representations and warranties contained in each Loan
          Document are correct on and as of such date, before and after giving
          effect to such Borrowing or issuance or renewal and to the application
          of the proceeds therefrom, as though made on and as of such date
          except (A) for any such representations or warranties that, by their
          terms, refer to a specific date other than the date of such Borrowing
          or issuance or renewal, in which case as of such specific date and (B)
          if any Required Financial Information has been delivered to the
          Administrative Agent and the Lender Parties on or prior to the date of
          such Borrowing or issuance or renewal, that the Consolidated financial
          statements of the Borrower and its Subsidiaries referred to in Section
          4.01(g)(i) shall be deemed at any time and from time to time after the
          Closing Date to refer to the Consolidated financial statements of the
          Borrower and its Subsidiaries comprising part of the Required
          Financial Information most recently delivered to the Administrative
          Agent and the Lender Parties pursuant to Sections 5.03(b) and 5.03(c)
          (except that in the case of financial statements delivered pursuant to
          Section 5.03(c), such financial statements may not contain all notes
          and may be subject to year end audit adjustments), respectively, on or
          prior to the date of such Borrowing, issuance or renewal; and

               (ii) no Default has occurred and is continuing, or would result
          from such Borrowing or issuance or renewal or from the application of
          the proceeds therefrom;

and (b) the Administrative Agent shall have received such other approvals,
opinions or documents as any Appropriate Lender Party through the Administrative
Agent may reasonably request.
<PAGE>

                                       62

     SECTION 3.03. Determinations Under Section 3.01. For purposes of
     -----------------------------------------------
determining compliance with the conditions specified in Section 3.01, each
Lender Party 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 the Lender Parties unless an
officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents shall have received notice from such Lender
Party prior to the Initial Extension of Credit specifying its objection thereto
and, if the Initial Extension of Credit consists of a Borrowing, such Lender
Party shall not have made available to the Administrative Agent such Lender
Party's ratable portion of such Borrowing.

                                  ARTICLE IV

                        REPRESENTATIONS AND WARRANTIES

     SECTION 4.01. Representations and Warranties of the Borrower. The Borrower
     ------------------------------------------------------------
represents and warrants as follows:

          (a) Each Loan Party and each of its Subsidiaries (i) is duly
     organized, validly existing and in good standing (if such concept is
     applicable) under the laws of the jurisdiction of its organization, (ii) is
     duly qualified and in good standing as a foreign business enterprise (if
     such concept is applicable) in each other jurisdiction in which it owns or
     leases property or in which the conduct of its business requires it to so
     qualify or be licensed except where the failure to be so qualified or
     licensed would not result in a Material Adverse Effect and (iii) has all
     requisite power and authority (including, without limitation, all material
     Governmental Authorizations) to own or lease and operate its properties and
     to carry on its business as now conducted and as proposed to be conducted.

          (b) Set forth on Schedule 4.01(b) hereto is a complete and accurate
     list of all Subsidiaries of the Borrower, showing as of the date hereof (as
     to each such Subsidiary) the jurisdiction of its organization, the number
     of shares or other units of each class of its Equity Interests authorized,
     and the number outstanding, on the date hereof and the percentage of each
     such class of its Equity Interests owned (directly or indirectly) by the
     Borrower or any Subsidiary thereof and the number of shares or other units
     covered by all outstanding options, warrants, rights of conversion or
     purchase and similar rights at the date hereof, except for any obligations
     or rights of the Borrower or any of its Subsidiaries to acquire any
     minority interest in any Subsidiary of the Borrower that is a partnership.
     All of the outstanding Equity Interests in each such Subsidiary have (A)
     (in the case of Subsidiaries that are corporations) been validly issued,
     are fully paid and non-assessable and are (B) to the extent owned by the
     Borrower or one or more of its Subsidiaries, free and clear of all Liens,
     except those created under the Collateral Documents or Permitted Liens.

          (c) The execution, delivery and performance by each Loan Party of each
     Loan Document to which it is or is to be a party, and the consummation of
     the Transaction, are within such Loan Party's corporate, partnership or
     limited liability company powers, as applicable, have been duly authorized
     by all necessary corporate, partnership or limited liability company
     action, as applicable, and do not (i) contravene such Loan Party's
     Constitutive Documents, (ii) violate any Requirements of Law, (iii)
     conflict with or result in the breach of, or constitute a default or
     require any payment to be made under, any material contract, loan
     agreement, indenture, mortgage, deed of trust, lease or other instrument
     binding on or affecting any Loan Party or any of its properties or (iv)
     except for the Liens created under the Loan Documents, result in or require
     the creation or imposition of any Lien upon or with respect to any of the
     properties of any Loan Party. No Loan Party is in violation of any such
     Requirements of Law or in breach of any
<PAGE>

                                       63

     such contract, loan agreement, indenture, mortgage, deed of trust, lease or
     other instrument, the violation or breach of which would be reasonably
     likely to have a Material Adverse Effect.

          (d) No Governmental Authorization, and no other authorization or
     approval or other action by, and no notice to or filing with, any
     Governmental Authority or any other third party is required for (i) the due
     execution, delivery, recordation, filing or performance by any Loan Party
     of any Loan Document to which it is or is to be a party, or for the
     consummation of the Transaction, (ii) the grant by any Loan Party of the
     Liens granted by it pursuant to the Collateral Documents, (iii) the
     perfection or maintenance of the Liens created under the Collateral
     Documents on such of the Collateral located in the United States in which a
     Lien may be perfected by the filing of financing statements, the
     recordation of security agreements with the U.S. Patent and Trademark
     Office or the U.S. Copyright Office or the delivery of Collateral
     (including the first priority nature thereof) or (iv) the exercise by any
     Agent or any Lender Party of its rights under the Loan Documents or the
     remedies in respect of the Collateral pursuant to the Collateral Documents,
     except for (A) the authorizations, approvals and actions on Schedule
     4.01(d) hereto, all of which have been duly obtained and are in full force
     and effect, (B) filings, notices, recordings and other similar actions
     necessary for the creation or perfection of the Liens and security
     interests contemplated by the Loan Documents and (C) the actions required
     by laws generally with respect to the exercise by secured creditors of
     their rights and remedies. All applicable waiting periods in connection
     with the Transaction have expired without any action having been taken by
     any competent 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.

          (e) This Agreement has been, and each other Loan Document when
     delivered hereunder will have been, duly executed and delivered by each
     Loan Party thereto. This Agreement is, and each other Loan Document when
     delivered hereunder will be, the legal, valid and binding obligation of
     each Loan Party thereto, enforceable against such Loan Party in accordance
     with its terms.

          (f) There is no action, suit, investigation, litigation or proceeding
     affecting any Loan Party or any of its Subsidiaries, including any
     Environmental Action, pending or, to the knowledge of the Borrower,
     threatened before any Governmental Authority or arbitrator that (i) could
     be reasonably likely to have a Material Adverse Effect or (ii) purports to
     affect the legality, validity or enforceability of any Loan Document or the
     consummation of the Transaction, except as described on Schedule 4.01(f)
     hereto or disclosed prior to the Closing Date in the Borrower's filings
     made with the Securities and Exchange Commission.

          (g) The Consolidated balance sheet of the Borrower and its
     Subsidiaries as at December 31, 2000, and the related Consolidated
     statement of income and Consolidated statement of cash flows of the
     Borrower and its Subsidiaries for the fiscal year then ended, accompanied
     by an unqualified opinion of KPMG LLP, independent public accountants,
     copies of which have been furnished to each Lender Party, fairly present
     the Consolidated financial condition of the Borrower and its Subsidiaries
     as at such date and the Consolidated results of operations of the Borrower
     and its Subsidiaries for the period ended on such date, all in accordance
     with generally accepted accounting principles applied on a consistent
     basis, and since December 31, 2000, there has been no Material Adverse
     Change.

          (h) The Consolidated forecasted balance sheet, statement of income and
     statement of cash flows of the Borrower and its Subsidiaries delivered to
     the Lender Parties pursuant to

<PAGE>

                                       64

     Section 3.01(a)(ix) or Section 5.03 were prepared in good faith on the
     basis of the assumptions stated therein, which assumptions were believed to
     be reasonable in light of the conditions existing at the time of delivery
     of such forecasts, and represented, at the time of delivery, the Borrower's
     best estimate of its future financial performance.

          (i) Neither the Information Memorandum nor any other information,
     exhibit or report furnished by any Loan Party to any Agent or any Lender
     Party in connection with the negotiation and syndication of the Loan
     Documents or pursuant to the terms of the Loan Documents contained any
     untrue statement of a material fact or omitted to state a material fact
     necessary to make the statements made therein not misleading.

          (j) The Borrower is not engaged in the business of extending credit
     for the purpose of purchasing or carrying Margin Stock, and no proceeds of
     any Advance or drawings under any Letter of Credit will be used to purchase
     or carry any Margin Stock or to extend credit to others for the purpose of
     purchasing or carrying any Margin Stock.

          (k) Neither any Loan Party nor any of its Subsidiaries is an
     "investment company", or an "affiliated person" of, or "promoter" or
     "principal underwriter" for, an "investment company", as such terms are
     defined in the Investment Company Act of 1940, as amended. Neither any Loan
     Party nor any of its Subsidiaries is a "holding company", or a "subsidiary
     company" of a "holding company", or an "affiliate" of a "holding company"
     or of a "subsidiary company" of a "holding company", as such terms are
     defined in the Public Utility Holding Company Act of 1935, as amended.
     Neither the making of any Advances, nor the issuance of any Letters of
     Credit, nor the application of the proceeds or repayment thereof by the
     Borrower, nor the consummation of the other transactions contemplated by
     the Loan Documents and Related Documents, will violate any provision of any
     such Act or any rule, regulation or order of the Securities and Exchange
     Commission thereunder.

          (l) Upon making of the filings and taking of the other actions
     necessary to create, perfect and protect the security interest in the
     Collateral created under the Collateral Documents, the Collateral Documents
     create in favor of the Administrative Agent for the benefit of the Secured
     Parties a valid and, together with such filings and other actions,
     perfected first priority security interest in the Collateral, securing the
     payment of the Secured Obligations, subject to Permitted Liens. The Loan
     Parties are the legal and beneficial owners of the Collateral free and
     clear of any Lien, except for the liens and security interests created or
     permitted under the Loan Documents.

          (m) Each Loan Party is, individually and together with its
     Subsidiaries, Solvent.

          (n) No ERISA Event has occurred or is reasonably expected to occur
     with respect to any Plan that has resulted in or is reasonably expected to
     result in a material liability of any Loan Party or any ERISA Affiliate.

              (i)   Schedule B (Actuarial Information) to the most recent annual
          report (Form 5500 Series) for each Plan, copies of which have been
          filed with the Internal Revenue Service and furnished to the Lender
          Parties, is complete and accurate and fairly presents the funding
          status of such Plan, and since the date of such Schedule B there has
          been no material adverse change in such funding status.
<PAGE>

                                       65

              (ii)  Neither any Loan Party nor any ERISA Affiliate has incurred
          or is reasonably expected to incur any Withdrawal Liability exceeding
          $100,000 to any Multiemployer Plan.

              (iii) Neither any Loan Party nor any ERISA Affiliate has been
          notified by the sponsor of a Multiemployer Plan that such
          Multiemployer Plan is in reorganization or has been terminated, within
          the meaning of Title IV of ERISA, and no such Multiemployer Plan is
          reasonably expected to be in reorganization or to be terminated,
          within the meaning of Title IV of ERISA.

          (o) Except as described on Schedule 4.01(o) hereto:

              (i)   The operations and properties of each Loan Party comply in
          all material respects with all applicable Environmental Laws and
          Environmental Permits, except where any such failure to comply would
          not be reasonably expected to have a Material Adverse Effect, all past
          non-compliance with such Environmental Laws and Environmental Permits
          has been resolved without ongoing obligations or costs, except where
          any such failure to comply would not be reasonably expected to have a
          Material Adverse Effect and, to Borrower's knowledge, no circumstances
          exist that could be reasonably likely to (A) form the basis of an
          Environmental Action against any Loan Party or any of their properties
          that could have a Material Adverse Effect or (B) cause any such
          property to be subject to any restrictions on ownership, occupancy,
          use or transferability under any Environmental Law.

              (ii)  None of the properties currently or, to Borrower's
          knowledge, formerly owned or operated by any Loan Party is listed or
          proposed for listing on the NPL or on the CERCLIS or any analogous
          foreign, state or local list or, to Borrower's knowledge, is adjacent
          to any such property; and except to the extent that any of the
          following would not have a Material Adverse Effect, (A) there are no
          and, to Borrower's knowledge, never have been any underground or
          aboveground storage tanks or any surface impoundments, septic tanks,
          pits, sumps or lagoons in which Hazardous Materials are being or have
          been treated, stored or disposed on any property currently owned or
          operated by any Loan Party or, to its knowledge, on any property
          formerly owned or operated by any Loan Party, (B) there is no asbestos
          or asbestos-containing material on any property currently owned or
          operated by any Loan Party, and (C) Hazardous Materials have not been
          released, discharged or disposed of on any property currently or, to
          Borrower's knowledge, formerly owned or operated by any Loan Party
          except in compliance with Environmental Laws.

              (iii) No Loan Party is undertaking, and has not completed, either
          individually or together with other potentially responsible parties,
          any investigation or assessment or remedial or response action
          relating to any actual or threatened release, discharge or disposal of
          Hazardous Materials at any site, location or operation, either
          voluntarily or pursuant to the order of any Governmental Authority or
          the requirements of any Environmental Law; and all Hazardous Materials
          generated, used, treated, handled or stored at, or transported to or
          from, any property currently or formerly owned or operated by any Loan
          Party have been disposed of in a manner not reasonably expected to
          result in liability to any Loan Party that, individually or in the
          aggregate, would have a Material Adverse Effect.
<PAGE>

                                       66

          (p) Each Loan Party and each of its Affiliates has filed, has caused
     to be filed or has been included in all tax returns (Federal, state, local
     and foreign) required to be filed and has paid all taxes shown thereon to
     be due, together with applicable interest and penalties. Set forth on
     Schedule 4.01(p) hereto is a complete and accurate list, as of the date
     hereof, of each Open Year of each Loan Party and each of its Affiliates.
     The aggregate unpaid amount, as of the date hereof, of adjustments to the
     Federal income tax liability of each Loan Party and each of its Affiliates
     proposed by the Internal Revenue Service with respect to Open Years does
     not exceed $62,500,000. No issues have been raised by the Internal Revenue
     Service in respect of Open Years that, in the aggregate, could be
     reasonably likely to have a Material Adverse Effect.

          (q) Set forth on Schedule 4.01(q) hereto is a complete and accurate
     list of all Liens (other than Permitted Liens) on the property or assets of
     any Loan Party, 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 subject thereto.

          (r) Set forth on Schedule 4.01(r) hereto is a complete and accurate
     list of all Investments held by any Loan Party on the date hereof, showing
     the amount, obligor or issuer and maturity, if any, thereof.

          (s) Except as set forth on Schedule 4.01(s), the dialysis facilities
     operated by each of the Borrower and its Subsidiaries (the "Dialysis
                                                                 --------
     Facilities") are qualified for participation in the Medicare programs and
     ----------
     the Medicaid programs in which they participate (together with their
     respective intermediaries or carriers, the "Government Reimbursement
                                                 ------------------------
     Programs") and are entitled to reimbursement under the Medicare program for
     --------
     services rendered to qualified Medicare beneficiaries, and comply in all
     material respects with the conditions of participation in all Government
     Reimbursement Programs in which they participate or have participated.
     Except as set forth on Schedule 4.01(s), there is no pending or, to
     Borrower's knowledge, threatened proceeding or investigation by any of the
     Government Reimbursement Programs with respect to (i) the Borrower's or any
     of its Subsidiaries' qualification or right to participate in any
     Government Reimbursement Program in which they participate or have
     participated, (ii) the compliance or non-compliance by the Borrower or any
     of its Subsidiaries with the terms or provisions of any Government
     Reimbursement Program in which they participate or have participated, or
     (iii) the right of the Borrower or any of its Subsidiaries to receive or
     retain amounts received or due or to become due from any Government
     Reimbursement Program in which they participate or have participated, which
     proceeding or investigation, together with all other such proceedings and
     investigations, could reasonably be expected to (x) have a Material Adverse
     Effect or (y) result in Consolidated net operating revenues for any
     (including any future) four fiscal quarter period of the Borrower
     constituting less than 95% of Consolidated net operating revenues for the
     immediately preceding four fiscal quarter period of the Borrower.

          (t) Neither the Borrower nor any of its Subsidiaries, nor any of their
     respective officers or directors has, on behalf of the Borrower or any of
     its Subsidiaries, knowingly or willfully violated the federal Medicare and
     Medicaid statutes, 42 U.S.C. (S)1320a-7b, or the regulations promulgated
     pursuant to such statutes or related state or local statutes or
     regulations, including but not limited to the following:  (i) knowingly and
     willfully making or causing to be made a false statement or representation
     of a material fact in any applications for any benefit or payment; (ii)
     knowingly and willfully making or causing to be made any false statement or
     representation of a material fact for use in determining rights to any
     benefit or payment; (iii) failing to disclose knowledge by a claimant of
     the occurrence of any event affecting the initial or continued right to any
     benefit or payment on its own behalf or on behalf of another, with intent
     to secure such benefit or payment fraudulently; (iv) knowingly and
     willfully soliciting or receiving
<PAGE>

                                       67

     any remuneration (including any kickback, bribe or rebate), directly or
     indirectly, overtly or covertly, in cash or in kind or offering to pay such
     remuneration (a) in return for referring an individual to a Person for the
     furnishing or arranging for the furnishing of any item or service for which
     payment may be made in whole or in part by Medicare, Medicaid or other
     applicable government payers, or (b) in return for purchasing, leasing or
     ordering or arranging for or recommending the purchasing, leasing or
     ordering of any good, facility, service or item for which payment may be
     made in whole or in part by Medicare, Medicaid or other applicable
     government payers. With respect to this Section, knowledge of an individual
     director or officer of the Borrower or a Subsidiary of any of the events
     described in this Section shall not be imputed to the Borrower or such
     Subsidiary unless such knowledge was obtained or learned by the director or
     officer in his or her official capacity as a director or officer of the
     Borrower or such Subsidiary.

          (u) The subordination provisions of (i) the Subordinated Notes
     Documents, (ii) the Subordinated Notes, (iii) any Subordinated Debt now
     existing or hereafter incurred or assumed by any Loan Party and (iv) any
     guarantee by any Loan Party of any Subordinated Debt will be enforceable
     against the holders thereof, and the Advances and all other monetary
     obligations hereunder and all monetary obligations under the Subsidiary
     Guaranty will constitute "Senior Indebtedness" and "Designated Senior
     Indebtedness" (or any comparable terms) as defined in such provisions.

                                  ARTICLE IV

                           COVENANTS OF THE BORROWER

     SECTION 5.01. Affirmative Covenants. So long as any Advance or any other
     -----------------------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will:

          (a) Compliance with Laws, Etc. Comply, and cause each of its
              -------------------------
     Subsidiaries to comply, in all material respects, with all applicable
     Requirements of Law, such compliance to include, without limitation,
     compliance with ERISA and the Racketeer Influenced and Corrupt
     Organizations Chapter of the Organized Crime Control Act of 1970, except to
     the extent that non-compliance could not be reasonably expected to result
     in a Material Adverse Effect.

          (b) Payment of Taxes, Etc.  Pay and discharge, and cause each of its
              ---------------------
     Subsidiaries to pay and discharge, before the same shall become delinquent,
     (i) all taxes, assessments and governmental charges or levies imposed upon
     it or upon its property and (ii) all lawful claims that, if unpaid, might
     by law become a Lien upon its property; provided, however, that neither the
     Borrower nor any of its Subsidiaries shall be required to pay or discharge
     any such tax, assessment, charge or claim (A) the non-payment or non-
     discharge of which could not be reasonably expected to result in a Material
     Adverse Effect or (B) that is being contested in good faith and by proper
     proceedings and as to which appropriate reserves are being maintained,
     unless and until any Lien resulting therefrom attaches to its property and
     becomes enforceable against its other creditors and subjects the property
     to a substantial risk of forfeiture.

          (c) Compliance with Environmental Laws.  Comply, and cause each of its
              ----------------------------------
     Subsidiaries and all lessees and other Persons operating or occupying its
     properties to comply, in all material respects, with all applicable
     Environmental Laws and Environmental Permits; obtain and renew and cause
     each of its Subsidiaries to obtain and renew all Environmental Permits
     necessary for its operations and properties; and conduct, and cause each of
     its Subsidiaries to conduct, any investigation, study, sampling and
     testing, and undertake any cleanup, removal,
<PAGE>

                                       68

     remedial or other action necessary to remove and clean up all Hazardous
     Materials from any of its properties, in accordance with the requirements
     of all Environmental Laws; provided, however, that neither the Borrower nor
     any of its Subsidiaries shall be required to undertake any such cleanup,
     removal, remedial or other action to the extent that its obligation to do
     so is being contested in good faith and by proper proceedings and
     appropriate reserves are being maintained with respect to such
     circumstances.

          (d) Maintenance of Insurance.  Maintain, and cause each of its
              ------------------------
     Subsidiaries to maintain, insurance with responsible and reputable
     insurance companies or associations in such amounts and covering such risks
     as is usually carried by companies engaged in similar businesses and owning
     similar properties in the same general areas in which the Borrower or such
     Subsidiary operates.

          (e) Preservation of Corporate Existence, Etc. Preserve and maintain,
              ----------------------------------------
     and cause each of its Subsidiaries to preserve and maintain, its existence,
     legal structure, legal name, rights (charter and statutory) and material
     franchises; provided, however, that neither the Borrower nor any of its
     Subsidiaries shall be required to preserve any right, privilege or
     franchise if the Board of Directors of the Borrower or such Subsidiary
     shall determine that the preservation thereof is no longer desirable in the
     conduct of the business of the Borrower or such Subsidiary, as the case may
     be, and that the loss thereof is not disadvantageous in any material
     respect to the Borrower, such Subsidiary or the Lender Parties and any
     Subsidiary may merge with or into or be liquidated into another Subsidiary
     or the Borrower as permitted under Section 5.02(d).

          (f) Visitation Rights.  At any reasonable time and from time to time,
              -----------------
     and, unless a Default or an Event of Default shall have occurred and be
     continuing, upon reasonable notice, permit any of the Agents or any of the
     Lender Parties, or any agents or representatives thereof, to examine and
     make copies of and abstracts from the records and books of account of, and
     visit the properties of, the Borrower and any of its Subsidiaries, and to
     discuss the affairs, finances and accounts of the Borrower and any of its
     Subsidiaries with any of their officers or directors and with their
     independent certified public accountants (provided that representatives of
     the Borrower shall be entitled to notice of and to participate in any such
     discussion).

          (g) Keeping of Books. Keep, and cause each of its Subsidiaries to
              ----------------
     keep, proper books of record and account, in which full and correct entries
     shall be made of all financial transactions and the assets and business of
     the Borrower and each such Subsidiary using sound business practices
     sufficient to permit the preparation of financial statements based thereon
     in accordance with generally accepted accounting principles in effect from
     time to time.

          (h) Maintenance of Properties, Etc.  Maintain and preserve, and cause
              ------------------------------
     each of its Subsidiaries to maintain and preserve, all of its properties
     that are used or useful in the conduct of its business in good working
     order and condition, ordinary wear and tear excepted.

          (i) Transactions with Affiliates.  Conduct, and cause each of its
              ----------------------------
     Subsidiaries to conduct, all transactions otherwise permitted under the
     Loan Documents with any of their Affiliates on terms that are fair and
     reasonable and no less favorable to the Borrower or such Subsidiary than it
     would obtain in a comparable arm's-length transaction with a Person not an
     Affiliate.

          (j) Covenant to Guarantee Obligations and Give Security.  Upon (x) the
              ---------------------------------------------------
     formation or acquisition of any new direct or indirect Subsidiaries by any
     Loan Party or (y) the acquisition of any property by any Loan Party, which,
     in the judgment of the Administrative Agent, shall not
<PAGE>

                                       69

         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 Borrower shall, in each case at the Borrower's
         expense:

                    (i)    in connection with the formation or acquisition of a
               wholly-owned Domestic Subsidiary, within 30 days after such
               formation or acquisition, cause each such Domestic Subsidiary,
               and cause each direct and indirect parent of such Domestic
               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, and, in connection with the
               formation or acquisition of a Foreign Subsidiary, within 30 days
               after such formation or acquisition, pledge or, cause its
               respective Subsidiary to pledge, to the Administrative Agent for
               the benefit of the Secured Parties 65% of the Equity Interests in
               such Foreign Subsidiary,

                    (ii)   within 10 days after such formation or acquisition,
               furnish to the Administrative Agent a description of (A) the
               material personal properties of such wholly-owned Domestic
               Subsidiary and (B) such property which was not previously subject
               to such perfected security interest, in each case in detail
               satisfactory to the Administrative Agent,

                    (iii)  within 30 days after such formation or acquisition,
               duly execute and deliver, and cause each such wholly-owned
               Domestic Subsidiary and each direct and indirect parent of such
               wholly-owned Domestic Subsidiary (if it has not already done so)
               to duly execute and deliver, to the Administrative Agent pledges,
               assignments, security agreements and security agreement
               supplements, as specified by and in form and substance
               satisfactory to the Administrative Agent, with respect to the
               Equity Interests in and assets of such wholly-owned Domestic
               Subsidiary,

                    (iv)   within 30 days after such formation or acquisition,
               take, and cause such wholly-owned Subsidiary or such parent to
               take, whatever action (including, without limitation, 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 pledges,
               assignments, security agreements and security agreement
               supplements delivered pursuant to this Section 5.01(j),
               enforceable against all third parties in accordance with their
               terms,

                    (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 (subject to customary qualifications,
               limitations and exceptions), 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, as to such
               guaranties, guaranty supplements, pledges, assignments, security
               agreements and security agreement supplements being legal, valid
               and binding obligations of the respective Loan Party thereto
               enforceable in accordance with their terms, as to the matters
               contained in clause (iv) above, as to such recordings, filings,
               notices, endorsements and other actions being sufficient to
               create valid perfected Liens on such properties, and as to such
               other matters as the Administrative Agent may reasonably request,
               and
<PAGE>

                                       70

                    (vi)   at any time and from time to time, 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 in
               perfecting and preserving the Liens of, such guaranties, pledges,
               assignments, security agreements and security agreement
               supplements.

               (k)  Further Assurances.
                    ------------------

                    (i)    Promptly upon request by any Agent, or any Lender
               Party through the Administrative Agent, correct, and cause each
               of its Subsidiaries promptly to correct, any material defect or
               error that may be discovered in any Loan Document or in the
               execution, acknowledgment, filing or recordation thereof, and

                    (ii)   Promptly upon request by any Agent, or any Lender
               Party through the Administrative Agent, do, execute, acknowledge,
               deliver, record, re-record, file, re-file, register and re-
               register any and all such further acts, pledge agreements,
               assignments, financing statements and continuations thereof,
               termination statements, notices of assignment, transfers,
               certificates, assurances and other instruments as any Agent, or
               any Lender Party through the Administrative Agent, may reasonably
               require from time to time in order to (A) carry out more
               effectively the purposes of the Loan Documents, (B) to the
               fullest extent permitted by applicable law, subject any Loan
               Party,s properties, assets, rights or interests to the Liens now
               or hereafter intended to be covered by any of the Collateral
               Documents, (C) 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 (D) 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 is or
               is to be a party, and cause each of its Subsidiaries to do so.

     SECTION 5.02. Negative Covenants. So long as any Advance or any other
     --------------------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will not, at any time:

               (a)  Liens, Etc. Create, incur, assume or suffer to exist, or
                    ----------
     permit any of its Subsidiaries to create, incur, assume or suffer to exist,
     any Lien on or with respect to any of its properties of any character
     whether now owned or hereafter acquired, or sign or file or suffer to
     exist, or permit any of its Subsidiaries to sign or file or suffer to
     exist, under the Uniform Commercial Code of any jurisdiction, a financing
     statement that names the Borrower or any of its Subsidiaries as debtor, or
     sign or suffer to exist, or permit any of its Subsidiaries to sign or
     suffer to exist, any security agreement authorizing any secured party
     thereunder to file such financing statement, or assign, or permit any of
     its Subsidiaries to assign, any accounts or other right to receive income,
     except:

                    (i)    Liens created under the Loan Documents;

                    (ii)   Permitted Liens;

                    (iii)  Liens existing on the Closing Date and described on
               Schedule 4.01(q) hereto;
<PAGE>

                                       71

                    (iv)   Liens upon or in real property or equipment acquired
               or held by the Borrower or any of its Subsidiaries in the
               ordinary course of business to secure the purchase price of such
               property or equipment or to secure Debt incurred solely for the
               purpose of financing the acquisition, construction or improvement
               of any such property or equipment to be subject to such Liens, or
               Liens existing on any such property or equipment at the time of
               acquisition (other than any such Liens created in contemplation
               of such acquisition that do not secure the purchase price), or
               extensions, renewals or replacements of any of the foregoing for
               the same or a lesser amount; provided, however, that (a) such
               Liens shall be created not more than 180 days after the date of
               acquisition or completion of construction or improvement and
               (b) no such Lien shall extend to or cover any property other than
               the property or equipment being acquired, constructed or improved
               and any attachments thereto and proceeds thereof, and no such
               extension, renewal or replacement shall extend to or cover any
               property not theretofore subject to the Lien being extended,
               renewed or replaced; and provided further that the aggregate
               principal amount of the Debt secured by Liens permitted by this
               clause (iv) shall not exceed the amount permitted under Section
               5.02(b)(v) at any time outstanding;

                    (v)    Liens arising in connection with Capitalized Leases
               permitted under Section 5.02(b)(vi); provided that no such Lien
               shall extend to or cover any Collateral or assets other than the
               assets subject to such Capitalized Leases; and

                    (vi)   the replacement, extension or renewal of any Lien
               permitted by clause (iii) above upon or in the same property
               theretofore subject thereto or the replacement, extension or
               renewal (without increase in the amount or change in any direct
               or contingent obligor) of the Debt secured thereby.

               (b)  Debt. Create, incur, assume or suffer to exist, or permit
                    ----
     any of its Subsidiaries to create, incur, assume or suffer to exist, any
     Debt, except:

                    (i)    Debt under the Loan Documents;

                    (ii)   Debt existing on the Closing Date and described on
               Schedule 5.02(b) hereto;

                    (iii)  Debt of the Borrower in respect of Hedge Agreements
               (A) existing on the date of this Agreement and described in
               Schedule 5.02(b) hereto or (B) entered into from time to time
               after the date of this Agreement with counter parties that are
               Lender Parties at the time such Hedge Agreement is entered into
               (or Affiliates of such Lender Party at such time); provided that,
               in all cases under this clause (iii), all such Hedge Agreements
               shall not be speculative in nature (including, without
               limitation, with respect to the term and purpose thereof);

                    (iv)   Debt of (A) the Borrower owing to any other Loan
               Party, and (B) any of the Subsidiaries owing to the Borrower or
               any other Loan Party to the extent permitted under Section
               5.02(f)(viii);

                    (v)    Debt incurred after the date of this Agreement and
               secured by Liens expressly permitted under Section 5.02(a)(iv) in
               an aggregate principal amount not to exceed, when aggregated with
               the principal amount of all Debt incurred under clause (vi) of
               this Section 5.02(b), $50,000,000 any time outstanding;
<PAGE>

                                       72

                    (vi)    Capitalized Leases incurred after the date of this
               Agreement which, when aggregated with the principal amount of all
               Debt incurred under clause (v) of this Section 5.02(b), do not
               exceed $50,000,000 at any time outstanding;

                    (vii)   Contingent Obligations of (A) the Borrower
               guaranteeing all or any portion of the outstanding Obligations of
               any of the subsidiaries and (B) any Subsidiary of the Borrower
               guaranteeing any Obligations of the Borrower or another
               subsidiary thereof; provided that each such primary Obligation is
               otherwise permitted under the terms of the Loan Documents ;

                    (viii)  Unsecured Debt not otherwise permitted under this
               Section 5.02(b) in an aggregate amount not to exceed $50,000,000
               at any time outstanding;

                    (ix)    Endorsement of negotiable instruments for deposit or
               collection or similar transactions in the ordinary course of
               business;

                    (x)     Debt comprised of indemnities given by the Borrower
               or any of its Subsidiaries, or guarantees or other similar
               undertakings by the Borrower or any of its Subsidiaries entered
               into in lieu thereof, in favor of the purchaser of property and
               assets of the Borrower and its Subsidiaries being sold, leased,
               transferred or otherwise disposed of in accordance with this
               Agreement and covering liabilities incurred by the Borrower or
               its applicable Subsidiary in respect of such property and assets
               prior to the date of consummation of the sale, lease, transfer or
               other disposition thereof, which indemnities, guarantees or
               undertakings are required under the terms of the documentation
               for such sale, lease, transfer or other disposition;

                    (xi)    Debt comprised of liabilities or other Obligations
               assumed or retained by the Borrower or any of its Subsidiaries
               from Subsidiaries of the Borrower that are, or all or
               substantially all of the property and assets of which are, sold,
               leased, transferred or otherwise disposed of pursuant to Section
               5.02(e)(iii) or (vi); provided that such liabilities or other
               Obligations were not created or incurred in contemplation of the
               related sale, lease, transfer or other disposition;

                    (xii)   Unsecured Subordinated Debt or Redeemable Preferred
               Interests not otherwise permitted under this Section 5.02(b),
               provided that the aggregate amount of the outstanding principal
               amount of such unsecured Subordinated Debt and the maximum amount
               of the purchase price, redemption price or liquidation value
               (whichever is greater) of such Redeemable Preferred Interests
               does not exceed $300,000,000 at any time; provided further, that
               the Net Cash Proceeds thereof are applied to prepay the Advances
               to the extent provided in Section 2.06(b); and

                    (xiii)  Debt extending the maturity of, or refunding,
               refinancing or replacing, in whole or in part, any Debt incurred
               under clause (ii) of this Section 5.02(b); provided, however,
               that (A) the aggregate principal amount of such extended,
               refunding, refinancing or replacement Debt shall not be increased
               above the principal amount thereof and the premium, if any,
               thereon outstanding immediately prior to such extension,
               refunding, refinancing or replacement, (B) the direct and
               contingent obligors therefor shall not be changed as a result of
               or in connection with such extension, refunding, refinancing or
               replacement, (C) such extended, refunding, refinancing or
               replacement Debt shall not mature prior to the stated maturity
               date or mandatory redemption date of the Debt being so extended,
               refunded, refinanced or replaced, and (D) if the Debt being
<PAGE>

                                       73

               so extended, refunded, refinanced or replaced is subordinated in
               right of payment or otherwise to the Obligations of the Borrower
               or any of its Subsidiaries under and in respect of the Loan
               Documents, such extended, refunding, refinancing or replacement
               Debt shall be subordinated to such Obligations to at least the
               same extent.

               (c)  Change in Nature of Business. Engage or permit any of its
                    ----------------------------
     Subsidiaries to engage in any business other than the businesses carried on
     at the date hereof and any businesses incidental or related thereto.

               (d)  Mergers, Etc. Merge into or consolidate with any Person or
                    ------------
     permit any Person to merge into it, or permit any of its Subsidiaries to do
     so, except that:

                    (i)    any of the Subsidiaries may merge into or consolidate
               with the Borrower, provided that the Borrower is the surviving
               corporation;

                    (ii)   any Subsidiary of the Borrower may merge into or
               consolidate with any other Subsidiary of the Borrower, provided
               that, in the case of any such merger or consolidation involving a
               wholly-owned Subsidiary, the Person formed by or surviving such
               merger or consolidation shall be a wholly-owned Subsidiary of the
               Borrower, provided further that, in the case of any such merger
               or consolidation to which a Subsidiary Guarantor is a party, the
               Person formed by such merger or consolidation shall be a
               Subsidiary Guarantor;

                    (iii)  in connection with any purchase or other acquisition
               of Equity Interests in, or property and assets of, any Person
               permitted under Section 5.02(f)(v), the Borrower may permit any
               other Person to merge into or consolidate with it (provided that
               the Borrower is the surviving entity), and any of the
               Subsidiaries of the Borrower may merge into or consolidate with
               any other Person or permit any other Person to merge into or
               consolidate with it; provided that the Person with which such
               Subsidiary is merging or consolidating (1) shall be engaged in
               substantially the same lines of business as one or more of the
               businesses of the Borrower and the Subsidiaries or in an
               incidental or related business and (2) shall not have any
               contingent liabilities that could reasonably be expected to be
               material and adverse to the Borrower and its Subsidiaries, taken
               as a whole (as determined in good faith by the board of directors
               (or persons performing similar functions) of the Borrower or such
               Subsidiary if the board of directors is otherwise approving such
               transaction, and in each other case, by a Responsible Officer),
               and (3) in the case of any wholly-owned Domestic Subsidiary, such
               Person shall take all actions required under Section 5.01(j); and

                    (iv)   in connection with any sale, transfer or other
               disposition of all or substantially all of the Equity Interests
               in, or the property and assets of, any Person permitted under
               Section 5.02(e)(vi), any of the Subsidiaries of the Borrower may
               merge into or consolidate with any other Person or permit any
               other Person to merge into or consolidate with it; and

     provided, however, that in each case, immediately after giving effect
     thereto, no event shall occur and be continuing that constitutes a Default.

               (e)  Sales, Etc., of Assets. Sell, lease, transfer or otherwise
                    ----------------------
     dispose of, or permit any of its Subsidiaries to sell, lease, transfer or
     otherwise dispose of, any assets, or grant any option or other right to
     purchase, lease or otherwise acquire any assets, except:
<PAGE>

                                       74

                    (i)    the Borrower and its Subsidiaries may sell inventory
               in the ordinary course of business;

                    (ii)   (A) the Borrower may sell, lease, transfer or
               otherwise dispose of any of its property or assets to any of the
               Subsidiaries, and (B) any of the Subsidiaries may sell, lease,
               transfer or otherwise dispose of any of its property or assets to
               the Borrower or any of the other Subsidiaries;

                    (iii)  any Subsidiary of the Borrower that is no longer
               actively engaged in any business or activities and does not have
               property and assets with an aggregate book value in excess of
               $1,000,000 may be wound up, liquidated or dissolved so long as
               such winding up, liquidation or dissolution is determined in good
               faith by management of the Borrower to be in the best interests
               of the Borrower and its Subsidiaries;

                    (iv)   the Borrower and its Subsidiaries may sell, lease,
               transfer or otherwise dispose of any obsolete, damaged or worn
               out equipment thereof or any other equipment that is otherwise no
               longer useful in the conduct of their businesses;

                    (v)    the Borrower and its Subsidiaries may lease or
               sublease real property to the extent required for their
               respective businesses and operations in the ordinary course so
               long as such lease or sublease is not otherwise prohibited under
               the terms of the Loan Documents;

                    (vi)   the Borrower and its Subsidiaries may sell, lease,
               transfer or otherwise dispose of property and assets not
               otherwise permitted to be sold, leased, transferred or disposed
               of pursuant to this Section 5.02(e) so long as the aggregate book
               value of all of the property and assets of the Borrower and its
               Subsidiaries sold, leased, transferred or otherwise disposed of
               pursuant to this clause (vi) does not exceed $300,000,000 in the
               aggregate during the term of this Agreement; provided that:

                           (A)   the gross proceeds received from any such sale,
                    lease, transfer or other disposition shall be at least equal
                    to the fair market value of the property and assets so sold,
                    leased, transferred or otherwise disposed of, determined at
                    the time of such sale, lease, transfer or other disposition;

                           (B)   at least 75% of the value of the aggregate
                    consideration received from any such sale, lease, transfer
                    or other disposition shall be in cash, provided, that up to
                    one-third of such 75% may consist of notes or other
                    obligations received by the Borrower or such Subsidiary that
                    are due and payable or otherwise converted by the Borrower
                    or such Subsidiary into cash within 365 days of receipt,
                    which cash (to the extent received) shall constitute Net
                    Cash Proceeds attributable to the original transaction; and
                    provided further that any Debt of the Borrower or any of its
                    Subsidiaries (as shown on the Borrower's or such
                    Subsidiary's most recent balance sheet) that is assumed by
                    the transferee of any such assets shall constitute cash for
                    purposes of this Section 5.02(e)(vi), so long as the
                    Borrower and all of its Subsidiaries are fully and
                    unconditionally released therefrom;

                           (C)   immediately before and immediately after giving
                    pro forma effect to any such sale, lease, transfer or other
                    disposition, no Default shall have occurred and be
                    continuing, and
<PAGE>

                                       75

                           (D)   within fifteen Business Days after each
                    disposition under this subsection, the Borrower shall
                    deliver to the Administrative Agent, on behalf of the Lender
                    Parties, a certificate identifying the property disposed of
                    and stating (a) that immediately before and after giving
                    effect thereto, no Default or Event or Default existed, (b)
                    that the consideration received or to be received by the
                    Borrower or such Subsidiary for such property has been
                    determined by the Borrower or the applicable Subsidiary to
                    be not less than the fair market value of such property and
                    (c) the total consideration to be paid in respect of such
                    disposition and (d) the Net Cash Proceeds resulting from
                    such disposition; and

                           (E)   if and to the extent that the Net Cash Proceeds
                    of any transaction effected pursuant to this Section
                    5.02(e)(vi) shall not have been reinvested in assets or
                    property of the Borrower or any of its Subsidiaries with
                    respect to any transaction completed (1) on or prior to
                    December 31, 2001, by December 27, 2002 and (2) thereafter,
                    within 360 days after the date of receipt thereof, then such
                    uninvested Net Cash Proceeds shall be applied on the first
                    Business Day following December 27, 2002 or the applicable
                    360-day period, as the case may be, to prepay Advances in
                    accordance with Section 2.06(b); and

            (vii)   the Borrower and its Subsidiaries may exchange assets and
     properties with another Person; provided that:

                           (A)   the assets or properties received by the
                    Borrower or its Subsidiaries shall be used in the business
                    of the Borrower or such Subsidiary as conducted immediately
                    prior to such transaction, or in an incidental or related
                    business;

                           (B)   the total consideration received by the
                    Borrower or such Subsidiary for such assets or property
                    shall have been determined by the Borrower or such
                    Subsidiary to be not less than the fair market value of the
                    assets or property exchanged;

                           (C)   immediately before and immediately after giving
                    pro forma effect to any such exchange, no Default shall have
                    occurred and be continuing;

                           (D)   any cash received by the Borrower or any such
                    Subsidiary in connection with such exchange shall be treated
                    as Net Cash Proceeds subject to Section 2.06(b) and any cash
                    paid by the Borrower or any Subsidiary in connection with
                    such exchange shall be treated as an acquisition expenditure
                    under Section 5.02(f)(v); and

                           (E)   within fifteen Business Days after each
                    exchange under this Section 5.02(e)(vii), the Borrower shall
                    deliver to the Administrative Agent, on behalf of the Lender
                    Parties, a certificate identifying the assets or property
                    disposed of and acquired in such exchange, and stating (a)
                    that immediately before and after giving effect thereto, no
                    Default or Event or Default existed, (b) that the total
                    consideration received by the Borrower or such Subsidiary
                    for such assets or property has been determined by the
                    Borrower or such Subsidiary to be not less than the fair
                    market value of the assets or property exchanged, and (c)
                    the amount, if any, of the cash paid or Net Cash Proceeds
                    received in connection with such exchange.
<PAGE>

                                       76

                    (f)    Investments in Other Persons. Make or hold, or permit
                           ----------------------------
            any of its Subsidiaries to make or hold, any Investment in any
            Person, except:

                           (i)   Investments by the Borrower and its
                    Subsidiaries in Cash Equivalents;

                           (ii)  Investments existing on the Closing Date and
                    described on Schedule 4.01(b) hereto;

                           (iii) Investments by the Borrower in Hedge Agreements
                    permitted under Section 5.02(b) (iii);

                           (iv)  Investments in accounts and notes payable in
                    the ordinary course of business, including notes received in
                    transactions permitted under Section 5.02(e)(vi);

                           (v)   the purchase or other acquisition of (1) Equity
                    Interests in any Domestic Person that, upon the consummation
                    thereof, will be more than 50% owned by the Borrower or one
                    or more of its wholly owned Subsidiaries (including, without
                    limitation, as a result of a merger or consolidation) or
                    (2) all or substantially all the property and assets of a
                    Person or consisting of a line of business or business unit
                    of a Person; provided that, with respect to each purchase or
                    other acquisition made pursuant to this clause (v):

                                 (A)   the lines of business of the Person to be
                           (or the property and assets of which are to be) so
                           purchased or otherwise acquired shall be
                           substantially the same lines of business as one or
                           more of the businesses of the Borrower and its
                           Subsidiaries or a business that is incidental or
                           related thereto;

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

                                 (C)   the total cash consideration (excluding
                           all Equity Interests issued or transferred to the
                           sellers thereof but including the aggregate amounts
                           paid or to be paid under deferred purchase price,
                           noncompete, consulting and other similar agreements
                           with the sellers thereof and all assumptions of debt,
                           liabilities and other obligations in connection
                           therewith) paid by or on behalf of the Borrower and
                           its Subsidiaries for any such purchase or other
                           acquisition (or any series of related purchases or
                           acquisitions) shall not exceed $50,000,000 unless
                           such purchase or acquisition has been approved by the
                           Required Lenders, and for all such purchases or
                           acquisitions effected during the term of this
                           Agreement shall not exceed $250,000,000; provided
                           that such amount shall be increased to $450,000,000
                           at all times after the Leverage Ratio is less than or
                           equal to 2.75:1;

                                 (D)   (1) 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 (2) immediately after giving effect
                           to such purchase or other acquisition, the Borrower
                           and its Subsidiaries shall be in pro forma
<PAGE>

                                       77

                           compliance with all of the covenants set forth in
                           Section 5.04, such compliance to be determined on the
                           basis of the Required Financial Information most
                           recently delivered to the Administrative Agent and
                           the Lender Parties as though such purchase or other
                           acquisition had been consummated as of the first day
                           of the fiscal period covered thereby; and

                                 (E)   the Borrower shall have delivered to the
                           Administrative Agent, on behalf of the Lender
                           Parties, at least three Business Days prior to the
                           date on which any such purchase or other acquisition
                           in which the total cash consideration is more than
                           $30,000,000 is to be consummated, a certificate of a
                           Responsible Officer, in form and substance reasonably
                           satisfactory to the Administrative Agent, certifying
                           that all of the requirements set forth in this clause
                           (v) have been satisfied or will be satisfied on or
                           prior to the consummation of such purchase or other
                           acquisition;

                           (vi)    Investments by the Borrower or any Subsidiary
                    in 50% or less of the Equity Interests in another Person
                    (the "Minority Investment"), provided that (i) the Borrower
                    or any Subsidiary owns at least 20% (on a fully diluted
                    basis) of the issued and outstanding Equity Interests in
                    such Person, (ii) the aggregate outstanding amount of
                    Minority Investments made by the Borrower and any Subsidiary
                    shall not exceed $60,000,000 at any one time, (iii) the
                    Borrower or any Subsidiary shall have full control over all
                    bank accounts of such Person if the Borrower or any
                    Subsidiary is the largest holder of Equity Interests in such
                    Person, (iv) the Borrower or any Subsidiary shall control or
                    act as the managing general partner of such Person if such
                    Person is a partnership and if the Borrower or any
                    Subsidiary is the largest holder of Equity Interests in such
                    Person, and (v) immediately before and after giving effect
                    thereto, no Default or Event of Default shall exist;

                           (vii)   notes from employees issued to the Borrower
                    representing payment for capital stock of the Borrower or
                    representing payment of the exercise price of options to
                    purchase capital stock of the Borrower, and employee
                    relocation expenses incurred in the ordinary course of
                    business, in an aggregate amount at any time outstanding not
                    to exceed $10,000,000; and

                           (viii)  Investments of the Borrower or any of its
                    Subsidiaries in any Subsidiary of the Borrower; provided
                    that no such Investments in non-wholly-owned Subsidiaries
                    shall be made unless, after giving pro forma effect thereto,
                    the Borrower and its Subsidiaries would be in compliance
                    with Section 5.02(l) and Section 5.04(d).

                    (g)    Restricted Payments. Declare or pay any dividends,
                           -------------------
            purchase, redeem, retire, defease or otherwise acquire for value any
            of its Equity Interests now or hereafter outstanding, return any
            capital to its stockholders, partners or members (or the equivalent
            Persons thereof) as such, make any distribution of assets, Equity
            Interests, obligations or securities to its stockholders, partners
            or members (or the equivalent Persons thereof) as such, or permit
            any of its Subsidiaries to do any of the foregoing, or permit any of
            its Subsidiaries to purchase, redeem, retire, defease or otherwise
            acquire for value any Equity Interests in the Borrower, 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:

                           (i)     the Borrower may (A) declare and pay
                    dividends and distributions payable only in its common
                    Equity Interests, (B) except to the extent the Net Cash
<PAGE>

                                       78

                    Proceeds thereof are required to be applied to the
                    prepayment of the Advances pursuant to Section 2.06(b),
                    purchase, redeem, retire, defease or otherwise acquire
                    Equity Interests with the proceeds received
                    contemporaneously from the issue of new Equity Interests
                    with equal or inferior voting powers, designations,
                    preferences and rights, and (C) repurchase its Equity
                    Interests owned by management or employees and physicians
                    under contract with the Borrower or any of its Subsidiaries
                    in an amount not in excess of $10,000,000 in any twelve
                    month period;

                           (ii)    any Subsidiary of the Borrower may (A)
                    declare and pay cash dividends to the Borrower, and (B)
                    declare and pay cash dividends to any other Loan Party of
                    which it is a Subsidiary;

                           (iii)   any of the non-wholly owned Subsidiaries of
                    the Borrower may declare and pay or make dividends and other
                    distributions to its shareholders, partners or members (or
                    the equivalent persons thereof) generally so long as the
                    Borrower and each of the Subsidiaries that own any of the
                    Equity Interests therein receive at least their respective
                    proportionate shares of any such dividend, distribution
                    (based on upon their relative holdings of the Equity
                    Interests therein and taking into account the relative
                    preferences, if any, of the various classes of the Equity
                    Interests therein); and

                           (iv)    the Borrower may purchase, redeem or
                    otherwise acquire for value any of its Equity Interests in
                    an aggregate amount not in excess of (A) $50,000,000 in the
                    aggregate during the term of this Agreement; plus (B)
                    $50,000,000, in the aggregate during the term of this
                    Agreement, provided that (1) the Share Repurchase Ratio is
                    not more than 0.85:1, and (2) for the 60 day period
                    immediately preceding each such purchase the sum of the
                    aggregate outstanding amount of all Revolving Credit
                    Borrowings shall not exceed $75,000,000; plus (C) commencing
                    after the second anniversary of the Closing Date,
                    $50,000,000 in the aggregate during the term of this
                    Agreement; provided that (1) the Share Repurchase Ratio is
                    not more than 0.85:1, and (2) for the 60 day period
                    immediately preceding each such purchase the sum of the
                    aggregate outstanding amount of all Revolving Credit
                    Borrowings shall not exceed $75,000,000.

                    (h)    Accounting Changes. Make or permit, or permit any of
                           ------------------
            its Subsidiaries to make or permit, any change in (i) accounting
            policies or reporting practices, except as allowed by generally
            accepted accounting principles, or (ii) Fiscal Year.

                    (i)    Prepayments, Etc., of Subordinated Debt. Except as
                           ---------------------------------------
            permitted under Section 5.02(g)(iv), (i) 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 Subordinated Debt, or give any notice in respect
            thereof, or (ii) amend, modify or change in any manner any term or
            condition of any of the Subordinated Notes Documents, or permit any
            of its Subsidiaries to do any of the foregoing, except that if such
            Subordinated Debt is convertible into common stock of the Borrower,
            the Borrower, subject to the approval of the Administrative Agent
            (which approval shall not unreasonably be withheld), may give notice
            with respect thereof if the purpose of such notice is to force the
            holders of such Subordinated Debt to convert such Subordinated Debt
            into common stock of the Borrower and thereafter the Borrower may
            exercise any right it may have to so redeem all or any part of such
            Subordinated Debt.

                    (j)    Negative Pledge. Enter into or suffer to exist, or
                           ---------------
            permit any of its Subsidiaries to enter into or suffer to exist, any
            agreement prohibiting or conditioning the creation or assumption of
            any Lien upon any of its property or assets except (i) in favor of
            the Secured Parties or (ii) in
<PAGE>

                                       79

     connection with (A) any Debt permitted by Section 5.02(b)(v) solely to the
     extent that the agreement or instrument governing such Debt prohibits a
     Lien on the property acquired with the proceeds of such Debt, or (B) any
     Capitalized Lease permitted by Section 5.02(b)(vi) solely to the extent
     that such Capitalized Lease prohibits a Lien on the property subject
     thereto, or (C) any Debt outstanding on the date any Subsidiary of the
     Borrower becomes such a Subsidiary (so long as such agreement was not
     entered into solely in contemplation of such Subsidiary becoming a
     Subsidiary of the Borrower), or (D)solely with respect to Subsidiaries
     that are not Guarantors, restrictions contained in the Constitutive
     Documents of such Subsidiaries.

          (k)       Payment Restrictions Affecting Subsidiaries. Directly or
                    -------------------------------------------
     indirectly, enter into or suffer to exist, or permit any of its
     Subsidiaries to enter into or suffer to exist, any agreement or arrangement
     limiting the ability of any of its Subsidiaries to declare or pay dividends
     or other distributions in respect of its Equity Interests or repay or
     prepay any Debt owed to, make loans or advances to, or otherwise transfer
     assets to or invest in, the Borrower or any Subsidiary of the Borrower
     (whether through a covenant restricting dividends, loans, asset transfers
     or investments, a financial covenant or otherwise), except (i) the Loan
     Documents, (ii) any agreement in effect at the time such Subsidiary becomes
     a Subsidiary of the Borrower, so long as such agreement was not entered
     into solely in contemplation of such Person becoming a Subsidiary of the
     Borrower, (iii) restrictions on transfer contained in Debt incurred
     pursuant to Sections 5.02(b)(v) and (vi); provided, that such restrictions
     relate only to the transfer of the property financed with such Debt; (iv)
     in connection with and pursuant to refinancing Debt under Section
     5.02(b)(xiii), replacements of restrictions that are not more restrictive
     than those being replaced and do not apply to any other Person or assets
     than those that would have been covered by the restrictions in the Debt so
     refinanced; and (v) solely with respect to Subsidiaries that are not
     Guarantors, restrictions under the Constitutive Documents governing such
     Subsidiary: (A) with respect to existing Subsidiaries, existing on the date
     of this Agreement; and (B) with respect to Subsidiaries created or acquired
     after the date of this Agreement: (1) prohibiting such Subsidiary from
     guaranteeing Debt of the Borrower or another Subsidiary; (2) on dividend
     payments and other distributions solely to permit pro rata dividends and
     other distributions in respect of any Equity Interests of such Subsidiary;
     (3) limiting transactions with the Borrower or another Subsidiary to those
     with terms that are fair and reasonable to such Subsidiary and no less
     favorable to such Subsidiary than could have been obtained in an arm's
     length transaction with an unrelated third party; and (vi) encumbrances or
     restrictions (A) that restrict in a customary manner the subletting,
     assignment or transfer of any property or asset that is subject to a lease,
     license or similar contract entered into in the ordinary course of
     business, or the assignment or transfer of any lease, license or contract
     entered into in the ordinary course of business and (B) arising by virtue
     of any transfer of, agreement to transfer, option or right with respect to,
     or Lien on, any property or assets of the Borrower or any Subsidiary.

          (l)       Non-Wholly-Owned Subsidiaries. Permit at any time (x) the
                    -----------------------------
     aggregate total assets (calculated without duplication) at such time of all
     Subsidiaries of the Borrower formed or acquired after April 30, 1998 that
     are not Guarantors, plus (y) the aggregate total Investments made during
     the period from April 30, 1998 to such time (calculated without duplication
     and excluding Investments made pursuant to Section 5.02(f)(vi) to the
     extent the proceeds thereof were used to acquire Equity Interests or assets
     included in (x) above) by the Loan Parties in all Subsidiaries of the
     Borrower that are not Guarantors, less (z) the aggregate total assets at
     such time of all Subsidiaries of the Borrower existing on April 30, 1998
     that became Guarantors after April 30, 1998, to exceed 10% of the
     Consolidated total assets of the Borrower and its Subsidiaries.
<PAGE>

                                       80

          (m)  Issuance of Additional Stock. Permit any of its Subsidiaries to
               ----------------------------
     issue any additional Equity Interests, except as follows:

               (i)    in connection with a permitted Investment or to employees
          or consultants in the ordinary course of business;

               (ii)   the Borrower and any Subsidiary thereof msy organize new
          wholly-owned Subsidiaries and any Subsidiary may issue additional
          Equity Interests to the Borrower or to a wholly-owned Subsidiary of
          the Borrower;

               (iii)  subject to compliance with the provisions this Agreement,
          including Section 5.02(1) and Section 5.04(d), the Borrower and its
          Subsidiaries may (A) organize new non-wholly-owned Subsidiaries, and
          (B) (i) cause Subsidiaries to issue additional Equity Interests or
          (ii) sell outstanding Equity Interests therein, in each case to
          Persons other than Affiliates of the Borrower or its Subsidiaries.

     SECTION 5.03. Reporting Requirements. So long as any Advance or any other
     ------------------------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will furnish to the Agents and the Lender
Parties:

          (a)  Default Notice. As soon as possible and in any event within five
               --------------
     days after the Borrower knows or reasonably should have known of the
     occurrence of a Default or any event, development or occurrence reasonably
     likely to have a Material Adverse Effect continuing on the date of such
     statement, a statement of the chief financial officer of the Borrower
     setting forth details of such Default or other event, development or
     occurrence and the action that the Borrower has taken and proposes to take
     with respect thereto.

          (b)  Annual Financials. As soon as available and in any event within
               -----------------
     90 days after the end of each Fiscal Year, a copy of the annual audit
     report for such year for the Borrower and its Subsidiaries, including
     therein Consolidated and consolidating balance sheets of the Borrower and
     its Subsidiaries as of the end of such Fiscal Year and a Consolidated and
     consolidating statements of income and a Consolidated statement of cash
     flows of the Borrower and its Subsidiaries for such Fiscal Year, in each
     case accompanied by an unqualified opinion of KPMG LLP or other independent
     public accountants of recognized national standing, together with (i) a
     certificate of such accounting firm to the Lender Parties stating that in
     the course of the regular audit of the business of the Borrower and its
     Subsidiaries, which audit was conducted by such accounting firm in
     accordance with generally accepted auditing standards, such accounting firm
     has obtained no knowledge that a Default has occurred and is continuing, or
     if, in the opinion of such accounting firm, a Default has occurred and is
     continuing, a statement as to the nature thereof, (ii) a schedule in form
     satisfactory to the Administrative Agent of the computations used by such
     accountants in determining, as of the end of such Fiscal Year, compliance
     with the covenants contained in Section 5.04, provided that in the event of
     any change in generally accepted accounting principles used in the
     preparation of such financial statements, the Borrower shall also provide,
     if necessary for the determination of compliance with Section 5.04 from
     GAAP, a statement of reconciliation conforming such financial statements to
     GAAP and (iii) a certificate of the Chief Financial Officer of the Borrower
     stating that to the best of such officer's knowledge, no Default has
     occurred and is continuing or, if a Default has occurred and is continuing,
     a statement as to the nature thereof and the action that the Borrower has
     taken and proposes to take with respect thereto.
<PAGE>

                                       81

          (c)  Quarterly Financials. As soon as available and in any event
               --------------------
     within 45 days after the end of each of the first three quarters of each
     Fiscal Year, Consolidated and consolidating balance sheets of the Borrower
     and its Subsidiaries as of the end of such quarter and Consolidated and
     consolidating statements of income for the period commencing at the end of
     the previous fiscal quarter and ending with the end of such fiscal quarter
     and Consolidated and consolidating statements of income and a Consolidated
     statement of cash flows of the Borrower and its Subsidiaries for the period
     commencing at the end of the previous Fiscal Year and ending with the end
     of such quarter, setting forth in each case in comparative form the
     corresponding figures for the corresponding date or period of the preceding
     Fiscal Year, all in reasonable detail and duly certified (subject to normal
     year-end audit adjustments) by the Chief Financial Officer of the Borrower
     as having been prepared in accordance with generally accepted accounting
     principles (except that such financial statements may not contain all
     required notes and may be subject to year end audit adjustments), together
     with (i) a certificate of said officer stating that to the best of such
     officer's knowledge, no Default has occurred and is continuing or, if a
     Default has occurred and is continuing, a statement as to the nature
     thereof and the action that the Borrower has taken and proposes to take
     with respect thereto, (ii) a schedule in form satisfactory to the
     Administrative Agent of the computations used by the Borrower in
     determining compliance with the covenants contained in Section 5.04,
     provided that in the event of any change in generally accepted accounting
     principles used in the preparation of such financial statements as compared
     to GAAP, the Borrower shall also provide, if necessary for the
     determination of compliance with Section 5.04, a statement of
     reconciliation conforming such financial statements to GAAP, and (iii) a
     report (in a form satisfactory to the Administrative Agent) specifying all
     permitted Investments made during such quarter and during the period from
     the date hereof to the end of such quarter and specifying the total
     consideration paid with respect to each such Investment.

          (d)  Annual Forecasts. As soon as available and in any event no later
               ----------------
     than 30 days after the end of each Fiscal Year, forecasts prepared by
     management of the Borrower, in form satisfactory to the Administrative
     Agent, of Consolidated balance sheets, income statements and cash flow
     statements of the Borrower and its Subsidiaries on a quarterly basis for
     the Fiscal Year following such Fiscal Year and on an annual basis for each
     Fiscal Year thereafter until the Termination Date.

          (e)  Litigation. (i) Promptly after the commencement thereof, notice
               ----------
     of all actions, suits, investigations, litigation and proceedings before
     any Governmental Authority or arbitrator, affecting any Loan Party or any
     of its Subsidiaries of the type described in Section 4.01(f), and promptly
     after the occurrence thereof, notice of any material adverse change in the
     status or the financial effect on any Loan Party or any of its Subsidiaries
     of the litigation from that described on Schedule 4.01(f) hereto, and (ii)
     prompt written notice of: (A) any citation, summons, subpoena, order to
     show cause or other document naming the Borrower or any of its Subsidiaries
     a party to any proceeding before any Governmental Authority that could
     reasonably be expected to have a Material Adverse Effect or that expressly
     calls into question the validity or enforceability of any of the Loan
     Documents, and include with such notice a copy of such citation, summons,
     subpoena, order to show cause or other document, (B) any lapse or other
     termination of any material intellectual property, license, permit,
     franchise or other authorization issued to the Borrower or any of its
     Subsidiaries by any Person or Governmental Authority, or (C) any refusal by
     any Person or Governmental Authority to renew or extend such material
     intellectual property, license, permit, franchise or other authorization,
     which lapse, termination, refusal or dispute could reasonably be expected
     to have a Material Adverse Effect.

          (f)  Securities Reports. Promptly after the sending or filing thereof,
               ------------------
     copies of all proxy statements, financial statements and reports that any
     Loan Party or any of its Subsidiaries
<PAGE>

                                       82

     sends to its stockholders, and copies of all regular, periodic and special
     reports, and all registration statements, that any Loan Party or any of its
     Subsidiaries files with the Securities and Exchange Commission or any
     governmental authority that may be substituted therefor, or with any
     national securities exchange.

          (g)  ERISA.
               -----

               (i)    ERISA Events and ERISA Reports. (A) Promptly and in any
                      ------------------------------
          event within 10 days after any Loan Party or any ERISA Affiliate knows
          or has reason to know that any ERISA Event has occurred, a statement
          of the Chief Financial Officer of the Borrower describing such ERISA
          Event and the action, if any, that such Loan Party or such ERISA
          Affiliate has taken and proposes to take with respect thereto and (B)
          on the date any records, documents or other information must be
          furnished to the PBGC with respect to any Plan pursuant to Section
          4010 of ERISA, a copy of such records, documents and information.

               (ii)   Plan Terminations. Promptly and in any event within two
                      -----------------
          Business Days after receipt thereof by any Loan Party or any ERISA
          Affiliate, copies of each notice from the PBGC stating its intention
          to terminate any Plan or to have a trustee appointed to administer any
          Plan.

               (iii)  Plan Annual Reports. Promptly and in any event within 30
                      -------------------
          days after the filing thereof with the Internal Revenue Service,
          copies of each Schedule B (Actuarial Information) to the annual report
          (Form 5500 Series) with respect to each Plan.

               (iv)   Multiemployer Plan Notices. Promptly and in any event
                      --------------------------
          within five Business Days after receipt thereof by any Loan Party or
          any ERISA Affiliate from the sponsor of a Multiemployer Plan, copies
          of each notice concerning (A) the imposition of Withdrawal Liability
          by any such Multiemployer Plan, (B) the reorganization or termination,
          within the meaning of Title IV of ERISA, of any such Multiemployer
          Plan or (C) the amount of liability incurred, or that may be incurred,
          by such Loan Party or any ERISA Affiliate in connection with any event
          described in clause (A) or (B).

          (h)  Environmental Conditions. Promptly after the assertion or
               ------------------------
     occurrence thereof, notice of any Environmental Action 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.

          (i)  Other Information. Such other information respecting the
               -----------------
     business, condition (financial or otherwise), operations, performance,
     properties or prospects of any Loan Party or any of its Subsidiaries as any
     Agent or any Lender Party, through the Administrative Agent, may from time
     to time reasonably request.

     SECTION 5.04.  Financial Covenants. So long as any Advance or any other
     ----------------------------------
Obligation of any Loan Party under any Loan Document shall remain unpaid, any
Letter of Credit shall be outstanding or any Lender Party shall have any
Commitment hereunder, the Borrower will:
<PAGE>

                                       83

     (a)  Leverage Ratio. Maintain a Leverage Ratio at all times during each
          --------------
period set forth below of not more than the amount set forth below opposite such
period:

       ===================================================================
                           Period                               Ratio
       ===================================================================
        June 30, 2001 through                                  4.00:1
        September 30, 2001
       ===================================================================
        From and including October 1, 2001 through             3.75:1
        September 30, 2002
       ===================================================================
        From and including October 1, 2002 through             3.50:1
        September 30, 2003
       ===================================================================
        From and including October 1, 2003 and                 3.25:1
        thereafter
       ===================================================================

     (b)  Fixed Charge Coverage Ratio. Maintain a Fixed Charge Coverage Ratio as
          ---------------------------
of the last day of each Measurement Period set forth below of not less than the
amount set forth below opposite such Measurement Period:

       ==================================================================
        Measurement Period Ending In                        Ratio
       ==================================================================
        March 31, 2001                                      1.25:1
       ==================================================================
        June 30, 2001                                       1.25:1
       ==================================================================
        September 30, 2001                                  1.25:1
       ==================================================================
        December 31, 2001                                   1.25:1
       ==================================================================
        March 31, 2002                                      1.375:1
       ==================================================================
        June 30, 2002                                       1.375:1
       ==================================================================
        September 30, 2002                                  1.375:1
       ==================================================================
        December 31, 2002                                   1.375:1
       ==================================================================
        March 31, 2003                                      1.375:1
       ==================================================================
        June 30, 2003                                       1.375:1
       ==================================================================
        September 30, 2003                                  1.375:1
       ==================================================================
        December 31, 2003 and thereafter                    1.50:1
       ==================================================================

     (c)  Minimum Net Worth. Maintain at all times a Consolidated net worth of
          -----------------
the Borrower and its Subsidiari of not less than $250,000,000, plus the sum of
75% of Consolidated Net Income of the Borrower and its Subsidiaries (determined
as of the end of each Fiscal Quarter, but excluding net losses in any Fiscal
Quarter) and 100% of the Net Cash Proceeds received by the Borrower from its
issuance of Equity Interests, in each case determined
<PAGE>

                                       84

     on a cumulative basis for the period commencing April 1, 2001, minus non-
     recurring charges incurred not exceeding in the aggregate $45,000,000
     resulting from the write-off of accounts receivable and other related
     charges as a result of the pending third party carrier review of claims for
     Medicare reimbursement submitted by the Subsidiary of the Borrower
     operating the Borrower's Florida laboratory or other Governmental
     Reimbursement Program Costs.

          (d)       Minimum Consolidated EBITDA Ratio. Maintain at all times a
                    ---------------------------------
     ratio of Consolidated EBITDA to Consolidated Pre-Minority EBITDA of not
     less than 0.8:1.00.

                                  ARTICLE II

                               EVENTS OF DEFAULT

     SECTION 6.01. Events of Default. If any of the following events ("Events of
     -------------------------------
Default") shall occur and be continuing:

          (a)       the Borrower shall fail to pay (i) any principal of any
     Advance when the same shall become due and payable, or (ii) within three
     Business Days after the date due and payable, any interest on any Advance;
     or any of the Loan Parties shall fail to make any other payment under or in
     respect of any of the Loan Documents required to have been made by it,
     within three Business Days after the same shall become due and payable, in
     each case whether by scheduled maturity or at a date fixed for prepayment
     or by acceleration, demand or otherwise; or

          (b)       any representation or warranty made by any of the Loan
     Parties (or any of their respective officers) under or in connection with
     any of the Loan Documents (including, without limitation, in any
     certificate, report, statement or other writing at any time furnished (or
     deemed to have been furnished) to the Administrative Agent or any of the
     Lender Parties by or on behalf of any of the Loan Parties) shall prove to
     have been incorrect in any material respect on the date as of which it was
     made or deemed made; or

          (c)       (i) the Borrower shall fail to perform or observe any term,
     covenant or agreement contained in Section 5.01(e) or Section 5.02, 5.03 or
     5.04 or (ii) any of the other Loan Parties shall fail to perform or observe
     any term, covenant or agreement contained in Section 4 or 7 of the
     Subsidiaries Guarantee on its part to be performed or observed; or

          (d)       any of the Loan Parties shall fail to perform or observe any
     term, covenant or agreement contained in any of the Loan Documents on its
     part to be performed or observed that is not otherwise referred to in
     Section 6.01(c) if such failure shall remain unremedied for at least 30
     consecutive days after the earlier of the date on which (i) a Responsible
     Officer of the Borrower or any of its Subsidiaries first becomes aware of
     such failure and (ii) written notice thereof shall have been given to the
     Borrower by the Administrative Agent or any of the Lender Parties; or

          (e)       (i) the Borrower or any of its Subsidiaries shall fail to
     pay any principal of, premium or interest on, or any other amount payable
     in respect of, one or more items of Debt of the Borrower and its
     Subsidiaries (excluding Debt outstanding hereunder) that is outstanding (or
     under which one or more Persons have a commitment to extend credit) in an
     aggregate principal amount (or, in the case of any Hedge Agreement, having
     an Agreement Value) of at least $10,000,000 at the time of such failure,
     when the same becomes due and payable (whether by scheduled maturity,
     required prepayment, acceleration, demand or otherwise), and such failure
     shall continue after the applicable grace period, if any, specified in the
     agreements or instruments relating to all such Debt; or (ii) any other
     event shall occur or condition shall exist under the
<PAGE>

                                       85

     agreements or instruments relating to one or more items of Debt of the
     Borrower and its Subsidiaries (excluding Debt outstanding hereunder) that
     is outstanding (or under which one or more Persons have a commitment to
     extend credit) in an aggregate principal amount (or, in the case of any
     Hedge Agreement, having an Agreement Value) of at least $10,000,000 at the
     time of such other event or condition, and shall continue after the
     applicable grace period, if any, specified in all such agreements or
     instruments, if the effect of such event or condition is to accelerate, or
     to permit the acceleration of, the maturity of such Debt or otherwise to
     cause, or to permit the holder thereof to cause, such Debt to mature; or
     (iii) one or more items of Debt of the Borrower and its Subsidiaries
     (excluding Debt outstanding hereunder) that is outstanding (or under which
     one or more Persons have a commitment to extend credit) in an aggregate
     principal amount (or, in the case of any Hedge Agreement, having an
     Agreement Value) of at least $10,000,000 shall be declared to be due and
     payable or required to be prepaid or redeemed (other than by a regularly
     scheduled or required prepayment or redemption), purchased or defeased, or
     an offer to prepay, redeem, purchase or defease such Debt shall be required
     to be made, in each case prior to the stated maturity thereof; or

          (f)    the Borrower or any Material Subsidiary or Subsidiaries shall
     generally not pay its debts as such debts become due, or shall admit in
     writing its inability to pay its debts generally, or shall make a general
     assignment for the benefit of creditors; or any proceeding shall be
     instituted by or against the Borrower or any Material Subsidiary or
     Subsidiaries seeking to adjudicate it a bankrupt or insolvent, or seeking
     liquidation, winding up, reorganization, arrangement, adjustment,
     protection, relief, or composition of it or its debts under any law
     relating to bankruptcy, insolvency or reorganization or relief of debtors,
     or seeking the entry of an order for relief or the appointment of a
     receiver, trustee, administrator or other similar official for it or for
     any substantial part of its property and assets and, in the case of any
     such proceeding instituted against it (but not instituted by it) that is
     being diligently contested by it in good faith, either such proceeding
     shall remain undismissed or unstayed for a period of at least 60
     consecutive days or any of the actions sought in such proceeding
     (including, without limitation, the entry of an order for relief against,
     or the appointment of a receiver, trustee, custodian or other similar
     official for, it or any substantial part of its property and assets) shall
     occur; or any event or action analogous to or having a substantially
     similar effect to any of the events or actions set forth above in this
     Section 6.01(f) (other than a solvent reorganization) shall occur under the
     Requirements of Law of any jurisdiction applicable to the Borrower or any
     Material Subsidiary or Subsidiaries; or the Borrower or any Material
     Subsidiary or Subsidiaries shall take any corporate, partnership, limited
     liability company or other similar action to authorize any of the actions
     set forth above in this Section 6.01(f); provided that any action or
     circumstance permitted under Section 5.01(h) shall not be deemed to result
     in an Event of Default under this Section 6.01(f); or

          (g)    one or more judgments or orders for the payment of money in
     excess of $10,000,000 in the aggregate shall be rendered against one or
     more of the Borrower and its Subsidiaries and shall remain unsatisfied and
     there shall be any period of at least 30 consecutive Business Days during
     which a stay of enforcement of any such judgment or order, by reason of a
     pending appeal or otherwise, shall not be in effect; provided, however,
     that any such judgment or order shall not give rise to an Event of Default
     under this Section 6.01(g) if and for so long as (A) the amount of such
     judgment or order which remains unsatisfied is covered by a valid and
     binding policy of insurance between the defendant and the insurer covering
     full payment thereof and (B) such insurer has been notified, and has not
     disputed the claim made for payment, of the amount of such judgment or
     order; or

          (h)    one or more nonmonetary judgments or orders (including, without
     limitation, writs or warrants of attachment, garnishment, execution,
     distraint or similar process) shall be
<PAGE>

                                       86

rendered against the Borrower or any of its Subsidiaries that, either
individually or in the aggregate, is reasonably expected to have a Material
Adverse Effect and there shall be any period of at least 30 consecutive Business
Days during which a stay of enforcement of any such judgment or order, by reason
of a pending appeal or otherwise, shall not be in effect; or

     (i)  any provision of any of the Loan Documents after delivery thereof
pursuant to Sections 3.01, 5.01(j) or 5.01(k) shall for any reason (other than
pursuant to the terms thereof) cease to be valid and binding on or enforceable
against any of the Loan Parties intended to be a party to it, or any such Loan
Party shall so state in writing;

     (j)  any Collateral Document or financing statement after delivery thereof
pursuant to Sections 3.01, 5.01(j) or 5.01(k) shall for any reason (other than
pursuant to the terms thereof) cease to create a valid and perfected Lien on any
material portion of the Collateral purported to be covered thereby subject only
to Liens permitted thereby; or

     (k)  any of the following events or conditions shall have occurred and such
event or condition, when aggregated with any and all other such events or
conditions set forth in this subsection (k), has resulted or is reasonably
expected to result in liabilities of the Loan Parties and/or the ERISA
Affiliates in an aggregate amount exceeding $10,000,000 at any time:

          (i)    any ERISA Event shall have occurred with respect to a Plan; or

          (ii)   any of the Loan Parties or any of the ERISA Affiliates shall
     have been notified by the sponsor of a Multiemployer Plan that it has
     incurred Withdrawal Liability to such Multiemployer Plan; or

          (iii)  any of the Loan Parties or any of the ERISA Affiliates shall
     have been notified by the sponsor of a Multiemployer Plan that such
     Multiemployer Plan is in reorganization, is insolvent or is being
     terminated, within the meaning of Title IV of ERISA, and, as a result of
     such reorganization, insolvency or termination, the aggregate annual
     contributions of the Loan Parties and the ERISA Affiliates to all of the
     Multiemployer Plans that are in reorganization, are insolvent or being
     terminated at such time have been or will be increased over the amounts
     contributed to such Multiemployer Plans for the plan years of such
     Multiemployer Plans immediately preceding the plan year in which such
     reorganization, insolvency or termination occurs; or

          (iv)   any "accumulated funding deficiency" (as defined in Section 302
     of ERISA and Section 412 of the Internal Revenue Code), whether or not
     waived, shall exist with respect to one or more of the Plans, or any Lien
     shall exist on the property and assets of any of the Loan Parties or any of
     the ERISA Affiliates in favor of the PBGC or any Plan; or

     (l)  the Borrower or any of its Subsidiaries shall suspend or discontinue
all or any part of its businesses and operations other than in the ordinary
course of business and such suspension or discontinuance, in the aggregate, is
reasonably expected to have a Material Adverse Effect; or

     (m)  a Change of Control shall occur;

     (n)  an "Event of Default" (as defined in any of the Subordinated Notes
Documents) shall have occurred and be continuing under the respective
Subordinated Notes Documents; or
<PAGE>

                                       87

          (o)  The Borrower or any Subsidiary, in each case to the extent it is
     engaged in the business of providing services for which Medicare or
     Medicaid reimbursement is sought, shall for any reason, including, without
     limitation, as the result of any finding, designation or decertification,
     lose its right or authorization, or otherwise fail to be eligible, to
     participate in Medicaid or Medicare programs or to accept assignments or
     rights to reimbursements under Medicaid regulations or Medicare
     regulations, or the Borrower or any Subsidiary has, for any reason, had its
     right to receive reimbursements under Medicaid or Medicare regulations
     suspended, and such loss, failure or suspension (together with all such
     other losses, failures and suspensions continuing at such time) shall have
     resulted in (x) a Material Adverse Effect or (y) Consolidated net operating
     revenues for the immediately preceding four fiscal quarter period of the
     Borrower constituting less than 95% of Consolidated net operating revenues
     for any preceding four fiscal quarter period of the Borrower;

then, and in any such event, the Administrative Agent (i) shall at the request,
or may with the consent, of the Required Lenders, by notice to the Borrower,
declare the Commitments of each of the Lender Parties and the obligation of each
of the Lender Parties to make Advances (other than Letter of Credit Advances by
the Issuing Bank or any of the Revolving Credit Lenders pursuant to Section
2.03(c)(i) and Swing Line Advances by any of the Revolving Credit Lenders
pursuant to Section 2.02(b)(ii)) and of the Issuing Bank to issue Letters of
Credit to be terminated, whereupon the same shall forthwith terminate, and (ii)
shall at the request, or may with the consent, of the Required Lenders, (A) by
notice to the Borrower, declare the Notes, all interest thereon and all other
amounts payable under or in respect of this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon the Notes, all such
interest and all such other amounts shall become and be forthwith due and
payable, without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived by the Borrower and (B) by notice to each
party required under the terms of any agreement in support of which a Letter of
Credit is issued, request that all of the Obligations under such agreement be
declared to be due and payable; provided, however, that in the event of an
actual or deemed entry of an order for relief with respect to any Loan Party
under the United States Federal Bankruptcy Code or a similar order or action
under any other Requirements of Law covering the protection of creditors' rights
or the relief of debtors applicable to any Loan Party, (1) the Commitments of
each of the Lender Parties and the obligation of each of the Lender Parties to
make Advances (other than Letter of Credit Advances by the Issuing Bank or any
of the Revolving Credit Lenders pursuant to Section 2.03(c)(i) and Swing Line
Advances by any of the Revolving Credit Lenders pursuant to Section 2.02(b)(ii))
and of the Issuing Bank to issue Letters of Credit shall automatically be
terminated and (2) the Notes, all such interest and all such amounts shall
automatically become and be due and payable, without presentment, demand,
protest or any notice of any kind, all of which are hereby expressly waived by
the Borrower.

     SECTION 6.02. Actions in Respect of the Letters of Credit upon Default. If
     ----------------------------------------------------------------------
any Event of Default shall have occurred and be continuing, the Administrative
Agent may, or shall at the request of the Required Lenders, irrespective of
whether it is taking any of the actions described in Section 6.01 or otherwise,
make demand upon the Borrower to, and forthwith upon such demand the Borrower
will, pay to the Administrative Agent in same day funds at the Administrative
Agent's office designated in such demand, for deposit in the L/C Cash Collateral
Account, an amount equal to the aggregate Available Amount of all Letters of
Credit then outstanding; provided, however, that in the event of an actual or
deemed entry of an order for relief with respect to any Loan Party under the
United States Federal Bankruptcy Code or a similar order or action under any
other Requirements of Law covering the protection of creditors' rights or the
relief of debtors applicable to any Loan Party, the Borrower, without
requirement of demand by the Administrative Agent or any other Person, will
forthwith pay to the Administrative Agent in same day funds at the
Administrative Agent's office for deposit in the L/C Cash Collateral Account an
amount equal to such aggregate Available Amount. If at any time the
Administrative Agent determines that any funds held in the L/C Cash Collateral
Account are subject to
<PAGE>

                                       88

any right or claim of any Person other than the Secured Parties or that the
total amount of such funds is less than the aggregate Available Amount of all
Letters of Credit, the Borrower will, forthwith upon demand by the
Administrative Agent, pay to the Administrative Agent, as additional funds to be
deposited and held in the L/C Cash Collateral Account, an amount equal to the
excess of (a) such aggregate Available Amount over (b) the total amount of
funds, if any, then held in the L/C Cash Collateral Account 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
in the L/C Cash Collateral Account, such funds shall be applied to reimburse the
Issuing Bank or Revolving Credit Lenders, as applicable, in the manner provided
for in the Security Agreement and to the extent permitted by applicable law.

                                  ARTICLE VII

                                  THE AGENTS

     SECTION 7.01.   Appointment, Powers and Immunity.
     ------------------------------------------------

          (a)  Each Lender Party (in its capacities as a Lender, the Swing Line
     Bank (if applicable), the Issuing Bank (if applicable) and on behalf of
     itself and its Affiliates as potential Hedge Banks) hereby appoints and
     authorizes the Administrative Agent to act as its agent under this
     Agreement and the other Loan Documents with such powers and discretion as
     are specifically delegated to the Administrative Agent by the terms of this
     Agreement and the other Loan Documents, together with such other powers as
     are reasonably incidental thereto. The Administrative Agent (which term as
     used in this sentence and in Section 7.05(a) and the first sentence of
     Section 7.06 shall include its affiliates and its own and its affiliates'
     officers, directors, employees, and agents): (i) shall not have any duties
     or responsibilities except those expressly set forth in this Agreement and
     shall not be a trustee or fiduciary for any Lender Party; (ii) shall not be
     responsible to the Lender Parties for any recital, statement,
     representation, or warranty (whether written or oral) made in or in
     connection with any Loan Document or any certificate or other document
     referred to or provided for in, or received by any of them under, any Loan
     Document, or for the value, validity, effectiveness, genuineness,
     enforceability, or sufficiency of, or the perfection or priority of any
     lien or security interest created or purported to be created under or in
     connection with, any Loan Document, or any other document referred to or
     provided for therein or for any failure by any Loan Party or any other
     Person to perform any of its obligations thereunder; (iii) shall not be
     responsible for or have any duty to ascertain, inquire into, or verify the
     performance or observance of any covenants or agreements by any Loan Party
     or the satisfaction of any condition or to inspect the property (including
     the books and records) of any Loan Party or any of its Subsidiaries or
     Affiliates; (iv) shall not be required to initiate or conduct any
     litigation or collection proceedings under any Loan Document; and (v) shall
     not be responsible for any action taken or omitted to be taken by it or any
     of its directors, officers, agents or employees under or in connection with
     any Loan Document, except for its or their own gross negligence or willful
     misconduct.

          (b) The Administrative Agent shall also act as the "collateral agent"
     under the Loan Documents, and each of the Lender Parties (in its capacities
     as a Lender, the Swing Line Bank (if applicable), Issuing Bank (if
     applicable) hereby appoints and authorizes the Administrative Agent to act
     as the agent of such Lender Party 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 Secured Obligations, together with such powers
     and discretion as are reasonably incidental thereto. The Administrative
     Agent may from time to time in its discretion appoint any of the other
     Lender Parties or any of the affiliates of a Lender Party to act as its co-
     agent or sub-agent or its attorney-
<PAGE>

                                      89

          in-fact for any purpose, including for purposes of holding or
          enforcing any Lien on the Collateral (or any portion thereof) granted
          under the Collateral Documents or of exercising any rights and
          remedies thereunder at the direction of the Administrative Agent, and
          the Administrative Agent shall not be responsible for the negligence
          or misconduct of any such co-agents, sub-agents or attorneys-in-fact
          selected by it with reasonable care. In this connection, the
          Administrative Agent, as "collateral agent", and such co-agents, sub-
          agents and attorneys-in-fact shall be entitled to the benefits of all
          provisions of this Article VII (including, without limitation, Section
          7.05, 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.

               (c)   The Book Managers, the Syndication Agent and the
          Documentation Agents shall not have any powers or discretion under
          this Agreement or any of the other Loan Documents other than those
          bestowed upon it as a co-agent or sub-agent from time to time by the
          Administrative Agent pursuant to subsection (b) of this Section 7.01,
          and each of the Lender Parties hereby acknowledges that the Book
          Managers, the Syndication Agent and the Documentation Agents shall not
          have any liability under this Agreement or any of the other Loan
          Documents.

          SECTION 7.02. Reliance by Agent. The Administrative Agent shall be
          -------------------------------
entitled to rely upon any certification, notice, instrument, writing, or other
communication (including, without limitation, any thereof by telephone or
telecopy) believed by it to be genuine and correct and to have been signed, sent
or made by or on behalf of the proper Person or Persons, and upon advice and
statements of legal counsel (including counsel for any Loan Party), independent
accountants, and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the holder
thereof for all purposes hereof unless and until the Administrative Agent
receives and accepts an Assignment and Acceptance executed in accordance with
Section 8.07. As to any matters not expressly provided for by this Agreement,
the Administrative Agent shall not be required to exercise any discretion or
take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Required Lenders or, to the extent any action requires the
consent of all Lenders as specifically provided in Section 8.01, upon the
instructions of all Lenders, and such instructions shall be binding on all of
the Lender Parties; provided, however, that the Administrative Agent shall not
be required to take any action that exposes the Administrative Agent to personal
liability or that is contrary to any Loan Document or applicable Requirements of
Law or unless it shall first be indemnified to its satisfaction by the Lender
Parties against any and all liability and expense which may be incurred by it by
reason of taking any such action.

          SECTION 7.03. Defaults. The Administrative Agent shall not be deemed
          ----------------------
to have knowledge or notice of the occurrence of a Default or Event of Default
unless the Administrative Agent has received written notice from a Lender Party
or the Borrower specifying such Default or Event of Default and stating that
such notice is a "Notice of Default". In the event that the Administrative Agent
receives such a notice of the occurrence of a Default or Event of Default, the
Administrative Agent shall give prompt notice thereof to the Lender Parties. The
Administrative Agent shall (subject to Section 7.02) take such action with
respect to such Default or Event of Default as shall reasonably be directed by
the Required Lenders or, to the extent any action requires the consent of all
Lenders as specifically provided in Section 8.01, then as directed by all
Lenders; provided that, unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interest of the Lender Parties.

          SECTION 7.04. BofA, BAS and Affiliates. With respect to its
          --------------------------------------
Commitments, the Advances made by it and the Note or Notes issued to it, BofA
(and any successor acting as the Administrative
<PAGE>

                                      90

Agent) in its capacity as a Lender Party hereunder shall have the same rights
and powers under the Loan Documents as any other Lender Party and may exercise
the same as though it were not acting as the Administrative Agent; and the
term"Lender Party" or"Lender Parties" shall, unless otherwise expressly
indicated, include BofA in its individual capacity. BofA (and any successor
acting as the Administrative Agent), BAS and their respective affiliates may
(without having to account therefor to any Lender Party) accept deposits from,
lend money to, make investments in, provide services to, and generally engage in
any kind of lending, trust, or other business with any Loan Party or any of its
Subsidiaries or Affiliates as if it were not acting as an Agent, and BofA (and
any successor acting as the Administrative Agent), BAS and their respective
affiliates may accept fees and other consideration from any Loan Party or any of
its Subsidiaries or Affiliates, or any Person that may do business with or own
securities of any Loan Party or any such Subsidiary or Affiliate, for services
in connection with this Agreement or otherwise without having to account for the
same to the Lender Parties.

          SECTION 7.05. Indemnification.
          -----------------------------

               (a)   The Lenders severally agree to indemnify the Administrative
          Agent (to the extent not promptly reimbursed under Section 8.04, but
          without limiting the obligations of the Borrower under such Section)
          ratably in accordance with their respective Commitments, for any and
          all liabilities, obligations, losses, damages, penalties, actions,
          judgments, suits, costs, expenses (including attorneys' fees), or
          disbursements of any kind and nature whatsoever that may be imposed
          on, incurred by or asserted against the Administrative Agent in any
          way relating to or arising out of any Loan Document or the
          transactions contemplated thereby or any action taken or omitted by
          the Administrative Agent under any Loan Document (collectively, the
          "Indemnified Costs"); provided that no Lender shall be liable for any
          of the foregoing to the extent they arise from the gross negligence or
          willful misconduct of the Person to be indemnified. In the case of any
          claim, investigation, litigation or proceeding for which indemnity
          under this Section 7.05(a) applies, such indemnity shall apply whether
          or not such claim, investigation, litigation or proceeding is brought
          by the Administrative Agent, any of the other Agents, any of the
          Lender Parties or a third party. Without limitation of the foregoing,
          each Lender severally agrees to reimburse the Administrative Agent
          promptly upon demand for its ratable share of any costs or expenses
          payable by the Borrower under Section 8.04, to the extent that the
          Administrative Agent is not promptly reimbursed for such costs and
          expenses (including, without limitation, fees and expenses of counsel)
          by the Borrower. In the case of any investigation, litigation or
          proceeding giving rise to any Indemnified Costs, this Section 7.05
          applies whether any such investigation, litigation or proceeding is
          brought by any Lender Party or any other Person. The failure of any
          Lender Party to reimburse the Administrative Agent promptly upon
          demand for its ratable share of any amount required to be paid by the
          Lender Party to the Administrative Agent as provided herein shall not
          relieve any other Lender Party of its obligation hereunder to
          reimburse the Administrative Agent for its ratable share of such
          amount, but no Lender Party shall be responsible for the failure of
          any other Lender Party to reimburse the Administrative Agent for such
          other Lender Party's ratable share of such amount. Without prejudice
          to the survival of any other agreement of any Lender Party hereunder,
          the agreement and obligations of each Lender contained in this Section
          7.05(a) shall survive the payment in full of principal, interest and
          all other amounts payable hereunder and under the other Loan
          Documents.

               (b)   The Revolving Credit Lenders severally agree to indemnify
          the Issuing Bank (to the extent not promptly reimbursed under Section
          8.04, but without limiting the obligations of the Borrower under such
          Section) for such Revolving Credit Lender's Pro Rata Share of any and
          all liabilities, obligations, losses, damages, penalties, actions,
          judgments, suits, costs, expenses or disbursements of any kind or
          nature whatsoever that may be imposed on, incurred by, or asserted
          against the Issuing Bank in any way relating to or arising out of the
          Loan Documents or the
<PAGE>

                                      91

          transactions contemplated thereby or any action taken or omitted by
          the Issuing Bank under the Loan Documents; provided, however, that no
          Revolving Credit Lender shall be liable for any portion of such
          liabilities, obligations, losses, damages, penalties, actions,
          judgments, suits, costs, expenses or disbursements resulting from the
          Issuing Bank's gross negligence or willful misconduct. In the case of
          any claim, investigation, litigation or proceeding for which indemnity
          under this Section 7.05(b) applies, such indemnity shall apply whether
          or not such claim, investigation, litigation or proceeding is brought
          by the Issuing Bank, any of the other Lender Parties or a third party.
          Without limitation of the foregoing, each Revolving Credit Lender
          severally agrees to reimburse the Issuing Bank promptly upon demand
          for its Pro Rata Share of any costs and expenses (including, without
          limitation, fees and expenses of counsel) payable by the Borrower
          under Section 8.04, to the extent that the Issuing Bank is not
          promptly reimbursed for such costs and expenses by the Borrower. The
          failure of any Revolving Credit Lender to reimburse the Issuing Bank
          promptly upon demand for its Pro Rata Share of any amount required to
          be paid by the Revolving Credit Lenders to the Issuing Bank as
          provided herein shall not relieve any other Revolving Credit Lender of
          its obligation hereunder to reimburse the Issuing Bank for its Pro
          Rata Share of such amount, but no Revolving Credit Lender shall be
          responsible for the failure of any other Revolving Credit Lender to
          reimburse the Issuing Bank for such other Revolving Credit Lender's
          Pro Rata Share of such amount. Without prejudice to the survival of
          any other agreement of any Revolving Credit Lender hereunder, the
          agreement and obligations of each Revolving Credit Lender contained in
          this Section 7.05(b) shall survive the payment in full of principal,
          interest and all other amounts payable hereunder and under the other
          Loan Documents.

          SECTION 7.06. Non-Reliance on Agent and Other Lender Parties. Each
          ------------------------------------------------------------
Lender Party agrees that it has, independently and without reliance on any Agent
or any other Lender Party, and based on such documents and information as it has
deemed appropriate, made its own credit analysis of the Loan Parties and their
Subsidiaries and decision to enter into this Agreement and that it will,
independently and without reliance upon any Agent or any other Lender Party, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under the Loan Documents. Except for notices, reports, and other
documents and information expressly required to be furnished to the Lender
Parties by the Administrative Agent hereunder, the Administrative Agent shall
not have any duty or responsibility to provide any Lender Party with any credit
or other information concerning the affairs, financial condition, or business of
any Loan Party or any of its Subsidiaries or Affiliates that may come into the
possession of the Administrative Agent or any of its affiliates.

          SECTION 7.07. Resignation of Administrative Agent. The Administrative
          -------------------------------------------------
Agent may resign at any time by giving notice thereof to the Lender Parties and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor Administrative Agent. If no successor Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Lender Parties, appoint a successor Administrative Agent which shall be a
commercial bank organized under the laws of the United States of America or of
any state thereof and having combined capital and surplus of at least
$100,000,000. If within 45 days after written notice is given of the retiring
Administrative Agent's resignation under this Section 7.07 no successor
Administrative Agent shall have been appointed and shall have accepted such
appointment, then on such 45th day (a) the retiring Administrative Agent's
resignation shall become effective, (b) the retiring Administrative Agent shall
thereupon be discharged from its duties and obligations under the Loan Documents
and (c) the Required Lenders shall thereafter perform all duties and obligations
of the retiring Administrative Agent under the Loan Documents until such time,
if any, as the Required Lenders appoint a successor Administrative Agent as
provided above in this Section 7.07. Upon the acceptance of
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                                      92

any appointment as Administrative Agent hereunder by a successor and upon the
execution and filing or recording of such financing statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, or as the Required Lenders may request, in order to continue the
perfection of the Liens granted or purported to be granted by the Collateral
Documents, such successor Administrative Agent shall thereupon succeed to and
become vested with all the rights, powers, discretion, privileges, and duties of
the retiring Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under the Loan Documents. After any retiring
Agent's resignation hereunder as Administrative Agent, the provisions of this
Article VII shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent.

     SECTION 7.08. Release of Collateral. Upon the payment of all Notes and all
     -----------------------------------
other amounts payable under the Loan Documents, the termination of all Letters
of Credit and the termination of all commitments of the Lender Parties
hereunder, the Lender Parties hereby agree that all Collateral is released from
the security interest granted under the respective Collateral Documents, and
upon (i) the sale, lease, transfer or other disposition of any item of
Collateral of any Loan Party, (ii) the issuance or sale pursuant to Section
5.02(m)(iii) of any Equity Interests causing a Subsidiary of the Borrower to
cease to be wholly-owned by the Borrower or any of its Subsidiaries, in each
case in accordance with the terms of the Loan Documents, the Lender Parties
hereby agree that such item of Collateral in the case of clause (i), or all
Collateral owned by such Subsidiary in the case of clause (ii), shall be
released from the security interest granted under the respective Collateral
Documents. In connection therewith, the Lender Parties hereby irrevocably
authorize the Administrative Agent to release any such Collateral. The
Administrative Agent will, at the Borrower's expense, execute and deliver to the
respective Loan Party such documents as such Loan Party may reasonably request
to evidence the release of such item of Collateral from the security interest
granted under the Collateral Documents.

     SECTION 7.09. Release of Guarantor. Upon the sale of outstanding shares of
     ----------------------------------
capital stock and other equity, ownership and profit interests in any Guarantor
in a transaction which is permitted under Section 5.02(e) and, if applicable,
5.02(m)(iii), then upon request by the Borrower, the Administrative Agent, on
behalf of each Lender Party, shall confirm in writing that the liability of such
Guarantor under the Subsidiary Guaranty is released and discharged effective
when such transaction is consummated and all requirements hereunder in
connection therewith are satisfied, including with respect to the application of
the proceeds of such sale. Such confirmation from the Administrative Agent (a)
shall establish conclusively that the liability of such Guarantor under the
Subsidiaries Guarantee is released and discharged and (b) may be relied on,
without further inquiry, by the purchaser in such transaction and each of its
transferees. Each Lender Party hereby irrevocably authorizes the Administrative
Agent to release any Guarantor from time to time to the extent provided for
herein and to execute any document reasonably required in connection therewith.

                                 ARTICLE VIII

                                 MISCELLANEOUS

     SECTION 8.01. Amendments, Etc. No amendment or waiver of any provision of
     -----------------------------
this Agreement, the Notes, or any of the other Loan Documents (except to the
extent otherwise expressly provided for therein), nor consent to any departure
by any of the Loan Parties therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that:
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                                      93

          (a)  no amendment, waiver or consent shall, unless in writing and
signed by all of the Lenders (other than any of the Lenders that is, at such
time, a Defaulting Lender), do any of the following at any time:

               (i)    waive any of the conditions specified in Section 3.01 or,
          in the case of the Initial Extensions of Credit, Section 3.02;

               (ii)   change the number of Lenders or the percentage of the
          Commitments or the aggregate outstanding principal amount of Advances
          or the aggregate Available Amount of outstanding Letters of Credit
          that, in each case, shall be required for the Lender Parties or any of
          them to take any action hereunder;

               (iii)  except to the extent contemplated herein, release all or
          substantially all of the Guarantors that are a party to the Subsidiary
          Guarantee from their Obligations thereunder in any transaction or
          series of related transactions;

               (iv)   release all or substantially all of the Collateral in any
          transaction or series of related transactions;

               (v)    amend Section 2.13 or this Section 8.01; or

               (vi)   amend the definition of Interest Period to include
          additional monthly periods for setting the duration of an Interest
          Period.

          (b)  no amendment, waiver or consent shall, unless in writing and
     signed by the Required Lenders and each of the Lenders (other than any of
     the Lenders that is, at such time, a Defaulting Lender) that has a
     Commitment under the Term Facilities or the Revolving Credit Facility or is
     owed any amounts under or in respect thereof, if such Lender is directly
     affected by such amendment, waiver or consent:

               (i)    increase the Commitments of such Lender or subject such
          Lender to any additional Obligations;

               (ii)   reduce the principal or interest rate of, or interest on,
          the Notes held by such Lender or any fees or other amounts payable
          hereunder to such Lender;

               (iii)  postpone any date scheduled for any payment of principal
          of, or interest on, the Notes held by such Lender or any fees or other
          amounts payable to such Lender; or

               (iv)   change the order of application of any prepayment set
          forth in Section 2.06 in any manner that materially affects such
          Lender; and

     provided further that no amendment, waiver or consent shall, unless in
     writing and signed by the Swing Line Bank or the Issuing Bank, as the case
     may be, in addition to the Lenders required above to take such action,
     affect the rights or duties of the Swing Line Bank or the Issuing Bank,
     respectively, under this Agreement or any of the other Loan Documents; and
     provided further that no amendment, waiver or consent shall, unless in
     writing and signed by the Administrative Agent in addition to the Lenders
     required above to take such action, affect the rights or duties of the
     Administrative Agent under this Agreement or any of the other Loan
     Documents. Notwithstanding any of the foregoing provisions of this Section
     8.01, none of the defined terms
<PAGE>

                                      94

     set forth in Section 1.01 shall be amended, supplemented or otherwise
     modified hereafter in any manner that would change the meaning, purpose or
     effect of this Section 8.01 or any Section referred to herein unless such
     amendment, supplement or modification is agreed to in writing by the number
     and percentage of Lenders (and the Issuing Bank, the Swing Line Bank and
     Administrative Agent, in each case if applicable) otherwise required to
     amend such Section under the terms of this Section 8.01.

     SECTION 8.02. Notices, Etc.
     --------------------------

          (a)  All notices and other communications provided for hereunder shall
     be in writing (including telecopy communication) and mailed, telecopied or
     delivered, if to the Borrower, at its address at 21250 Hawthorne Blvd.,
     Suite 800, Torrance, California 90503 (Telecopier (310) 792-9281),
     Attention: Chief Financial Officer with a copy to Borrower's general
     counsel at the same address (Telecopier (310) 792-0044); if to any Initial
     Lender, the Swing Line Bank or the Initial Issuing Bank, at its Base Rate
     Lending Office specified opposite its name on Schedule I hereto; if to any
     other Lender Party, at its Base Rate Lending Office specified in the
     Assignment and Acceptance pursuant to which it became a Lender Party; and
     if to the Administrative Agent, at its address at Independence Center, 101
     North Tryon Street, 15th Floor, Charlotte, North Carolina 28255 (Telecopier
     (704) 386-9923), Attention: Corporate Credit Services; or, as to the
     Borrower or the Administrative Agent, at such other address as shall be
     designated by such party in a written notice to the other parties and, as
     to each other party, at such other address as shall be designated by such
     party in a written notice to the Borrower and the Administrative Agent. All
     such notices and other communications shall, when mailed or telecopied, be
     effective when deposited in the mails, or transmitted by telecopier,
     respectively, except that notices and communications to any Agent pursuant
     to Article II, III or VII shall not be effective until received by such
     Agent. Delivery by telecopier of an executed counterpart of a signature
     page to any amendment or waiver of any provision of this Agreement or the
     Notes or of any Exhibit hereto to be executed and delivered hereunder shall
     be effective as delivery of an original executed counterpart thereof.

          (b)  If any notice required under this Agreement is permitted to be
     made, and is made, by telephone, actions taken or omitted to be taken in
     reliance thereon by the Administrative Agent or any of the Lender Parties
     shall be binding upon the Borrower and the other Loan Parties
     notwithstanding any inconsistency between the notice provided by telephone
     and any subsequent writing in confirmation thereof provided to the
     Administrative Agent or such Lender Party; provided that any such action
     taken or omitted to be taken by the Administrative Agent or such Lender
     Party shall have been in good faith and in accordance with the terms of
     this Agreement.

     SECTION 8.03. No Waiver; Remedies. No failure on the part of any Lender
     ---------------------------------
Party or any Agent to exercise, and no delay in exercising, any right, power or
privilege hereunder or under any Note or any other Loan Document shall operate
as a waiver thereof or consent thereto; nor shall any single or partial exercise
of any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
applicable law.

     SECTION 8.04. Costs and Expenses.
     --------------------------------

          (a)  The Borrower agrees to pay on demand (i) all costs and expenses
     of each Agent in connection with the syndication, preparation, execution,
     delivery, administration, modification and amendment of, or any consent or
     waiver under, the Loan Documents and the other documents to be delivered
     thereunder (including, without limitation, (A) all due diligence,
     collateral review,
<PAGE>

                                      95

     syndication, transportation, computer, duplication, appraisal, audit,
     insurance, consultant, search, filing and recording fees and expenses and
     (B) the reasonable fees and expenses of counsel for the Administrative
     Agent (including the cost of internal counsel) with respect thereto, with
     respect to advising such Agent as to its rights and responsibilities, or
     the perfection, protection or preservation of rights or interests, under
     the Loan Documents), and (ii) all costs and expenses of each Agent and each
     Lender Party in connection with the enforcement of the Loan Documents and
     the other documents to be delivered thereunder, whether in any action, suit
     or litigation, or any bankruptcy, insolvency or other similar proceeding
     affecting creditors' rights generally (including, without limitation, the
     reasonable fees and expenses of counsel (including the cost of internal
     counsel) for the Administrative Agent and each Lender Party with respect
     thereto).

          (b)  The Borrower agrees to indemnify, defend and save and hold
     harmless each Agent, each Lender Party and each of their affiliates and
     their respective affiliates, officers, directors, trustees, employees,
     agents and advisors (each, an"Indemnified Party") from and against, and
     shall pay on demand, any and all claims, damages, losses, liabilities and
     expenses (including, without limitation, reasonable fees and expenses of
     counsel) that may be incurred by or asserted or awarded against any
     Indemnified Party, in each case arising out of or in connection with or by
     reason of (including, without limitation, in connection with any
     investigation, litigation or proceeding or preparation of a defense in
     connection therewith) (i) the Transaction (or any aspect thereof),
     Facilities, the actual or proposed use of the proceeds of the Advances or
     the Letters of Credit, the Loan Documents, or any of the transactions
     contemplated thereby; (ii) any acquisition or proposed acquisition by the
     Borrower or any of its Subsidiaries or Affiliates of all or any portion of
     the Equity Interests in or Debt securities or substantially all of the
     property and assets of any other Person; or (iii) the actual or alleged
     presence of Hazardous Materials on any property of any Loan Party or any of
     its Subsidiaries or any Environmental Action relating in any way to any
     Loan Party or any of its Subsidiaries, except to the extent such claim,
     damage, loss, liability or expense is found in a final, non-appealable
     judgment by a court of competent jurisdiction to have resulted from such
     Indemnified Party's gross negligence or willful misconduct or have arisen
     after such Loan Party or Subsidiary is dispossessed of or relinquishes its
     interest in such property. In the case of an investigation, litigation or
     other proceeding to which the indemnity in this Section 8.04(b) applies,
     such indemnity shall be effective whether or not such investigation,
     litigation or proceeding is brought by any Loan Party, its directors,
     shareholders or creditors or an Indemnified Party or any other Person,
     whether or not any Indemnified Party is otherwise a party thereto and
     whether or not the Transaction or any of the other transactions
     contemplated hereby is consummated. If and to the extent that the indemnity
     in this subsection (b) is unenforceable for any reason other than by
     operation of the last clause of the first sentence of this
     subsection 8.04(b), the Borrower hereby agrees to make to each applicable
     Indemnified Party the maximum contribution to the payment of the claims,
     damages, losses, liabilities and expenses (including, without limitation,
     reasonable fees and expenses of counsel) for which the indemnity in this
     subsection (b) has been determined to be unenforceable that is permitted
     under applicable law. The Borrower also agrees not to assert any claim
     against any Agent, any Lender Party or any of their respective affiliates,
     officers, directors, trustees, employees, agents and advisors, on any
     theory of liability, for special, indirect, consequential or punitive
     damages arising out of or otherwise relating to the Transaction (or any
     aspect thereof) Facilities, the actual or proposed use of the proceeds of
     the Advances or the Letters of Credit, the Loan Documents, or any of the
     other transactions contemplated hereby.

          (c)  If any payment of principal of, or Conversion of, any Eurodollar
     Rate Advance is made by the Borrower to or for the account of a Lender
     Party other than on the last day of the Interest Period for such Advance,
     as a result of a payment or Conversion pursuant to Section 2.05(d), 2.06,
     2.09(b)(i) or 2.10(d), acceleration of the maturity of the Notes pursuant
     to Section
<PAGE>

                                      96

     6.01 or for any other reason, or by an Eligible Assignee to a Lender Party
     other than on the last day of the Interest Period for such Advance upon an
     assignment of rights and obligations under this Agreement pursuant to
     Section 8.07 as a result of a demand by the Borrower pursuant to Section
     8.07(a), or if the Borrower fails to make any payment or prepayment of an
     Advance for which a notice of prepayment has been given or that is
     otherwise required to be made, whether pursuant to Section 2.04, 2.06 or
     6.01 or otherwise, the Borrower shall, upon demand by such Lender Party
     (with a copy of such demand to the Administrative Agent), pay to the
     Administrative Agent for the account of such Lender Party any amounts
     required to compensate such Lender Party for any additional losses, costs
     or expenses that it may reasonably incur as a result of such payment or
     Conversion or such failure to pay or prepay, as the case may be, including,
     without limitation, any loss, cost or expense incurred by reason of the
     liquidation or reemployment of deposits or other funds acquired by any
     Lender Party to fund or maintain such Advance.

          (d)  If any Loan Party fails to pay when due, after the expiration of
     any grace period, if applicable, any costs, expenses or other amounts
     payable by it under any Loan Document, including, without limitation, fees
     and expenses of counsel and indemnification payments, such amount may be
     paid on behalf of such Loan Party by the Administrative Agent or any Lender
     Party, in its sole discretion.

          (e)  Without prejudice to the survival of any other agreement of any
     Loan Party hereunder or under any other Loan Document, the agreements and
     obligations of the Borrower contained in Sections 2.10 and 2.13 and this
     Section 8.04 shall survive the payment in full of principal, interest and
     all other amounts payable hereunder and under any of the other Loan
     Documents.

     SECTION 8.05. Right of Set-off. Upon (a) the occurrence and during the
     ------------------------------
continuance of any Event of Default and (b) the making of the request or the
granting of the consent specified by Section 6.01 to authorize the
Administrative Agent to declare the Notes due and payable pursuant to the
provisions of Section 6.01, each Agent and each Lender Party and each of their
respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and otherwise apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by such Agent, such Lender Party
or such Affiliate to or for the credit or the account of the Borrower against
any and all of the Obligations of the Borrower now or hereafter existing under
the Loan Documents, irrespective of whether such Agent or such Lender Party
shall have made any demand under this Agreement or such Note or Notes and
although such Obligations may be unmatured. Each Agent and each Lender Party
agrees promptly to notify the Borrower after any such set-off and application;
provided, however, that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Agent and each
Lender Party and their respective Affiliates under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) that such Agent, such Lender Party and their respective Affiliates may
have.

     SECTION 8.06. Binding Effect. This Agreement shall become effective when it
     ----------------------------
shall have been executed by the Borrower and each Agent and the Administrative
Agent shall have been notified by each Initial Lender, the Swing Line Bank and
the Initial Issuing Bank that such Initial Lender, the Swing Line Bank or the
Initial Issuing bank has executed it and thereafter shall be binding upon and
inure to the benefit of the Borrower, each Agent and each Lender Party and their
respective successors and assigns, except that the Borrower shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of all the Lender Parties.

<PAGE>

                                      97

     SECTION 8.07. Assignments and Participations.
     --------------------------------------------

          (a)  With the consent of the Administrative Agent (which consent shall
     not be unreasonably withheld or delayed) and, in the case of any assignment
     of a Revolving Credit Commitment, each Issuing Bank (which consent shall be
     granted in its sole discretion), each Lender may assign to one or more
     Eligible Assignees all or a portion of its rights and obligations under
     this Agreement (including, without limitation, all or a portion of its
     Commitment or Commitments, the Advances owing to it and the Note or Notes
     held by it); provided, however, that (i) each such assignment shall be of a
     uniform, and not a varying, percentage of all rights and obligations under
     and in respect of any or all Facilities, (ii) except in the case of an
     assignment to a Person that, immediately prior to such assignment, was a
     Lender, an Affiliate of any Lender or an Approved Fund of any Lender or an
     assignment of all of a Lender's rights and obligations under this
     Agreement, the aggregate amount of the Commitments being assigned to such
     Eligible Assignee pursuant to such assignment (determined as of the date of
     the Assignment and Acceptance with respect to such assignment) shall in no
     event be less than $1,000,000 (or such lesser amount as shall be approved
     by the Administrative Agent and, so long as no Default shall have occurred
     and be continuing at the time of effectiveness of such assignment, the
     Borrower (in each case, such approval not to be unreasonably withheld or
     delayed)) under each Facility for which a Commitment is being assigned,
     (iii) each such assignment shall be to an Eligible Assignee, (iv) each such
     assignment made as a result of a demand by the Borrower pursuant to Section
     8.07(l) shall be arranged by the Borrower after consultation with the
     Administrative Agent and shall be either an assignment of all of the rights
     and obligations of the assigning Lender under this Agreement or an
     assignment of a portion of such rights and obligations made concurrently
     with another such assignment or other such assignments that together cover
     all of the rights and obligations of the assigning Lender under this
     Agreement, (v) no Lender shall be obligated to make any such assignment as
     a result of a demand by the Borrower pursuant to Section 8.07(l) unless and
     until such Lender shall have received one or more payments from either the
     Borrower or one or more Eligible Assignees in an aggregate amount at least
     equal to the aggregate outstanding principal amount of the Advances owing
     to such Lender, together with accrued interest thereon to the date of
     payment of such principal amount and all other amounts payable to such
     Lender under this Agreement and (vi) the parties to each such assignment
     shall execute and deliver to the Administrative Agent, for its acceptance
     and recording in the Register, an Assignment and Acceptance, together with
     any Note or Notes subject to such assignment, provided further however,
     that the consent of the Administrative Agent will not be required for an
     assignment from any Lender to another Lender, an Affiliate of such other
     Lender or an Approved Fund of such other Lender.

          (b)  Upon such execution, delivery, acceptance and recording, from and
     after the effective date specified in such Assignment and Acceptance, (i)
     the assignee thereunder shall be a party hereto and, to the extent that
     rights and obligations hereunder have been assigned to it pursuant to such
     Assignment and Acceptance, have the rights and obligations of a Lender or
     Issuing Bank, as the case may be, hereunder and (ii) the Lender or Issuing
     Bank assignor thereunder shall, to the extent that rights and obligations
     hereunder have been assigned by it pursuant to such Assignment and
     Acceptance, relinquish its rights (other than its rights under Sections
     2.10, 2.13 and 8.04 (and other similar provisions of the Loan Documents
     that are specified under the terms of such other Loan Documents to survive
     the payment in full of the Obligations of the Loan Parties under or in
     respect of the Loan Documents) to the extent any claim thereunder relates
     to an event arising prior to such assignment) and be released from its
     obligations (other than its obligations under Section 7.05 to the extent
     any claim thereunder relates to an event arising prior to such assignment)
     under this Agreement (and, in the case of an Assignment and Acceptance
     covering all of the remaining portion of an assigning Lender's or
<PAGE>

                                      98

     Issuing Bank's rights and obligations under this Agreement, such Lender or
     Issuing Bank shall cease to be a party hereto). If the assignee is not
     incorporated under the laws of the United States of America or a state
     thereof, it shall deliver to the Borrower and the Administrative Agent
     certification as to exemption from deduction or withholding of Taxes in
     accordance with Section 2.13.

          (c)  By executing and delivering an Assignment and Acceptance, each
     Lender Party assignor thereunder and each assignee thereunder confirm to
     and agree with each other and the other parties thereto and hereto as
     follows: (i) other than as provided in such Assignment and Acceptance, such
     assigning Lender Party makes no representation or warranty and assumes no
     responsibility with respect to any statements, warranties or
     representations made in or in connection with any Loan Document or the
     execution, legality, validity, enforceability, genuineness, sufficiency or
     value of, or the perfection or priority of any lien or security interest
     created or purported to be created under or in connection with, any Loan
     Document or any other instrument or document furnished pursuant thereto;
     (ii) such assigning Lender Party makes no representation or warranty and
     assumes no responsibility with respect to the financial condition of any
     Loan Party or the performance or observance by any Loan Party of any of its
     obligations under any Loan Document or any other instrument or document
     furnished pursuant thereto; (iii) such assignee confirms that it has
     received a copy of this Agreement, together with copies of such documents
     and information as it has deemed appropriate to make its own credit
     analysis and decision to enter into such Assignment and Acceptance; (iv)
     such assignee will, independently and without reliance upon any Agent, such
     assigning Lender Party or any other Lender Party and based on such
     documents and information as it shall deem appropriate at the time,
     continue to make its own credit decisions in taking or not taking action
     under this Agreement; (v) such assignee confirms that it is an Eligible
     Assignee; (vi) such assignee appoints and authorizes each Agent to take
     such action as agent on its behalf and to exercise such powers and
     discretion under the Loan Documents as are delegated to such Agent by the
     terms hereof and thereof, together with such powers and discretion as are
     reasonably incidental thereto; and (vii) such assignee agrees that it will
     perform in accordance with their terms all of the obligations that by the
     terms of this Agreement are required to be performed by it as a Lender or
     Issuing Bank, as the case may be.

          (d)  The Administrative Agent, acting for this purpose (but only for
     this purpose) as the agent of the Borrower, shall maintain at its address
     referred to in Section 8.02 a copy of each Assignment and Acceptance
     delivered to and accepted by it and a register for the recordation of the
     names and addresses of the Lender Parties and the Commitment under each
     Facility of, and principal amount of the Advances owing under each Facility
     to, each Lender Party from time to time (the "Register"). The entries in
     the Register shall be conclusive and binding for all purposes, absent
     manifest error, and the Borrower, the Agents and the Lender Parties shall
     treat each Person whose name is recorded in the Register as a Lender Party
     hereunder for all purposes of this Agreement. The Register shall be
     available for inspection by the Borrower or any Agent or any Lender Party
     at any reasonable time and from time to time upon reasonable prior notice.

          (e)  Upon its receipt of an Assignment and Acceptance executed by an
     assigning Lender Party and an assignee, together with any Note or Notes
     subject to such assignment, the Administrative Agent shall, subject, if
     applicable, to the approvals specified in Section 8.07(a), if such
     Assignment and Acceptance has been completed and is in substantially the
     form of Exhibit C hereto, (i) accept such Assignment and Acceptance, (ii)
     record the information contained therein in the Register and (iii) give
     prompt notice thereof to the Borrower and each other Agent. In the case of
     any assignment by a Lender, promptly after its receipt of such notice, the
     Borrower, at its own expense, shall execute and deliver to the
     Administrative Agent in exchange for the
<PAGE>

                                      99

     surrendered Note or Notes a new Note to the order of such Eligible Assignee
     in an amount equal to the Commitment assumed by it under each Facility
     pursuant to such Assignment and Acceptance and, if any assigning Lender has
     retained a Commitment hereunder under such Facility, a new Note to the
     order of such assigning Lender in an amount equal to the Commitment
     retained by it hereunder. Such new Note or Notes shall be in an aggregate
     principal amount equal to the aggregate principal amount of such
     surrendered Note or Notes, shall be dated the effective date of such
     Assignment and Acceptance and shall otherwise be in substantially the form
     of Exhibit A-1, A-2 or A-3 hereto, as the case may be.

          (f)  Each Issuing Bank may assign to one or more Eligible Assignees
     all or a portion of its rights and obligations under the undrawn portion of
     its Letter of Credit Commitment at any time; provided, however, that (i)
     except in the case of an assignment to a Person that immediately prior to
     such assignment was an Issuing Bank or an assignment of all of an Issuing
     Bank's rights and obligations under this Agreement, the amount of the
     Letter of Credit Commitment of the assigning Issuing Bank being assigned
     pursuant to each such assignment (determined as of the date of the
     Assignment and Acceptance with respect to such assignment) shall in no
     event be less than $10,000,000 and shall be in an integral multiple of
     $1,000,000 in excess thereof, (ii) each such assignment shall be to an
     Eligible Assignee and (iii) the parties to each such assignment shall
     execute and deliver to the Administrative Agent, for its acceptance and
     recording in the Register, an Assignment and Acceptance.

          (g)  Each Lender Party may sell participations to one or more Persons
     (other than any Loan Party or any of its Affiliates) in or to all or a
     portion of its rights, obligations or rights and obligations under this
     Agreement (including, without limitation, all or a portion of its
     Commitments, the Advances owing to it and the Note or Notes (if any) held
     by it); provided, however, that (i) such Lender Party's obligations under
     this Agreement (including, without limitation, its Commitments) shall
     remain unchanged, (ii) such Lender Party shall remain solely responsible to
     the other parties hereto for the performance of such obligations, (iii)
     such Lender Party shall remain the holder of any such Note for all purposes
     of this Agreement, (iv) the Borrower, the Agents and the other Lender
     Parties shall continue to deal solely and directly with such Lender Party
     in connection with such Lender Party's rights and obligations under this
     Agreement, (v) the participant shall be entitled to the benefit of the
     yield protection provisions contained in Sections 2.10, 2.13 and 8.04 and
     the right of set-off contained in Section 8.05 and (vi) no participant
     under any such participation shall have any right to approve any amendment
     or waiver of any provision of any Loan Document, or any consent to any
     departure by any Loan Party therefrom, except to the extent that such
     amendment, waiver or consent would reduce the principal of, or stated rate
     of interest on, the Notes or any fees or other amounts payable hereunder,
     in each case to the extent subject to such participation, postpone any date
     scheduled for any payment of principal of, or interest on, the Notes
     pursuant to Section 2.04 or 2.07 or any date fixed for any payment of fees
     hereunder or any Guaranteed Obligations payable under the Subsidiary
     Guaranty, in each case to the extent subject to such participation, or
     release all or substantially all of the Collateral.

          (h)  Any Lender Party may, in connection with any assignment or
     participation or proposed assignment or participation pursuant to this
     Section 8.07, disclose to the assignee or participant or proposed assignee
     or participant any information relating to the Borrower furnished to such
     Lender Party by or on behalf of the Borrower; provided, however, that,
     prior to any such disclosure, the assignee or participant or proposed
     assignee or participant shall agree to preserve the confidentiality of any
     Confidential Information received by it from such Lender Party.
<PAGE>

                                      100

          (i)  Notwithstanding any other provision set forth in this Agreement,
     any Lender Party may at any time create a security interest in all or any
     portion of its rights under this Agreement (including, without limitation,
     the Advances owing to it and the Note or Notes held by it) in favor of any
     Federal Reserve Bank in accordance with Regulation A of the Board of
     Governors of the Federal Reserve System and any Operating Circular issued
     by such Federal Reserve Bank. No such assignment shall release the
     assigning Lender from its obligations hereunder.

          (j)  Notwithstanding anything to the contrary contained herein, any
     Lender that is a fund that invests in bank loans may create a security
     interest in all or any portion of the Advances owing to it and the Note or
     Notes held by it to its creditors the trustee or agent or other
     representative for holders of obligations owed, or securities issued, by
     such fund as security for such obligations or securities, provided, that
     unless and until such creditors, trustee or agent or other representative
     actually becomes a Lender in compliance with the other provisions of this
     Section 8.07, (i) no such pledge shall release the pledging Lender from any
     of its obligations under the Loan Documents and (ii) such creditors,
     trustee or agent or other representative shall not be entitled to exercise
     any of the rights of a Lender under the Loan Documents even though such
     creditors, trustee or agent or other representative may have acquired
     ownership rights with respect to the pledged interest through foreclosure
     or otherwise.

          (k)  Notwithstanding anything to the contrary contained herein, any
     Lender Party (a"Granting Lender") may grant to a special purpose funding
     vehicle identified as such in writing from time to time by the Granting
     Lender to the Administrative Agent and the Borrower (an"SPC") the option to
     provide all or any part of any Advance that such Granting Lender would
     otherwise be obligated to make pursuant to this Agreement, provided that
     (i) nothing herein shall constitute a commitment by any SPC to fund any
     Advance, and (ii) if an SPC elects not to exercise such option or otherwise
     fails to make all or any part of such Advance, the Granting Lender shall be
     obligated to make such Advance pursuant to the terms hereof. The making of
     an Advance by an SPC hereunder shall utilize the Commitment of the Granting
     Lender to the same extent, and as if, such Advance were made by such
     Granting Lender. Each party hereto hereby agrees that (i) no SPC shall be
     liable for any indemnity or similar payment obligation under this Agreement
     for which a Lender Party would be liable, (ii) no SPC shall be entitled to
     the benefits of Sections 2.10 and 2.13 (or any other increased costs
     protection provision) and (iii) the Granting Lender shall for all purposes,
     including, without limitation, the approval of any amendment or waiver of
     any provision of any Loan Document, remain the Lender Party of record
     hereunder. In furtherance of the foregoing, each party hereto hereby agrees
     (which agreement shall survive the termination of this Agreement) that,
     prior to the date that is one year and one day after the payment in full of
     all outstanding commercial paper or other senior Debt of any SPC, it will
     not institute against, or join any other person in instituting against,
     such SPC any bankruptcy, reorganization, arrangement, insolvency, or
     liquidation proceeding under the laws of the United States or any State
     thereof. Notwithstanding anything to the contrary contained in this
     Agreement, any SPC may (i) with notice to, but without prior consent of,
     the Borrower and the Administrative Agent and without paying any processing
     fee therefor, assign all or any portion of its interest in any Advance to
     the Granting Lender and (ii) disclose on a confidential basis any non-
     public information relating to its funding of Advances to any rating
     agency, commercial paper dealer or provider of any surety or guarantee or
     credit or liquidity enhancement to such SPC. This subsection (k) may not be
     amended without the prior written consent of each Granting Lender, all or
     any part of whose Advances are being funded by the SPC at the time of such
     amendment.
<PAGE>

                                      101

          (l)  In the event that the Borrower shall request that the Lender
     Parties enter into any amendment, modification, consent or waiver with
     respect to this Agreement or any other Loan Document, and any Lender Party
     elects not to enter into such amendment, modification, consent or waiver
     (each such Lender Party being a "Dissenting Lender"), then the Borrower
     shall have the right upon 10 days' written notice to the Administrative
     Agent and such Dissenting Lender, to require each such Dissenting Lender to
     assign 100% of the rights and obligations of the Dissenting Lender at par
     to any Lender or any other financial institution which satisfies the
     requirements of Section 8.07(a) and has been consented to by the
     Administrative Agent, the Swing Line Lender and in the case of any
     assignment of a Revolving Credit Commitment each Issuing Bank (which
     consents in the case of the Administrative Agent and the Swing Line Lender
     shall not be unreasonably withheld or delayed). Each such assignment shall
     be made pursuant to an Assignment and Acceptance and shall comply with the
     other terms of this Section 8.07. The Borrower shall pay to such Dissenting
     Lender, concurrently with the effectiveness of such assignment, any amounts
     payable under this Agreement that would have been payable if the Borrower
     had voluntarily prepaid such Advances. The Dissenting Lender shall not be
     required to pay any fee relating to such assignment.

     SECTION 8.08. Execution in Counterparts. This Agreement may be executed in
     ---------------------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery by telecopier of an executed counterpart of a signature page to this
Agreement shall be effective as delivery of an original executed counterpart of
this Agreement.

     SECTION 8.09. No Liability of the Issuing Bank. The Borrower assumes all
     ----------------------------------------------
risks of the acts or omissions of any beneficiary or transferee of any Letter of
Credit with respect to its use of such Letter of Credit. Neither the Issuing
Bank nor any of its officers or directors shall be liable or responsible for:
(a) the use that may be made of any Letter of Credit or any acts or omissions of
any beneficiary or transferee in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement thereon, even if
such documents should prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (c) payment by the Issuing Bank against presentation of
documents that do not comply with the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to the
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under any Letter of Credit, except that the Borrower shall have
a claim against the Issuing Bank, and the Issuing Bank shall be liable to the
Borrower, to the extent of any direct, but not consequential, damages suffered
by the Borrower that the Borrower proves were caused by (i) the Issuing Bank's
willful misconduct or gross negligence, or failure to conform with the standards
specified in Section 5-108 of the UCC, as determined in a final, non-appealable
judgment by a court of competent jurisdiction in determining whether documents
presented under any Letter of Credit comply with the terms of the Letter of
Credit or (ii) the Issuing Bank's willful failure to make lawful payment under a
Letter of Credit after the presentation to it of a draft and certificates
strictly complying with the terms and conditions of the Letter of Credit. In
furtherance and not in limitation of the foregoing, but subject to Section
5-109(a) of the UCC, the Issuing Bank 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.

     SECTION 8.10. Confidentiality. Neither any Agent nor any Lender Party shall
     -----------------------------
disclose any Confidential Information to any Person without the consent of the
Borrower, other than (a) to such Agent's or such Lender Party's Affiliates and
their officers, directors, employees, agents and advisors, to other Lender
Parties and to actual or prospective Eligible Assignees and participants, and
then only on a confidential basis, (b) as required by any law, rule or
regulation or judicial process, (c) as requested or required by any state,
Federal or foreign authority or examiner (including the National Association of
Insurance Commissioners or any similar organization or quasi-regulatory
authority) regulating such
<PAGE>

                                      102

Lender Party, (d) to any rating agency when required by it, provided that, prior
to any such disclosure, such rating agency shall undertake to preserve the
confidentiality of any Confidential Information relating to the Loan Parties
received by it from such Lender Party in accordance with such rating agency's
internal procedures generally applicable to information of the same type, (e) in
connection with any litigation or proceeding to which such Agent or such Lender
Party or any of its Affiliates may be a party, (f) in connection with the
exercise of any remedy under this Agreement or any other Loan Document, or (g)
to any direct or indirect contractual counterparty in swap agreements or such
contractual counterparty's professional advisor (so long as such contractual
counterparty or professional advisor to such contractual counterparty agrees to
be bound by the provisions of this Section 8.10).

     SECTION 8.11. Execution in Counterparts. This Agreement may be executed in
     ---------------------------------------
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.

     SECTION 8.12. Governing Law, Jurisdiction, Etc.
     ----------------------------------------------

          (a)  This Agreement and the Notes shall be governed by, and construed
     in accordance with, the laws of the State of New York.

          (b)  Each of the parties hereto hereby irrevocably and unconditionally
     submits, for itself and its property and assets, to the nonexclusive
     jurisdiction of any New York State court or any federal court of the United
     States of America sitting in New York City, New York, and any appellate
     court from any thereof, in any action or proceeding arising out of or
     relating to this Agreement or any of the other Loan Documents to which it
     is a party, or for recognition or enforcement of any judgment in respect
     thereof, and each of the parties hereto hereby irrevocably and
     unconditionally agrees that all claims in respect of any such action or
     proceeding may be heard and determined in any such New York State court or,
     to the fullest extent permitted under applicable law, in any such federal
     court. Each of the parties hereto hereby irrevocably consents to the
     service of copies of any summons and complaint and any other process which
     may be served in any such action or proceeding by certified mail, return
     receipt requested, or by delivering a copy of such process to such party,
     at its address specified in Section 8.02, or by any other method permitted
     under applicable law. Each of the parties hereto hereby 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 applicable law. Nothing in this Agreement shall affect
     any right that any of the parties hereto may otherwise have to bring any
     action or proceeding relating to this Agreement or any of the other Loan
     Documents in the courts of any jurisdiction.

          (c)  Each of the parties hereto irrevocably and unconditionally
     waives, to the fullest extent it may legally and effectively do so, any
     objection that it may now or hereafter have to the laying of venue of any
     suit, action or proceeding arising out of or relating to this Agreement or
     any of the other Loan Documents to which it is a party in any New York
     State or federal court. Each of the parties hereto hereby irrevocably
     waives, to the fullest extent permitted by law, the defense of an
     inconvenient forum to the maintenance of such action or proceeding in any
     such court.

     SECTION 8.13. Designation as Designated Senior Debt. This Agreement, the
     ---------------------------------------------------
Subsidiary Guaranty, the Loan Documents and all monetary obligations hereunder
or thereunder are hereby expressly
<PAGE>

                                      103

designated as "Designated Senior Indebtedness" as that term (or any comparable
term) is defined in the Subordinated Notes Documents.
<PAGE>

     SECTION 8.14. WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENTS AND
     ----------------------------------
THE LENDER PARTIES IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS, THE ADVANCES, THE
LETTERS OF CREDIT OR THE ACTIONS OF ANY AGENT OR ANY LENDER PARTY IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

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

                                                  DAVITA INC., as Borrower

                                                  By ___________________________
                                                     Name:
                                                     Title:
<PAGE>

                                  BANK OF AMERICA, N.A., as Administrative
                                    Agent, Initial Issuing Bank, Swing Line
                                    Bank, and an Initial Lender

                                  By _________________________________________
                                     Name:
                                     Title:
<PAGE>

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

                                  By _________________________________________
                                     Name:
                                     Title:
<PAGE>

                                   CREDIT SUISSE FIRST BOSTON, as Joint
                                      Lead Arranger and Joint Bank Manager, and
                                      an Initial Lender

                                   By ________________________________________
                                      Name:
                                      Title:
<PAGE>

                                   THE BANK OF NEW YORK, as an Issuing
                                      Bank under the Existing Credit Agreement,
                                      a Documentation Agent and an Initial
                                      Lender

                                   By __________________________________________
                                      Name:
                                      Title:
<PAGE>

                                   SUNTRUST BANK, as a Documentation Agent
                                      and an Initial Lender

                                   By __________________________________________
                                      Name:
                                      Title:
<PAGE>

                                   THE BANK OF NOVA SCOTIA, as a
                                      Documentation Agent and an Initial Lender

                                   By _________________________________________
                                      Name:
                                      Title:
<PAGE>

                                   U.S. BANK NATIONAL ASSOCIATION, as
                                      an Initial Lender

                                   By _______________________________
                                      Name:
                                      Title:
<PAGE>

                                   CREDIT LYONNAIS NEW YORK BRANCH,
                                      as an Initial Lender

                                   By _______________________________
                                      Name:
                                      Title:
<PAGE>

                                   KZH CNC LLC, as an Initial Lender

                                   By _____________________________________
                                      Name:
                                      Title:
<PAGE>

                                    KZH STERLING LLC, as an Initial
                                      Lender

                                    By ____________________________________
                                       Name:
                                       Title:
<PAGE>

                                    KZH CYPRESSTREE-1 LLC, as an Initial
                                      Lender

                                    By  ________________________________________
                                        Name:
                                        Title:

<PAGE>

                                    KZH SHOSHONE LLC, as an Initial Lender

                                    By  ____________________________________
                                        Name:
                                        Title:

<PAGE>

                                    KZH SOLEIL LLC, as an Initial Lender

                                    By  ____________________________________
                                        Name:
                                        Title:

<PAGE>

                                    WINGED FOOT FUNDING TRUST, as an
                                      Initial Lender

                                    By  ____________________________________
                                        Name:
                                        Title:

<PAGE>

                                    OPPENHEIMER SENIOR FLOATING RATE
                                      FUND, as an Initial Lender

                                    By  ____________________________________
                                        Name:
                                        Title:
<PAGE>

                                    PPM SPYGLASS FUNDING TRUST, as an
                                       Initial Lender

                                    By  ____________________________________
                                        Name:
                                        Title:
<PAGE>

                                  SCHEDULE I
                  COMMITMENTS AND APPLICABLE LENDING OFFICES

<TABLE>
<CAPTION>
====================================================================================================================================
                                                                                                              Letter
                                              Term A               Term B          Revolving Credit         of Credit
   Name of Initial Lender Party             Commitment           Commitment           Commitment           Commitment/1/
====================================================================================================================================
<S>                                        <C>                  <C>                   <C>                  <C>
Bank of America, N.A.                      $ 10,000,000         $ 175,500,000         $ 30,000,000         $ 50,000,000
101 North Tryon Street, 15/th/ Floor
Charlotte, NC 28255

------------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston                 $ 10,000,000                               $ 30,000,000
11 Madison  Avenue
New York, NY 10010-3629

------------------------------------------------------------------------------------------------------------------------------------
SunTrust Bank                              $  8,750,000                               $ 26,250,000
201 4th Avenue North
Nashville, TN 37219

------------------------------------------------------------------------------------------------------------------------------------
The Bank of New York                       $ 6,250,000                                $ 18,750,000         $ 15,261,813
10990 WilshiBlvd., Suite 1125
Los Angeles, CA 90024

<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                                   Base Rate                               Eurodollar
                                                    Lending                                 Lending
   Name of Initial Lender Party                      Office                                  Office
------------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                                     <C>
Bank of America, N.A.                      Independence Centre, 15/th/ Fl.         Independence Centre, 15/th/ Fl.
101 North Tryon Street, 15/th/ Floor       NC1-001-15-04                           NC1-001-15-04
Charlotte, NC 28255                        Charlotte, NC 28255                     Charlotte, NC 28255
                                           Attention: Elizabeth Garver             Attention: Elizabeth Garver
                                           Phone: (704) 388-1107                   Phone: (704) 388-1107
                                           Fax: (704) 386-9923                     Fax: (704) 386-9923
------------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston                 11 Madison Avenue                       Five World Trade Center
11 Madison  Avenue                         New York, NY 10010-3629                 8/th/ Floor
New York, NY 10010-3629                    Contact: William Lutkins                New York, NY 10048-0928
                                           Phone: (212) 325-9705                   Contact: Nilsa Ware
                                           Fax: (212) 325-8319                     Phone: (212) 322-5094
                                                                                   Fax: (212) 335-0593
------------------------------------------------------------------------------------------------------------------------------------
SunTrust Bank                              201 4/th/ Avenue, North                 201 4/th/ Avenue, North
201 4th Avenue North                       3/rd/ Floor                             5th Floor
Nashville, TN 37219                        Nashville, TN 37219                     Nashville, TN 37219
                                           Contact: Brooks Hubbard                 Contact: Leigh Anne Gregory
                                           Phone: (615) 748-4465                   Phone: (615) 748-5461
                                           Fax: (615) 748-5269                     Fax: (615) 748-4611
------------------------------------------------------------------------------------------------------------------------------------
The Bank of New York                       10990 Wilshire Blvd.                    1 Wall Street
10990 WilshiBlvd., Suite 1125              Los Angeles, CA 90024                   New York, NY 10286
Los Angeles, CA 90024                      Contact: Rebecca K. Levine              Contact: Rosa Leonard
                                           Phone: (310) 996-8650                   Phone: (212) 635-6787
                                           Fax: (310) 996-8667                     Fax: (212) 635-6397-6426
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

-------------------------------
/1/  Less the aggregate amount of Existing Letters of Credit pursuant to Section
     2.01(e) in the amount of $15,261,813 as of the date hereof.
<PAGE>

<TABLE>
<CAPTION>
====================================================================================================================================
                                                                                                                    Letter of
                                                 Term A                  Term B           Revolving Credit           Credit
   Name of Initial Lender Party                Commitment              Commitment            Commitment            Commitment/1/
====================================================================================================================================
 <S>                                         <C>                    <C>                   <C>                    <C>
 The Bank of Nova Scotia                       $6,250,000                                   $18,750,000
 580 California Street, Suite 2100
 San Francisco, CA  94104

------------------------------------------------------------------------------------------------------------------------------------
 U.S. Bank National Association                $5,000,000                                   $15,000,000
 555 S.W. Oak Street
 Portland, OR  97204

------------------------------------------------------------------------------------------------------------------------------------
 Credit Lyonnais New York Branch               $3,750,000              $5,000,000           $11,250,000
 1301 Avenue of the Americas
 New York, NY  10019

------------------------------------------------------------------------------------------------------------------------------------
 KZH CNC LLC                                                           $2,500,000
 c/o The Chase Manhattan Bank
 140 East 45/th/ Street, 11/th/ Floor
 New York, NY  10017

------------------------------------------------------------------------------------------------------------------------------------
 KZH Sterling, LLC                                                     $1,000,000
 c/o The Chase Manhattan Bank
 140 East 45/th/ Street, 11/th/ Floor
 New York, NY  10017

------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
====================================================================================================================================
                                                      Base Rate                           Eurodollar
                                                       Lending                             Lending
    Name of Initial Lender Party                       Office                              Office
====================================================================================================================================
 <S>                                        <C>                                 <C>
 The Bank of Nova Scotia                     Atlanta Agency, Suite 2700          Atlanta Agency, Suite 2700
 580 California Street, Suite 2100           600 Peachtree Street, NE            600 Peachtree Street, NE
 San Francisco, CA  94104                    Atlanta, GA 30308                   Atlanta, GA 30308
                                             Contact: San Francisco Loan         Contact: San Francisco Loan
                                             Servicing, Lily Hsieh               Servicing, Lily Hsieh
                                             Phone: (404) 877-1523               Phone: (404) 877-1523
                                             Fax:   (404) 888-8998               Fax:   (404) 888-8998
------------------------------------------------------------------------------------------------------------------------------------
 U.S. Bank National Association              555 S.W. Oak Street                 555 S.W. Oak Street
 555 S.W. Oak Street                         PL-0631                             PL-0631
 Portland, OR  97204                         Portland, OR  97204                 Portland, OR  97204
                                             Contact: Lily Blank                 Contact: Lily Blank
                                             Phone:  (503) 275-6559              Phone:  (503) 275-6559
                                             Fax:    (503) 275-4600              Fax:    (503) 275-4600
------------------------------------------------------------------------------------------------------------------------------------
 Credit Lyonnais New York Branch             1301 Avenue of the Americas         1301 Avenue of the Americas
 1301 Avenue of the Americas                 New York, NY  10019                 New York, NY  10019
 New York, NY  10019                         Contact: Gener David                Contact: Gener David
                                             Phone:  (212) 261-7741              Phone:  (212) 261-7741
                                             Fax:    (212) 459-3181              Fax:    (212) 459-3181
------------------------------------------------------------------------------------------------------------------------------------
 KZH CNC LLC                                 140 East 45/th/ Street               140 East 45/th/ Street
 c/o The Chase Manhattan                     11/th/ Floor                         11/th/ Floor
 140 East 45/th/ Street, 11/th/ Floor        New York, NY  10017                  New York, NY  10017
 New York, NY  10017                         Contact: Virginia Conway             Contact: Virginia Conway
                                             Phone:  (212) 622-9353               Phone:  (212) 622-9353
                                             Fax:    (212) 622-0123               Fax:    (212) 622-0123
------------------------------------------------------------------------------------------------------------------------------------
 KZH Sterling, LLC                           140 East 45/th/ Street               140 East 45/th/ Street
 c/o The Chase Manhattan Bank                11/th/ Floor                         11/th/ Floor
 140 East 45/th/ Street, 11/th/ Floor        New York, NY  10017                  New York, NY  10017
 New York, NY  10017                         Contact: Virginia Conway             Contact: Virginia Conway
                                             Phone:  (212) 622-9353               Phone:  (212) 622-9353
                                             Fax:    (2120 622-0123               Fax:    (2120 622-0123
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
==================================================================================================================================
                                                                                                                  Letter of
                                                         Term A            Term B         Revolving Credit          Credit
   Name of Initial Lender Party                         Commitment        Commitment          Commitment         Commitment /1/
==================================================================================================================================
<S>                                                    <C>            <C>                 <C>                   <C>
KZH Cypress Tree-1, LLC                                               $     2,000,000
c/o The Chase Manhattan Bank
140 East 45/th/ Street, 11/th/ Floor
New York, NY 10017

----------------------------------------------------------------------------------------------------------------------------------
KZH Shoshone LLC                                                      $     2,500,000
c/o The Chase Manhattan Bank
140 East 45/th/ Street, 11/th/ Floor
New York, NY 10017

----------------------------------------------------------------------------------------------------------------------------------
KZH Soleil LLC                                                        $     2,000,000
c/o The Chase Manhattan Bank
140 East 45/th/ Street, 11/th/ Floor
New York, NY 10017

----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Senior Floating Rate Fund                                 $     3,000,000
c/o Oppenheimer Funds, Inc.
6803 South Tucson Way
Englewood, CO 80112-3924

----------------------------------------------------------------------------------------------------------------------------------
PPM Spyglass Funding Trust                                            $     4,000,000
c/o Banc of America Securities LLC
100 North Tryon Street
NC1-007-06-07
Charlotte, NC 28255

----------------------------------------------------------------------------------------------------------------------------------
Winged Foot Funding Trust                                             $     2,500,000
c/o Conseco Capital Management, Inc.
11825 N. Pennsylvania Street
Carmel, IN 46032

----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
==================================================================================================================================
                                                        Base Rate Lending                         Eurodollar Lending
Name of Initial Lender Party                            Office                                    Office
==================================================================================================================================
<S>                                                     <C>                                       <C>
KZH Cypress Tree-1, LLC                                 140 East 45/th/ Street                    140 East 45/th/ Street
c/o The Chase Manhattan Bank                            11/th/ Floor                              11/th/ Floor
140 East 45th Street, 11/th/ Floor                      New York, NY 10017                        New York, NY 10017
New York, NY 10017                                      Contact: Virginia Conway                  Contact: Virginia Co
                                                        Phone: (212) 622-9353                     Phone: (212) 622-9353
                                                        Fax: (212) 622-0123                       Fax: (212) 622-0123
----------------------------------------------------------------------------------------------------------------------------------
KZH Shoshone LLC                                        140 East 45/th/ Street                    140 East 45/th/ Street
c/o The Chase Manhattan Bank                            11/th/ Floor                              11/th/ Floor
140 East 45/th/ Street, 11/th/ Floor                    New York, NY 10017                        New York, NY 10017
New York, NY 10017                                      Contact: Virginia Conway                  Contact: Virginia Co
                                                        Phone: (212) 622-9353                     Phone: (212) 622-935
                                                        Fax: (212) 622-0123                       Fax: (212) 622-0123
----------------------------------------------------------------------------------------------------------------------------------
KZH Soleil LLC                                          140 East 45/th/ Street                    140 East 45/th/ Street
c/o The Chase Manhattan Bank                            11/th/ Floor                              11/th/ Floor
140 East 45/th/ Street, 11/th/ Floor                    New York, NY 10017                        New York, NY 10017
New York, NY 10017                                      Contact: Virginia Conway                  Contact: Virginia Conway
                                                        Phone: (212) 622-9353                     Phone: (212) 622-9353
                                                        Fax: (212) 622-0123                       Fax: (212) 622-0123
----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Senior Floating Rate Fund                   6803 South Tucson Way                     6803 South Tucson Way
c/o Oppenheimer Funds, Inc.                             Englewood, CO 80112-3924                  Englewood, CO 80112-3924
6803 South Tucson Way                                   Contact: Myk Pleet                        Contact: Myk Pleet
Englewood, CO 80112-3924                                Phone: (303) 768-2260                     Phone: (303) 768-2260
                                                        Fax: (303) 645-0933                       Fax: (303) 645-0933
----------------------------------------------------------------------------------------------------------------------------------
PPM Spyglass Funding Trust                              100 North Tryon Street                    100 North Tryon Street
c/o Banc of America Securities LLC                      NC1-007-06-07                             NC1-007-06-07
100 North Tryon Street                                  Charlotte, NC 28255                       Charlotte, NC 28255
NC1-007-06-07                                           Contact: Annabet Morris                   Contact: Annabet Morris
Charlotte, NC 28255                                     Phone: (704) 387-1939                     Phone: (704) 387-1939
                                                        Fax: (704) 388-0648                       Fax: (704) 388-0648
----------------------------------------------------------------------------------------------------------------------------------
Winged Foot Funding Trust                               100 North Tryon Street                    100 North Tryon Street
c/o Conseco Capital Management, Inc.                    NC1-007-06-07                             NC1-007-06-07
11825 N. Pennsylvania Street                            Charlotte, NC 28255                       Charlotte, NC 28255
Carmel, IN 46032                                        Contact: Annabet Morris                   Contact: Annabet Morris
                                                        Phone: (704) 387-1939                     Phone: (704) 387-193
                                                        Fax: (704) 388-0648                       Fax: (704) 388-0648
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
====================================================================================================================================
                                                                                                       Base Rate     Eurodollar
                                     Term A         Term B     Revolving Credit   Letter of Credit      Lending       Lending
  Name of Initial Lender Party     Commitment     Commitment      Commitment        Commitment/1/       Office         Office
====================================================================================================================================
  <S>                             <C>            <C>           <C>                <C>                  <C>           <C>
  TOTAL:                          $50,000,000    $200,000,000    $150,000,000        $50,000,000
====================================================================================================================================
</TABLE><PAGE>

                                                                   Exhibit 10.20

                              SECURITY AGREEMENT

                               Dated May 3, 2001

                                     From

                        The Grantors referred to herein

                                  as Grantors
                                  -----------

                                      to

                             BANK OF AMERICA, N.A.

                              as Collateral Agent
                              -------------------
<PAGE>

                       T A B L E  O F  C O N T E N T S
                       - - - - -  - -  - - - - - - - -

<TABLE>
<CAPTION>
Section                                                                    Page
<S>                                                                        <C>
Section 1.    Grant of Security..........................................    2
----------    -----------------

Section 2.    Security for Obligations...................................    7
----------    ------------------------

Section 3.    Grantors Remain Liable.....................................    7
----------    ----------------------

Section 4.    Delivery and Control of Security Collateral................    7
----------    -------------------------------------------

Section 5.    Maintaining the L/C Collateral Account.....................    7
----------    --------------------------------------

Section 6.    Investing of Amounts in the L/C Collateral Account.........    8
----------    --------------------------------------------------

Section 7.    Release of Amounts.........................................    8
----------    ------------------

Section 8.    Representations and Warranties.............................    8
----------    ------------------------------

Section 9.    Further Assurances.........................................   11
----------    ------------------

Section 10.   As to Equipment and Inventory..............................   12
-----------   -----------------------------

Section 11.   Insurance..................................................   12
-----------   ---------

Section 12.   Place of Perfection; Records; Collection of
-----------   -------------------------------------------
              Receivables................................................   13
              -----------

Section 13.   As to Intellectual Property Collateral.....................   14
-----------   --------------------------------------

Section 14.   Voting Rights; Dividends; Etc..............................   15
-----------   ------------------------------

Section 15.   As to the Assigned Agreements..............................   17
-----------   -----------------------------

Section 16.   Transfers and Other Liens; Additional Shares...............   17
-----------   --------------------------------------------

Section 17.   Collateral Agent Appointed Attorney-in-Fact................   17
-----------   -------------------------------------------

Section 18.   Collateral Agent May Perform...............................   18
-----------   ----------------------------

Section 19.   The Collateral Agent's Duties..............................   18
-----------   -----------------------------

Section 20.   Remedies...................................................   19
-----------   --------

Section 21.   Indemnity and Expenses.....................................   21
-----------   ----------------------

Section 22.   Amendments; Waivers; Additional Grantors; Etc..............   21
-----------   ----------------------------------------------

Section 23.   Notices; Etc...............................................   22
-----------   -------------
</TABLE>
<PAGE>

<TABLE>
<S>                                                                        <C>
Section 24.   Continuing Security Interest; Assignments under the
-----------   ---------------------------------------------------
              Credit Agreement...........................................   22
              ----------------

Section 25.   Release; Termination.......................................   22
-----------   --------------------

Section 26.   Security Interest Absolute.................................   23
-----------   --------------------------

Section 27.   Execution in Counterparts..................................   24
-----------   -------------------------

Section 28.   Governing Law..............................................    1
-----------   -------------
</TABLE>

Schedules
---------

Schedule I      -  Pledged Shares and Pledged Debt
Schedule II     -  Locations of Equipment and Inventory
Schedule III    -  Chief Executive Office and Federal Tax Identification Number
Schedule IV     -  Patents, Trademarks and Trade Names, Copyrights and Licenses
Schedule V      -  Assets Subject to Existing Contracts of Sale
Schedule VI     -  Receivables Evidenced by Chattel Paper
Schedule VII    -  Notices of Termination or Cancellation of Licenses

Exhibits
--------

Exhibit A       -  Form of Security Agreement Supplement
Exhibit B       -  Form of Intellectual Property Security Agreement
Exhibit C       -  Form of Intellectual Property Security Agreement Supplement

Appendices
----------

Appendix A
Appendix B
<PAGE>

                              SECURITY AGREEMENT

          SECURITY AGREEMENT dated May 3, 2001 made by DAVITA INC., a Delaware
corporation (the "Borrower"), the subsidiaries of the Borrower listed on the
signature pages hereof and the Additional Grantors (as hereinafter defined) (the
Borrower, the Persons so listed and the Additional Grantors being, collectively,
the "Grantors"), to Bank of America, N.A., as collateral agent (together with
any successor collateral agent appointed pursuant to Article VII of the Credit
Agreement (as hereinafter defined), the "Collateral Agent") for the Secured
Parties (as defined in the Credit Agreement).

          PRELIMINARY STATEMENTS.

          (1)  The Borrower has entered into a Credit Agreement dated as of May
3, 2001 (said Agreement, as it may hereafter be amended, amended and restated,
supplemented or otherwise modified from time to time, being the "Credit
Agreement") with the Lender Parties and the Agents (each as defined therein).
Each Grantor (other than the Borrower) has entered into a Subsidiary Guarantee
dated May 3, 2001, pursuant to which such Grantor has guaranteed the Obligations
of the Borrower under the Credit Agreement. Capitalized terms used herein
without definition shall have the meanings assigned thereto in the Credit
Agreement.

          (2)  Pursuant to the Credit Agreement, the Borrower, from time to
time, may enter into interest with Hedge Agreements with counterparties that are
Lender Parties at the time such Hedge Agreements are entered into (or Affiliates
of such Lender Parties at such time) (all such Hedge Agreements being the
"Secured Hedge Agreements").

          (3)  Pursuant to the Credit Agreement, the Grantors are entering into
this Agreement in order to grant to the Collateral Agent for the ratable benefit
of the Secured Parties a security interest in all of their personal property and
fixtures now owned or hereafter acquired.

          (4)  Each Grantor is the owner of the shares (the "Initial Pledged
Shares") of stock set forth opposite such Grantor's name on and as otherwise
described in Part I of Schedule I hereto and issued by the corporations named
therein and of the indebtedness (the "Initial Pledged Debt") set forth opposite
such Grantor's name on and as otherwise described in Part II of Schedule I
hereto and issued by the obligors named therein.

          (5)  The Borrower has opened a collateral securities account, Account
No. ____ (the "L/C Collateral Account"), with the Collateral Agent at its office
at Charlotte, North Carolina, in the name of the Collateral Agent and under the
sole dominion of the Collateral Agent and subject to the terms of this
Agreement.

          (6)  It is a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
that the Grantors shall have granted the assignment and security interest and
made the pledge and assignment contemplated by this Agreement.

          (7)  Each Grantor will derive substantial direct and indirect benefit
from the transactions contemplated by the Loan Documents.
<PAGE>

                                       2

          (8)  Terms defined in the Credit Agreement and not otherwise defined
in this Agreement are used in this Agreement as defined in the Credit Agreement.
Further, unless otherwise defined in this Agreement or in the Credit Agreement,
terms defined in Article 8 or 9 of the Uniform Commercial Code in effect in the
State of New York ("N.Y. Uniform Commercial Code") are used in this Agreement as
so defined.

          NOW, THEREFORE, in consideration of the premises and in order to
induce the Lender Parties to make Advances and issue Letters of Credit under the
Credit Agreement, each Grantor hereby agrees with the Collateral Agent for the
ratable benefit of the Secured Parties as follows:

          Section 1.  Grant of Security.  Each Grantor hereby pledges to the
                      -----------------
Collateral Agent for the ratable benefit of the Secured Parties, and hereby
grants to the Collateral Agent for the ratable benefit of the Secured Parties a
security interest in, such Grantor's right, title and interest in and to the
following, in each case, as to each type of property described below, whether
now owned or hereafter acquired by such Grantor, wherever located, and whether
now or hereafter existing or arising (collectively, the "Collateral"):

          (a)  all equipment in all of its forms, all fixtures and all parts
     thereof and all accessions thereto (any and all such equipment, fixtures,
     parts and accessions being the "Equipment");

          (b)  all inventory in all of its forms and all accessions thereto and
     products thereof and documents therefor (any and all such inventory,
     accessions, products and documents being the "Inventory");

          (c)  all accounts, chattel paper, instruments, general intangibles
     (other than general intangibles consisting of Security Collateral,
     Intellectual Property Collateral or Agreement Collateral which are included
     as "Collateral" in the applicable provisions of this Section 1) and other
     obligations of any kind, whether or not arising out of or in connection
     with the sale or lease of goods or the rendering of services and whether or
     not earned by performance, and all rights now or hereafter existing in and
     to all security agreements, leases and other contracts securing or
     otherwise relating to any such accounts, chattel paper, instruments,
     general intangibles or obligations (any and all such accounts, chattel
     paper, instruments, general intangibles and obligations, to the extent not
     referred to in clause (d), (e) or (f) below, being the "Receivables", and
     any and all such security agreements, leases and other contracts being the
     "Related Contracts"). "Receivables" shall include, but not be limited to,
     any accounts, contract rights, notes, drafts and other obligations or
     rights to payment of every kind or description now or any time hereafter
     arising, directly or indirectly, out of the provision of Dialysis Services
     and/or the provision of Ancillary Services specifically including, but not
     limited to, all accounts receivable and rights to payment through federal,
     state or local governmental programs, including without limitation, all
     Governmental Health Receivables, all other third-party payer programs and
     health care insurance receivables and other private pay receivables. As
     used herein, (i) "Governmental Health Receivables" means Medicaid
     Receivables, Medicare Receivables or VA Receivables, (ii) "Medicaid
     Receivable"
<PAGE>

                                       3

     means any Receivable with respect to which the obligor is a state
     governmental authority (or agent thereof) obligated to pay, pursuant to
     federal or state Medicaid program statutes or regulations, for services
     rendered to eligible beneficiaries thereunder; (iii) "Medicare Receivable"
     means any Receivable with respect to which the obligor is a federal
     governmental authority (or agent thereof) obligated to pay, pursuant to
     federal Medicare Program statutes or regulations, for services rendered to
     eligible beneficiaries thereunder and (iv) "VA Receivable" means any
     Receivable with respect to which the obligor is the Veterans'
     Administration or any successor thereto (or any agent thereof);

          (d)  the following (the "Security Collateral"):

               (i)  the Initial Pledged Shares and the certificates, if any,
          representing the Initial Pledged Shares, and all dividends, cash,
          instruments and other property from time to time received, receivable
          or otherwise distributed in respect of or in exchange for any or all
          of the Initial Pledged Shares;

              (ii)  the Initial Pledged Debt and the instruments, if any,
          evidencing the Initial Pledged Debt, and all interest, cash,
          instruments and other property from time to time received, receivable
          or otherwise distributed in respect of or in exchange for any or all
          of the Initial Pledged Debt;

             (iii)  all additional shares of stock from time to time acquired
          by such Grantor in any manner (such shares, together with the Initial
          Pledged Shares, being the "Pledged Shares"), and the certificates, if
          any, representing such additional shares, and all dividends, cash,
          instruments and other property from time to time received, receivable
          or otherwise distributed in respect of or in exchange for any or all
          of such shares; provided, that if the issuer of any of such Pledged
          Shares is a controlled foreign corporation (used hereinafter as such
          term is defined in Section 975(a) or a successor provision of the
          Internal Revenue Code), the Pledged Shares shall not include any
          shares of stock of such issuer in excess of the number of shares of
          such issuer possessing up to but not exceeding 65% of the voting power
          of all classes of capital stock entitled to vote of such issuer, and
          all dividends, cash, warrants, rights, instruments and other property
          or proceeds from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of such
          Pledged Shares;

              (iv)  all additional indebtedness from time to time owed to such
          Grantor (such indebtedness, together with the Initial Pledged Debt,
          being the "Pledged Debt") and the instruments, if any, evidencing such
          indebtedness, and all interest, cash, instruments and other property
          from time to time received, receivable or otherwise distributed in
          respect of or in exchange for any or all of such indebtedness; and

               (v)  all other investment property in which such Grantor has now,
          or acquires from time to time hereafter, any right, title or interest
          in any manner, and the certificates or instruments, if any,
          representing or evidencing such investment property, and all
          dividends, interest, distributions, value, cash, instruments and
<PAGE>

                                       4

          other property from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of such
          investment property;

          (e) each of the agreements to which such Grantor is now or may
     hereafter become a party, in each case as such agreements may be amended,
     amended and restated, supplemented or otherwise modified from time to time
     (collectively, the "Assigned Agreements"), including, without limitation,
     (i) all rights of such Grantor to receive moneys due and to become due
     under or pursuant to the Assigned Agreements, (ii) all rights of such
     Grantor to receive proceeds of any insurance, indemnity, warranty or
     guaranty with respect to the Assigned Agreements, (iii) claims of such
     Grantor for damages arising out of or for breach of or default under the
     Assigned Agreements and (iv) the right of such Grantor to terminate the
     Assigned Agreements, to perform thereunder and to compel performance and
     otherwise exercise all remedies thereunder (all such Collateral being the
     "Agreement Collateral");

          (f)  the following (collectively, the "Account Collateral"):

               (i)  the L/C Collateral Account, all financial assets from time
          to time credited to the L/C Collateral Account (including, without
          limitation, all Cash Equivalents from time to time credited to the L/C
          Collateral Account), and all dividends, interest, cash, instruments
          and other property from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of such
          financial assets;

              (ii)  all other deposit accounts of such Grantor from time to
          time, all funds held therein and all certificates and instruments, if
          any, from time to time representing or evidencing such deposit
          accounts;

             (iii)  all notes, certificates of deposit, deposit accounts, checks
          and other instruments from time to time delivered to or otherwise
          possessed by the Collateral Agent for or on behalf of such Grantor,
          including, without limitation, those delivered or possessed in
          substitution for or in addition to any or all of the then existing
          Account Collateral; and

              (iv)  all interest, dividends, cash, instruments and other
          property from time to time received, receivable or otherwise
          distributed in respect of or in exchange for any or all of the then
          existing Account Collateral; and

          (g)  the following (collectively, the "Intellectual Property
     Collateral"):

               (i)  all United States, international and foreign patents, patent
          applications and statutory invention registrations, including, without
          limitation, the patents and patent applications set forth in Schedule
          IV hereto (as such Schedule IV may be supplemented from time to time
          by supplements to this Agreement, each such supplement being in
          substantially the form of Exhibit C hereto (an "IP Security Agreement
          Supplement"), executed and delivered by such Grantor to the Collateral
          Agent from time to time), together with all reissues, divisions,
          continuations, continuations-in-part, extensions and reexaminations
<PAGE>

                                       5

          thereof, all inventions therein, all rights therein provided by
          international treaties or conventions and all improvements thereto,
          and all other rights of any kind whatsoever of such Grantor accruing
          thereunder or pertaining thereto (the "Patents");

              (ii)  all trademarks (including, without limitation, service
          marks), certification marks, collective marks, trade dress, logos,
          domain names, product configurations, trade names, business names,
          corporate names and other source identifiers, whether or not
          registered, whether currently in use or not, including, without
          limitation, all common law rights and registrations and applications
          for registration thereof, including, without limitation, the trademark
          registrations and trademark applications set forth in Schedule IV
          hereto (as such Schedule IV may be supplemented from time to time by
          IP Security Agreement Supplements executed and delivered by such
          Grantor to the Collateral Agent from time to time), and all other
          marks registered in the U.S. Patent and Trademark Office or in any
          office or agency of any State or Territory of the United States or any
          foreign country (but excluding any United States intent-to-use
          trademark application prior to the filing and acceptance of a
          Statement of Use or an Amendment to allege use in connection therewith
          to the extent that a valid security interest may not be taken in such
          an intent-to-use trademark application under applicable law), and all
          rights therein provided by international treaties or conventions, all
          reissues, extensions and renewals of any of the foregoing, together in
          each case with the goodwill of the business connected therewith and
          symbolized thereby, and all rights corresponding thereto throughout
          the world and all other rights of any kind whatsoever of such Grantor
          accruing thereunder or pertaining thereto (the "Trademarks");

             (iii)  all copyrights, copyright applications, copyright
          registrations and like protections in each work of authorship, whether
          statutory or common law, whether published or unpublished, any
          renewals or extensions thereof, all copyrights of works based on,
          incorporated in, derived from, or relating to works covered by such
          copyrights, including, without limitation, the copyright registrations
          and copyright applications set forth in Schedule IV hereto including,
          without limitation, the trademark registrations and trademark
          applications set forth in Schedule IV hereto (as such Schedule IV may
          be supplemented from time to time by IP Security Agreement Supplements
          executed and delivered by such Grantor to the Collateral Agent from
          time to time), together with all rights corresponding thereto
          throughout the world and all other rights of any kind whatsoever of
          such Grantor accruing thereunder or pertaining thereto (the
          "Copyrights");

              (iv)  all confidential and proprietary information, including,
          without limitation, know-how, trade secrets, manufacturing and
          production processes and techniques, inventions, research and
          development information, technical data, financial, marketing and
          business data, pricing and cost information, business and marketing
          plans and customer and supplier lists and information (the "Trade
          Secrets");
<PAGE>

                                       6

               (v)  all computer software programs and databases (including,
          without limitation, source code, object code and all related
          applications and data files), firmware, and documentation and
          materials relating thereto, and all rights with respect to the
          foregoing, together with any and all options, warranties, service
          contracts, program services, test rights, maintenance rights,
          improvement rights, renewal rights and indemnifications and any
          substitutions, replacements, additions or model conversions of any of
          the foregoing (the "Computer Software");

              (vi)  all license agreements, permits, authorizations and
          franchises, whether with respect to the Patents, Trademarks,
          Copyrights, Trade Secrets or Computer Software, or with respect to the
          patents, trademarks, copyrights, trade secrets, computer software or
          other proprietary right of any other Person, including, without
          limitation, the license agreements set forth in Schedule IV hereto (as
          such Schedule IV may be supplemented from time to time by IP Security
          Agreement Supplements executed and delivered by such Grantor to the
          Collateral Agent from time to time), and all income, royalties and
          other payments now or hereafter due and/or payable with respect
          thereto, subject, in each case, to the terms of such license
          agreements, permits, authorizations and franchises, (the "Licenses");
          and

             (vii)  any and all claims for damages for past, present and
          future infringement, misappropriation or breach with respect to the
          Patents, Trademarks, Copyrights, Trade Secrets, Computer Software or
          Licenses, with the right, but not the obligation, to sue for and
          collect, or otherwise recover, such damages; and

          (h)  all proceeds of any and all of the Collateral (including, without
     limitation, proceeds that constitute property of the types described in
     clauses (a) through (g) of this Section 1 and this clause (h)) and, to the
     extent not otherwise included, all (i) payments under insurance (whether or
     not the Collateral Agent is the loss payee thereof), or any indemnity,
     warranty or guaranty, payable by reason of loss or damage to or otherwise
     with respect to any of the foregoing Collateral and (ii) cash.

          Notwithstanding anything herein to the contrary, in no event shall the
Collateral include, and no Grantor shall be deemed to have granted a security
interest in or pledged (i) the assets subject to existing contracts of sale
specified in Schedule V, or (ii) any of such Grantor's rights or interests in
any license, contract, or agreement to which such Grantor is a party or any
Security Collateral (other than stock issued by wholly owned Subsidiaries of the
Borrower) owned by such Grantor or any of its rights or interests thereunder to
the extent, but only to the extent, that such a grant would, under the terms of
such license, contract or agreement or otherwise, result in a breach of the
terms of, or constitute a default under any license, contract, or agreement to
which such Grantor is a party or any Security Collateral (other than stock
issued by wholly owned Subsidiaries of the Borrower) owned by such Grantor
(other than to the extent that any such term would be rendered ineffective
pursuant to Section 9-318(4) of the UCC or any other applicable law (including
the Bankruptcy Code) or principles of equity); provided, that immediately upon
the ineffectiveness, lapse or termination of any such provision, the Collateral
shall include, and such Grantor shall be deemed to have granted a security
interest in, all such rights and interests as if such provision had never been
in effect.
<PAGE>

                                       7

          In the event that any asset of a Grantor is excluded from the
Collateral by virtue of clause (ii) of the foregoing paragraph, upon request of
the Collateral Agent such Grantor agrees to use all reasonable efforts to obtain
all requisite consents to enable such Grantor to provide a security interest in
such asset pursuant hereto as promptly as practicable.

          Section 2.  Security for Obligations.  This Agreement secures, in the
                      ------------------------
case of each Grantor, the payment of all Obligations of such Grantor now or
hereafter existing under the Loan Documents and the secured Hedge Agreements,
whether direct or indirect, absolute or contingent, and whether for principal,
reimbursement obligations, interest, fees, premiums, penalties,
indemnifications, contract causes of action, costs, expenses or otherwise (all
such Obligations being the "Secured Obligations"). Without limiting the
generality of the foregoing, this Agreement secures, as to each Grantor, the
payment of all amounts that constitute part of the Secured Obligations and would
be owed by such Grantor to any Secured Party under the Loan Documents but for
the fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving a Loan Party.

          Section 3.  Grantors Remain Liable.  Anything herein to the contrary
                      ----------------------
notwithstanding, (a) each Grantor shall remain liable under the contracts and
agreements included in such Grantor's Collateral to the extent set forth therein
to perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by the Collateral Agent
of any of the rights hereunder shall not release any Grantor from any of its
duties or obligations under the contracts and agreements included in the
Collateral and (c) no Secured Party shall have any obligation or liability under
the contracts and agreements included in the Collateral by reason of this
Agreement or any other Loan Document, nor shall any Secured Party be obligated
to perform any of the obligations or duties of any Grantor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.

          Section 4.  Delivery and Control of Security Collateral. All
                      -------------------------------------------
certificates or instruments representing or evidencing Security Collateral shall
be delivered to and held by or on behalf of the Collateral Agent pursuant hereto
and shall be in suitable form for transfer by delivery, or shall be accompanied
by duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. The Collateral Agent shall have
the right, at any time in its discretion and without notice to any Grantor, to
transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Security Collateral, subject only to the revocable
rights specified in Section 14(a).

          (a)  With respect to any Security Collateral in which any Grantor has
any right, title or interest and that constitutes an uncertificated security, at
the request of the Collateral Agent such Grantor will cause the issuer thereof
either (i) to register the Collateral Agent as the registered owner of such
security or (ii) to agree in writing with such Grantor and the Collateral Agent
that such issuer will comply with instructions with respect to such security
originated by the Collateral Agent without further consent of such Grantor, such
agreement to be in form and substance satisfactory to the Collateral Agent.

          Section 5.  Maintaining the L/C Collateral Account.  So long as any
          --------------------------------------------------
Advance or any other Obligation of any Loan Party under any Loan Document shall
remain unpaid, any Letter of Credit shall be outstanding or any Lender shall
have any Commitment under the Credit
<PAGE>

                                       8

Agreement the Borrower will maintain the L/C Collateral Account with the
Collateral Agent. It shall be a term and condition of the L/C Collateral
Account, notwithstanding any term or condition to the contrary in any other
agreement relating to the L/C Collateral Account, and except as otherwise
provided by the provisions of Sections 7 and 20, that no amount (including
interest on Cash Equivalents credited thereto) will be paid or released to or
for the account of, or withdrawn by or for the account of, the Borrower or any
other Person from the L/C Collateral Account.

          Section 6. Investing of Amounts in the L/C Collateral Account. The
          --------------------------------------------------------------
Collateral Agent will, subject to the provisions of Sections 7 and 20, (a)
invest amounts received with respect to the L/C Collateral Account in such Cash
Equivalents credited to the L/C Collateral Account as the Borrower may select
and (b) invest interest paid on the Cash Equivalents referred to in clause (a)
above, and reinvest other proceeds of any such Cash Equivalents that may mature
or be sold, in each case in such Cash Equivalents credited to the L/C Collateral
Account as the Borrower may select. Interest and proceeds that are not invested
or reinvested in Cash Equivalents as provided above shall be deposited and held
in a deposit account with the Collateral Agent and under the sole control and
dominion of the Collateral Agent, such deposit account to be deemed to
constitute part of the L/C Collateral Account. In addition, the Collateral Agent
shall have the right to exchange such Cash Equivalents for similar Cash
Equivalents of smaller or larger determinations, or for other Cash Equivalents,
credited to the L/C Collateral Account.

          Section 7.  Release of Amounts. So long as no Default shall have
          ------------------------------
occurred and be continuing and there are no unpaid Obligations under the Loan
Documents, the Collateral Agent will pay and release to the Borrower or at its
order such amount, if any, as is then on deposit in the L/C Collateral Account
to the extent permitted to be released under the terms of the Credit Agreement.

          Section 8.  Representations and Warranties. Each Grantor represents
                      ------------------------------
and warrants as follows:

          (a)  All of the Equipment and Inventory of such Grantor are located at
     the places specified therefor in Schedule II hereto, as such Schedule II
     may be amended from time to time pursuant to Section 10(a). The chief
     executive office of such Grantor is located at the address specified
     therefor in Schedule III hereto, as such Schedule III may be amended from
     time to time pursuant to Section 12(a). Such Grantor's federal tax
     identification number is set forth opposite such Grantor's name in Schedule
     III hereto. All Security Collateral consisting of certificated securities
     and instruments have been delivered to the Collateral Agent. Except as
     disclosed on Schedule VI hereto, none of the Receivables is evidenced by
     any chattel paper.

          (b)  Such Grantor is the legal and beneficial owner of the Collateral
     of such Grantor free and clear of any Lien, claim, option or right of
     others, except for Permitted Liens and the security interest created under
     this Agreement.  No effective financing statement or other instrument
     similar in effect covering all or any part of such Collateral or listing
     such Grantor or any trade name of such Grantor as debtor is on file in any
     recording office, except such as may have been filed in favor of the
     Collateral Agent
<PAGE>

                                       9

     relating to the Loan Documents and except for Permitted Liens. Except as
     disclosed on Schedule IV hereto, no Grantor has any trade names.

          (c)  Such Grantor has exclusive possession and control of the
     Equipment and Inventory, except as disclosed on Schedule II hereto.

          (d)  The Pledged Shares have been duly authorized and validly issued
     and are fully paid and non-assessable.  The Pledged Debt pledged by each
     Grantor hereunder (i) has been duly authorized, authenticated or issued,
     and (ii) is the legal, valid and binding obligation of the issuers thereof.

          (e)  The Initial Pledged Shares constitute the percentage of the
     issued and outstanding shares of stock of the issuers thereof indicated on
     Schedule I hereto as of the Closing Date. The Initial Pledged Debt
     constitutes all of the outstanding indebtedness owed to such Grantor by the
     issuers thereof and is outstanding, as of the Closing Date, in the
     principal amount indicated on Schedule I hereto as of the Closing Date.

          (f)  All of the investment property owned by such Grantor as of the
     Closing Date is listed on Schedule I hereto.

          (g)  Upon the making of the filings and other actions necessary to
     perfect the security interest in the Collateral of such Grantor created
     under this Agreement, this Agreement will create in favor of the Collateral
     Agent for the benefit of the Secured Parties a valid perfected first
     priority security interest in the Collateral of such Grantor (subject to
     Permitted Liens to the extent such Liens have priority to the security
     interests created hereunder), securing the payment of the Secured
     Obligations.

          (h)  No authorization or approval or other action by, and no notice to
     or filing with, any governmental authority or regulatory body or any other
     third party is required for (i) the grant by such Grantor of the
     assignment, pledge and security interest granted hereunder or for the
     execution, delivery or performance of this Agreement by such Grantor, (ii)
     the perfection or maintenance of the pledge and security interest created
     hereunder on such of the Collateral located in the United States in which a
     Lien may be perfected by the filing of financing statements, the
     recordation of security agreements with the U.S. Patent and Trademark
     Office or the U.S. Copyright Office or the delivery of Collateral
     (including the first priority nature of such pledge or security interest),
     except for the filing of financing and continuation statements under the
     Uniform Commercial Code, the recordation of the Intellectual Property
     Security Agreements referred to in Section 14(f) with the U.S. Patent and
     Trademark Office and the U.S. Copyright Office (in the case of copyrights,
     limited to copyrights that are recorded in the U.S. Copyright Office) and
     the actions described in Section 4 with respect to Security Collateral, or
     (iii) for the exercise by the Collateral Agent of its voting or other
     rights provided for in this Agreement or the remedies in respect of the
     Collateral pursuant to this Agreement, except as may be required in
     connection with the exercise of the rights of a secured creditor by laws
     affecting such rights generally, or the disposition of any portion of the
     Security Collateral by laws affecting the offering and sale of securities
     generally.
<PAGE>

                                       10

          (i)  As to itself and its Intellectual Property Collateral:

               (i) To such Grantor's knowledge, no claim has been asserted that
          the use of such Intellectual Property Collateral does or may infringe
          upon the intellectual property rights of any third party.

              (ii) (A) With respect to Collateral owned by such Grantor, such
          Grantor is the exclusive owner of the entire and unencumbered right,
          title and interest in and to such Intellectual Property Collateral and
          is entitled to use all such Intellectual Property Collateral, subject
          to the license terms of the Licenses and (B) with respect to
          Collateral consisting of licenses of Intellectual Property in favor of
          such Grantor, such Grantor has the valid right to use the Collateral,
          subject to the terms of the applicable License.

             (iii) The Intellectual Property Collateral set forth on Schedule
          IV hereto includes all of the patents, patent applications, trademark
          registrations and applications, copyright registrations and
          applications and Licenses owned by such Grantor.

              (iv) The Intellectual Property Collateral is subsisting, and has
          not been adjudged invalid or unenforceable in whole or part, and to
          the best of such Grantor's knowledge, is valid and enforceable.

               (v) Such Grantor has made or performed all filings, recordings
          and other acts and has paid all required fees and taxes to maintain
          and protect its interest in such items of Intellectual Property
          Collateral in full force and effect in such jurisdictions, in each
          case, as such Grantor deems necessary in its reasonable commercial
          judgment, and to protect and maintain its interest therein.

              (vi) No action, suit, investigation, litigation or proceeding has
          been asserted or is pending against such Grantor or naming such
          Grantor as a party or, to such Grantor's knowledge, threatened against
          such Grantor (i) based upon or challenging or seeking to deny or
          restrict the use by such Grantor of any of the Intellectual Property
          Collateral, or (ii) alleging that any services provided by, processes
          used by, or products manufactured or sold by, such Grantor infringe
          upon or misappropriate any patent, trademark, copyright or any other
          proprietary right of any third party.  To such Grantor's knowledge, no
          Person is engaging in any activity that infringes upon or
          misappropriates the Intellectual Property Collateral or upon the
          rights of such Grantor therein.  Except as set forth on Schedule IV
          hereto, such Grantor has not granted any license, release, covenant
          not to sue, non-assertion assurance, or other right to any Person with
          respect to any part of the Intellectual Property Collateral.  The
          consummation of the Transaction will not result in the termination or
          impairment of any of the Intellectual Property Collateral in a manner
          that would constitute a Material Adverse Effect.
<PAGE>

                                       11

             (vii)  With respect to each License: (A) such License will not
          cease to be valid and binding and in full force and effect on terms
          identical to those currently in effect as a result of the rights and
          interest granted herein, nor will the grant of such rights and
          interest constitute a breach or default under such License or
          otherwise give the licensor or licensee a right to terminate such
          License; (B) except as set forth on Schedule VII hereto, such Grantor
          has not received any notice of termination or cancellation under such
          License; (C) except as set forth on Schedule VII hereto, such Grantor
          has not received any notice of a breach or default under such License,
          which breach or default has not been cured; and (D) such Grantor has
          not granted to any other third party any rights, adverse or otherwise,
          under such License.

          Section 9. Further Assurances. Each Grantor agrees that from time to
                     ------------------
time, at the expense of such Grantor, such Grantor will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary or desirable, or that the Collateral Agent may reasonably
request, in order to perfect and protect any pledge, assignment or security
interest granted or purported to be granted by such Grantor hereunder or to
enable the Collateral Agent to exercise and enforce its rights and remedies
hereunder with respect to any Collateral of such Grantor. Without limiting the
generality of the foregoing, each Grantor will promptly with respect to
Collateral of such Grantor: (i) at the request of the Collateral Agent, mark
conspicuously each of its records pertaining to such Collateral with a legend,
in form and substance satisfactory to the Collateral Agent, indicating that
Collateral is subject to the security interest granted hereby; (ii) if any such
Collateral shall be evidenced by a promissory note or other instrument or
chattel paper, deliver and pledge to the Collateral Agent hereunder such note or
instrument or chattel paper duly indorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance satisfactory to
the Collateral Agent; (iii) execute and file such financing or continuation
statements, or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Collateral Agent may reasonably request, in
order to perfect and preserve the security interest granted or purported to be
granted by such Grantor hereunder; (iv) deliver and pledge to the Collateral
Agent for the benefit of the Secured Parties certificates representing Security
Collateral that constitutes certificated securities, accompanied by undated
stock or bond powers executed in blank; and (v) deliver to the Collateral Agent
evidence that all other action that the Collateral Agent may deem reasonably
necessary or desirable in order to perfect and protect the security interest
created by such Grantor under this Agreement has been taken.

          (a)  Each Grantor hereby authorizes the Collateral Agent to file one
or more financing or continuation statements, and amendments thereto, relating
to all or any part of the Collateral of such Grantor without the signature of
such Grantor where permitted by law. A photocopy or other reproduction of this
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law.

          (b)  Each Grantor will furnish to the Collateral Agent from time to
time statements and schedules further identifying and describing the Collateral
of such Grantor and such other reports in connection with such Collateral as the
Collateral Agent may reasonably request, all in reasonable detail.
<PAGE>

                                       12

          Section 10.  As to Equipment and Inventory. Each Grantor will keep the
Equipment and Inventory of such Grantor (other than Inventory sold in the
ordinary course of business) at the places therefor specified in Section 8(a)
or, except in circumstances governed by Section 5.01(j) of the Credit Agreement,
upon 30 days' prior written notice to the Collateral Agent, at such other places
in a jurisdiction where all action required by Section 9 shall have been taken
with respect to such Equipment and Inventory (and, upon the taking of such
action in such jurisdiction, Schedule II hereto shall be automatically amended
to include such other places). In any case governed by Section 5.01(j) of the
Credit Agreement, such Grantor will comply with the provisions of such section.

          (a)  In all cases subject to its rights to sell or dispose of
obsolete, damaged or worn-out items, or items that are no longer useful, as
provided in Section 5.02(e)(iv) of the Credit Agreement, each Grantor will cause
the Equipment of such Grantor to be maintained and preserved in the good
condition, repair and working order, ordinary wear and tear excepted, and will
forthwith, or in the case of any loss or damage to any of such Equipment as soon
as practicable after the occurrence thereof, make or cause to be made all
repairs, replacements and other improvements in connection therewith that are
necessary or desirable to such end.

          (b)  Each Grantor will pay promptly when due all property and other
taxes, assessments and governmental charges or levies imposed upon, and all
claims (including, without limitation, claims for labor, materials and supplies)
against, the Equipment and Inventory of such Grantor, except to the extent
payment thereof is not required by Section 5.01(b) of the Credit Agreement.

          Section 11. Insurance. Each Grantor will, at its own expense, maintain
                       ---------
insurance with respect to the Equipment and Inventory of such Grantor in such
amounts, against such risks, in such form and with such insurers, as required
under Section 5.01(d) of the Credit Agreement. Each policy of each Grantor for
liability insurance shall provide for all losses to be paid on behalf of the
Collateral Agent and such Grantor as their interests may appear, and each policy
for property damage insurance shall provide for all losses to be paid directly
to the Collateral Agent during the continuance of a Default. Each such policy
shall in addition (i) name such Grantor and the Collateral Agent as insured
parties thereunder (without any representation or warranty by or obligation upon
the Collateral Agent) as their interests may appear, (ii) contain the agreement
by the insurer that any loss thereunder shall be payable to the Collateral Agent
notwithstanding any action, inaction or breach of representation or warranty by
such Grantor, (iii) provide that there shall be no recourse against the
Collateral Agent for payment of premiums or other amounts with respect thereto
and (iv) provide that at least 10 days' prior written notice of cancellation or
of lapse shall be given to the Collateral Agent by the insurer. Each Grantor
will, if so requested by the Collateral Agent, deliver to the Collateral Agent
original or duplicate policies of such insurance and, as often as the Collateral
Agent may reasonably request, a report of a reputable insurance broker with
respect to such insurance. Further, each Grantor will, at the request of the
Collateral Agent, duly execute and deliver instruments of assignment of such
insurance policies to comply with the requirements of Section 9 and cause the
insurers to acknowledge notice of such assignment.

          (a)  Reimbursement under any liability insurance maintained by any
Grantor pursuant to this Section 11 may be paid directly to the Person who shall
have incurred liability
<PAGE>

                                       13

covered by such insurance. In case of any loss involving damage to Equipment or
Inventory when subsection (c) of this Section 11 is not applicable, the
applicable Grantor will make or cause to be made the necessary repairs to or
replacements of such Equipment or Inventory, and any proceeds of insurance
properly received by or released to such Grantor shall be used by such Grantor,
except as otherwise required or permitted hereunder or under the Credit
Agreement, to pay, or as reimbursement for, the costs of such repairs or
replacements.

          (b)  So long as no Default shall have occurred and be continuing, all
insurance payments received by the Collateral Agent in connection with any loss,
damage or destruction of any Inventory or Equipment will be released by the
Collateral Agent to the applicable Grantor for the repair, replacement or
restoration thereof, subject to such terms and conditions with respect to the
release thereof as the Collateral Agent may reasonably require. To the extent
that (i) the amount of any such insurance payments exceeds the cost of any such
repair, replacement or restoration, or (ii) such insurance payments are not
otherwise required by the applicable Grantor to complete any such repair,
replacement or restoration required hereunder, the Collateral Agent will release
the amount thereof to such Grantor except during the continuance of any Default
and during which period the Collateral Agent may hold or continue to hold such
amount as additional security for the Secured Obligations of such Grantor.
During the continuance of any Default, all insurance payments in respect of such
Equipment or Inventory shall be paid to the Collateral Agent and shall, in the
Collateral Agent's sole discretion, (i) be released to the applicable Grantor to
be applied as set forth in the first sentence of this subsection (c) or (ii) be
held as additional Collateral hereunder or applied as specified in Section
20(b).

          Section 12.  Place of Perfection; Records; Collection of Receivables.
                       -------------------------------------------------------
Each Grantor will keep its chief executive office at the location therefor
specified in Section 8(a) or, upon 30 days' prior written notice to the
Collateral Agent, at such other location in a jurisdiction where all actions
required by Section 9 shall have been taken with respect to the Collateral of
such Grantor (and, upon the taking of such action in such jurisdiction, Schedule
III hereto shall be automatically amended to include such other location). Each
Grantor will hold and preserve its records relating to the Collateral and will
permit representatives of the Collateral Agent at any time during normal
business hours to inspect and make abstracts from such records and other
documents.

          (a)  Except as otherwise provided in this subsection (b), each Grantor
will continue to collect, at its own expense, all amounts due or to become due
such Grantor under the Receivables and the Related Contracts. In connection with
such collections, such Grantor may take (and during the continuance of an Event
of Default, at the Collateral Agent's direction, will take) such action as such
Grantor or the Collateral Agent may deem necessary or advisable to enforce
collection of the Receivables and the Related Contracts; provided, however, that
the Collateral Agent shall have the right at any time, upon the occurrence and
during the continuance of an Event of Default and upon written notice to such
Grantor of its intention to do so, to notify the Obligors under any Receivables
or Related Contracts of the assignment of such Receivables or Related Contracts
to the Collateral Agent and to direct such Obligors to make payment of all
amounts due or to become due to such Grantor thereunder directly to the
Collateral Agent and, upon such notification and at the expense of such Grantor,
to enforce collection of any such Receivables or Related Contracts, and to
adjust, settle or compromise the amount or payment thereof, in the same manner
and to the same extent as such Grantor might have done. After
<PAGE>

                                       14

receipt by any Grantor of the notice from the Collateral Agent referred to in
the proviso to the preceding sentence, (i) all amounts and proceeds (including
instruments) received by such Grantor in respect of the Receivables and the
Related Contracts of such Grantor shall be received in trust for the benefit of
the Collateral Agent hereunder, shall be segregated from other funds of such
Grantor and shall be forthwith paid over to the Collateral Agent in the same
form as so received (with any necessary endorsement) to be deposited in the
Collateral Account and either, as the Collateral Agent may in its sole
discretion determine, (A) released to such Grantor or (B) applied as provided in
Section 20(b) and (ii) such Grantor will not adjust, settle or compromise the
amount or payment of any Receivable, release wholly or partly any Obligor
thereof, or allow any credit or discount thereon. No Grantor will permit or
consent to the subordination of its right to payment under any of the
Receivables or the Related Contracts to any other indebtedness or obligations of
the Obligor thereof.

          Section 13. As to Intellectual Property Collateral. With respect to
                      --------------------------------------
each item of its Intellectual Property Collateral, each Grantor agrees, unless
and until each Grantor, in its reasonable commercial judgment, decides
otherwise, to take, at its expense, all necessary steps, including, without
limitation, in the U.S. Patent and Trademark Office, the U.S. Copyright Office
and any other governmental authority, to (i) maintain the validity and
enforceability of each such item of Intellectual Property Collateral and
maintain each such item of Intellectual Property Collateral in full force and
effect, and (ii) pursue the registration and maintenance of each patent,
trademark, or copyright registration or application, now or hereafter included
in the Intellectual Property Collateral of such Grantor, including, without
limitation, the payment of required fees and taxes, the filing of responses to
office actions issued by the U.S. Patent and Trademark Office, the U.S.
Copyright Office or other governmental authorities, the filing of applications
for renewal or extension, the filing of affidavits under Sections 8 and 15 of
the U.S. Trademark Act, the filing of divisional, continuation, continuation-in-
part, reissue and renewal applications or extensions, the payment of maintenance
fees and the participation in interference, reexamination, opposition,
cancellation, infringement and misappropriation proceedings. No Grantor shall,
without the written consent of the Collateral Agent upon or after an Event of
Default, discontinue use of or otherwise abandon any Intellectual Property
Collateral, or abandon any right to file an application for letters patent,
trademark, or copyright, unless such Grantor shall have previously determined
that such use or the pursuit or maintenance of such Intellectual Property
Collateral is no longer desirable in the conduct of such Grantor's business and
that the loss thereof would not be reasonably likely to have a Material Adverse
Effect. In the case of any material Intellectual Property Collateral, such
Grantor will give prompt notice of any such abandonment to the Collateral Agent.

          (a)  Each Grantor agrees promptly to notify the Collateral Agent if
such Grantor learns (i) that any item of the Intellectual Property Collateral
may have become abandoned, placed in the public domain, invalid or
unenforceable, or of any adverse determination or development regarding such
Grantor's ownership of any of the Intellectual Property Collateral or its right
to register the same or to keep and maintain and enforce the same, or (ii) of
any adverse determination or the institution of any proceeding (including,
without limitation, the institution of any proceeding in the U.S. Patent and
Trademark Office or any court) regarding any item of the Intellectual Property
Collateral, if in any such case, such development would be reasonably likely to
have a Material Adverse Effect.
<PAGE>

                                       15

          (b)  In the event that any Grantor becomes aware that any item of the
Intellectual Property Collateral is being infringed or misappropriated by a
third party, such Grantor shall promptly notify the Collateral Agent and shall
take such actions, at its expense, as such Grantor or the Collateral Agent deems
reasonable and appropriate under the circumstances to protect such Intellectual
Property Collateral, including, without limitation, suing for infringement or
misappropriation and for an injunction against such infringement or
misappropriation, if in any such case, such development would be reasonably
likely to have a Material Adverse Effect.

          (c)  Each Grantor shall take all steps which it deems reasonable and
appropriate under the circumstances to preserve and protect each item of its
Intellectual Property Collateral, including, without limitation, maintaining the
quality of any and all products or services used or provided in connection with
any of the Trademarks, consistent with the quality of the products and services
as of the date hereof, and taking all steps necessary to ensure that all
licensed users of any of the Trademarks use such consistent standards of
quality.

          (d)  With respect to its Intellectual Property Collateral, each
Grantor agrees to execute an agreement, in substantially the form set forth in
Exhibit B hereto (an "Intellectual Property Security Agreement"), for recording
the security interest granted hereunder to the Collateral Agent in such
Intellectual Property Collateral with the U.S. Patent and Trademark Office, the
U.S. Copyright Office and any other governmental authorities necessary to
perfect the security interest hereunder in such Intellectual Property
Collateral.

          (e)  Each Grantor agrees that, should it obtain an ownership interest
in any material item of the type set forth in Section 1(g) which is not on the
date hereof a part of the Intellectual Property Collateral (the "After-Acquired
Intellectual Property"), (i) the provisions of Section 1 shall automatically
apply thereto, (ii) any such After-Acquired Intellectual Property and, in the
case of trademarks, the goodwill of the business connected therewith or
symbolized thereby, shall automatically become part of the Intellectual Property
Collateral subject to the terms and conditions of this Agreement with respect
thereto, (iii) such Grantor shall give prompt written notice thereof to the
Collateral Agent in accordance herewith and (iv) such Grantor shall execute and
deliver to the Collateral Agent an IP Security Agreement Supplement covering
such After-Acquired Intellectual Property as "Additional Collateral" thereunder
and as defined therein, and shall record such IP Security Agreement Supplement
with the U.S. Patent and Trademark Office, the U.S. Copyright Office and any
other governmental authorities necessary to perfect the security interest
hereunder in such After-Acquired Intellectual Property.

          Section 14.  Voting Rights; Dividends; Etc.   So long as no Default
                       ------------------------------
shall have occurred and be continuing:

          (i)  Each Grantor shall be entitled to exercise any and all voting and
     other consensual rights pertaining to the Security Collateral of such
     Grantor or any part thereof for any purpose; provided however, that such
     Grantor will not exercise or refrain from exercising any such right if such
     action would have a material adverse effect on the value of the Security
     Collateral or any part thereof.
<PAGE>

                                       16

          (ii) Each Grantor shall be entitled to receive and retain any and all
     dividends, interest and other distributions paid in respect of the Security
     Collateral of such Grantor if and to the extent that the payment thereof is
     not otherwise prohibited by the terms of the Loan Documents; provided,
     however, that any and all

               (A) dividends, interest and other distributions paid or payable
          other than in cash in respect of, and instruments and other property
          received, receivable or otherwise distributed in respect of, or in
          exchange for, any Security Collateral,

               (B) dividends and other distributions paid or payable in cash in
          respect of any Security Collateral (other than in respect of any
          Subsidiary of the Borrower as provided in Section 5.02(e)(iii) of the
          Credit Agreement) in connection with a partial or total liquidation or
          dissolution or in connection with a reduction of capital, capital
          surplus or paid-in-surplus and

               (C) cash paid, payable or otherwise distributed in respect of
          principal of, or in redemption of, or in exchange for, any Security
          Collateral (other than in respect of any Subsidiary of the Borrower as
          provided in Section 5.02(e)(iii) of the Credit Agreement)

     shall be, and shall be forthwith delivered to the Collateral Agent to hold
     as, Security Collateral and shall, if received by such Grantor, be received
     in trust for the benefit of the Collateral Agent, be segregated from the
     other property or funds of such Grantor and be forthwith delivered to the
     Collateral Agent as Security Collateral in the same form as so received
     (with any necessary endorsement).

          (iii) The Collateral Agent will execute and deliver (or cause to be
     executed and delivered) to each Grantor all such proxies and other
     instruments as such Grantor may reasonably request for the purpose of
     enabling such Grantor to exercise the voting and other rights that it is
     entitled to exercise pursuant to paragraph (i) above and to receive the
     dividends or interest payments that it is authorized to receive and retain
     pursuant to paragraph (ii) above.

          (b)  Upon the occurrence and during the continuance of a Default:

          (i)  All rights of each Grantor (x) to exercise or refrain from
     exercising the voting and other consensual rights that it would otherwise
     be entitled to exercise pursuant to Section 14(a)(i) shall, upon notice to
     such Grantor by the Collateral Agent, cease and (y) to receive the
     dividends, interest and other distributions that it would otherwise be
     authorized to receive and retain pursuant to Section 14(a)(ii) shall
     automatically cease, and all such rights shall thereupon become vested in
     the Collateral Agent, which shall thereupon have the sole right to exercise
     or refrain from exercising such voting and other consensual rights and to
     receive and hold as Security Collateral such dividends, interest and other
     distributions; and

          (ii) All dividends, interest and other distributions that are received
     by any Grantor contrary to the provisions of paragraph (i) of this Section
     14(b) shall be received in trust for the benefit of the Collateral Agent,
     shall be segregated from other funds of
<PAGE>

                                       17

     such Grantor and shall be forthwith paid over to the Collateral Agent as
     Security Collateral in the same form as so received (with any necessary
     endorsement).

          Section 15.  As to the Assigned Agreements.  Each Grantor will at its
                       ------------------------------
     expense:

          (i)   from time to time (A) furnish to the Collateral Agent such
     information and reports regarding the Assigned Agreements and such other
     Collateral of such Grantor as the Collateral Agent may reasonably request
     and (B) upon request of the Collateral Agent make to each other party to
     any Assigned Agreement to which it is a party such demands and requests for
     information and reports or for action as such Grantor is entitled to make
     thereunder.

          (b)   Each Grantor agrees after the occurrence and during the
continuance of an Event of Default, not to:

          (i)   cancel or terminate any Assigned Agreement to which it is a
     party or consent to or accept any cancellation or termination thereof;

          (ii)  amend, amend and restate, supplement or otherwise modify any
     such Assigned Agreement or give any consent, waiver or approval thereunder;

          (iii) waive any default under or breach of any such Assigned
     Agreement; or

          (iv)  take any other action in connection with any such Assigned
     Agreement that would impair the value of the interests or rights of such
     Grantor thereunder or that would impair the interests or rights of any
     Secured Party.

          (c)   Each Grantor hereby consents on its behalf and on behalf of its
Subsidiaries to the assignment and pledge to the Collateral Agent for benefit of
the Secured Parties of each Assigned Agreement to which it is a party by any
other Grantor hereunder.

          Section 16.  Transfers and Other Liens; Additional Share.  Each
                       --------------------------------------------
Grantor agrees that it will not (i) sell, assign or otherwise dispose of, or
grant any option with respect to, any of the Collateral, other than sales,
assignments and other dispositions of Collateral, and options relating to
Collateral, permitted under the terms of the Credit Agreement, or (ii) create or
suffer to exist any Lien upon or with respect to any of the Collateral of such
Grantor except for the pledge, assignment and security interest created under
this Agreement and Liens permitted under the Credit Agreement.

          (a)   Each Grantor agrees that it will (i) cause each issuer of the
Pledged Shares pledged by such Grantor not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to such Grantor, and (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional shares
of stock or other securities.

          Section 17.  Collateral Agent Appointed Attorney-in-Fact.  Each
                       --------------------------------------------
Grantor hereby irrevocably appoints the Collateral Agent such Grantor's attorney
-in-fact, with full authority in the place and stead of such Grantor and in the
name of such Grantor or otherwise,
<PAGE>

                                       18

from time to time in the Collateral Agent's discretion, to take any action and
to execute any instrument that the Collateral Agent may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation:

          (a)   to obtain and adjust insurance required to be paid to the
     Collateral Agent pursuant to Section 11,

          (b)   to ask for, demand, collect, sue for, recover, compromise,
     receive and give acquittance and receipts for moneys due and to become due
     under or in respect of any of the Collateral,

          (c)   to receive, indorse and collect any drafts or other instruments,
     documents and chattel paper, in connection with clause (a) or (b) above,
     and

          (d)   to file any claims or take any action or institute any
     proceedings that the Collateral Agent may deem necessary or desirable for
     the collection of any of the Collateral or otherwise to enforce compliance
     with the terms and conditions of any Assigned Agreement or the rights of
     the Collateral Agent with respect to any of the Collateral;

provided however, that the Collateral Agent shall not exercise any rights
referred to above unless an Event of Default has occurred and is continuing.

          Section 18.  Collateral Agent May Perform.  If any Grantor fails to
                       -----------------------------
perform any agreement contained herein, within the time provided or allowed, the
Collateral Agent may, but without any obligation to do so and without notice,
itself perform, or cause performance of, such agreement, and the expense of the
Collateral Agent incurred in connection therewith shall be payable by such
Grantor under Section 21(b).

          Section 19.  The Collateral Agent's Duties.    The powers conferred
                       ------------------------------
on the Collateral Agent hereunder are solely to protect the Secured Parties'
interest in the Collateral and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder, the Collateral
Agent shall have no duty as to any Collateral, as to ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not any Secured Party has
or is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other rights
pertaining to any Collateral. The Collateral Agent shall be deemed to have
exercised reasonable care in the custody and preservation of any Collateral in
its possession if such Collateral is accorded treatment substantially equal to
that which it accords its own property.

          (a)   Anything contained herein to the contrary notwithstanding, the
Collateral Agent may from time to time, when the Collateral Agent deems it to be
necessary, appoint one or more subagents (each a "Subagent") for the Collateral
Agent hereunder with respect to all or any part of the Collateral.  In the event
that the Collateral Agent so appoints any Subagent with respect to any
Collateral, (i) the assignment and pledge of such Collateral and the security
interest granted in such Collateral by each Grantor hereunder shall be deemed
for purposes of this Security Agreement to have been made to such Subagent, in
addition to the Collateral Agent,
<PAGE>

                                       19

for the ratable benefit of the Secured Parties, as security for the Secured
Obligations of such Grantor, (ii) such Subagent shall automatically be vested,
in addition to the Collateral Agent, with all rights, powers, privileges,
interests and remedies of the Collateral Agent hereunder with respect to such
Collateral, and (iii) the term "Collateral Agent," when used herein in relation
to any rights, powers, privileges, interests and remedies of the Collateral
Agent with respect to such Collateral, shall include such Subagent; provided,
however, that no such Subagent shall be authorized to take any action with
respect to any such Collateral unless and except to the extent expressly
authorized in writing by the Collateral Agent.

          Section 20.  Remedies.  If any Event of Default shall have occurred
                       ---------
and be continuing:

          (a)   The Collateral Agent may exercise in respect of the Collateral,
     in addition to other rights and remedies provided for herein or otherwise
     available to it, all the rights and remedies of a secured party upon
     default under the N.Y. Uniform Commercial Code (whether or not the N.Y.
     Uniform Commercial Code applies to the affected Collateral) and also may:
     (i) require each Grantor to, and each Grantor hereby agrees that it will at
     its expense and upon request of the Collateral Agent forthwith, assemble
     all or part of the Collateral as directed by the Collateral Agent and make
     it available to the Collateral Agent at a place and time to be designated
     by the Collateral Agent that is reasonably convenient to both parties; (ii)
     without notice except as specified below, sell the Collateral or any part
     thereof in one or more parcels at public or private sale, at any of the
     Collateral Agent's offices or elsewhere, for cash, on credit or for future
     delivery, and upon such other terms as the Collateral Agent may deem
     commercially reasonable; (iii) occupy any premises owned or leased by any
     of the Grantors where the Collateral or any part thereof is assembled or
     located for a reasonable period in order to effectuate its rights and
     remedies hereunder or under law, without obligation to such Grantor in
     respect of such occupation; and (iv) exercise any and all rights and
     remedies of any of the Grantors under or in connection with the Assigned
     Agreements, the Receivables and the Related Contracts or otherwise in
     respect of the Collateral, including, without limitation, any and all
     rights of such Grantor to demand or otherwise require payment of any amount
     under, or performance of any provision of, the Assigned Agreements, the
     Receivables and the Related Contracts. Each Grantor agrees that, to the
     extent notice of sale shall be required by law, at least ten days' notice
     to such Grantor of the time and place of any public sale or the time after
     which any private sale is to be made shall constitute reasonable
     notification. The Collateral Agent shall not be obligated to make any sale
     of Collateral regardless of notice of sale having been given. The
     Collateral Agent may adjourn any public or private sale from time to time
     by announcement at the time and place fixed therefor, and such sale may,
     without further notice, be made at the time and place to which it was so
     adjourned.

          (b)   Any cash held by or on behalf of the Collateral Agent and all
     cash proceeds received by or on behalf of the Collateral Agent in respect
     of any sale of, collection from, or other realization upon all or any part
     of the Collateral may, in the discretion of the Collateral Agent, be held
     by the Collateral Agent as collateral for, and/or then or at any time
     thereafter applied (after payment of any amounts payable to the Collateral
     Agent pursuant to Section 21) in whole or in part by the Collateral Agent
     for
<PAGE>

                                       20

     the ratable benefit of the Secured Parties against, all or any part of
     the Secured Obligations, in the following manner:

               (i)    first, to the Agents for any amounts owing to the Agents
          pursuant to Section 8.04 of the Credit Agreement or otherwise under
          the Loan Documents, ratably in accordance with such respective amounts
          then owing to the Agents;

               (ii)   second, deposited as Collateral in the L/C Collateral
          Account up to an amount equal to 100% of the aggregate Available
          Amount of all outstanding Letters of Credit, provided that in the
          event that any such Letter of Credit is drawn, the Collateral Agent
          shall pay to the Issuing Bank that issued such Letter of Credit the
          amount held in the L/C Collateral Account in respect of such Letter of
          Credit, provided further that, to the extent that any such Letter of
          Credit shall expire or terminate undrawn and as a result thereof the
          amount of the Collateral in the L/C Collateral Account shall exceed
          the aggregate Available Amount of all then outstanding Letters of
          Credit, such excess amount of such Collateral shall be applied in
          accordance with the order of priority set out in this Section 20(b);

               (iii)  third, to the Issuing Bank and the Swing Line Bank for any
          amounts then owing to them, in their capacities as such, under the
          Loan Documents ratably in accordance with such respective amounts then
          owing to the Issuing Bank and the Swing Line Bank; and

               (iv)   fourth, to the Lender Parties for any amount then owing to
          them under the Loan Documents ratably in accordance with such
          respective amounts then owing to the Lender Parties.

     Any surplus of such cash or cash proceeds held by or on the behalf of the
     Collateral Agent and remaining after payment in full of all the Secured
     Obligations shall be paid over to the applicable Grantor or to whomsoever
     may be lawfully entitled to receive such surplus.

          (c)   All payments received by any Grantor under or in connection with
     any Assigned Agreement or otherwise in respect of the Collateral shall be
     received in trust for the benefit of the Collateral Agent, shall be
     segregated from other funds of such Grantor and shall be forthwith paid
     over to the Collateral Agent in the same form as so received (with any
     necessary endorsement).

          (d)   The Collateral Agent may, without notice to any Grantor except
     as required by law and at any time or from time to time, charge, set-off
     and otherwise apply all or any part of the Secured Obligations against any
     funds held in the L/C Collateral Account or in any other deposit account.

          (e)   In the event of any sale or other disposition of any of the
     Intellectual Property Collateral of any Grantor, the goodwill of the
     business connected with and symbolized by any Trademarks subject to such
     sale or other disposition shall be included therein, and such Grantor shall
     supply to the Collateral Agent or its designee such Grantor's know-how and
     expertise, and documents and things relating to any Intellectual
<PAGE>

                                       21

     Property Collateral subject to such sale or other disposition, and such
     Grantor's customer lists and other records and documents relating to such
     Intellectual Property Collateral and to the manufacture, distribution,
     advertising and sale of products and services of such Grantor.

          Section 21.  Indemnity and Expenses.    Each Grantor agrees to
                       -----------------------
indemnify, defend and save and hold harmless each Secured Party and each of
their Affiliates and their respective officers, directors, employees, agents and
advisors (each, an "Indemnified Party") from and against, and shall pay on
demand, any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and expenses of counsel) that
may be incurred by or asserted or awarded against any Indemnified Party, in each
case arising out of or in connection with or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except to the
extent such claim, damage, loss, liability or expense is found in a final, non-
appealable judgment by a court of competent jurisdiction to have resulted from
such Indemnified Party's gross negligence or willful misconduct.

          (a)   Each Grantor will upon demand pay to the Collateral Agent the
amount of any and all reasonable expenses, including, without limitation, the
reasonable fees and expenses of its counsel and of any experts and agents, that
the Collateral Agent may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the sale of,
collection from or other realization upon, any of the Collateral of such
Grantor, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent or the other Secured Parties hereunder or (iv) the failure by
such Grantor to perform or observe any of the provisions hereof.

          Section 22.  Amendments; Waivers; Additional Grantors; Etc.  No
                       ----------------------------------------------
amendment or waiver of any provision of this Agreement, and no consent to any
departure by any Grantor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Collateral Agent, and, in the case of
amendments, the Grantors, and then such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given. No
failure on the part of the Collateral Agent or any other Secured Party to
exercise, and no delay in exercising any right hereunder, shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right
preclude any other or further exercise thereof or the exercise of any other
right.

          (a)   Upon the execution and delivery by any Person of a security
agreement supplement in substantially the form of Exhibit A hereto (each a
"Security Agreement Supplement"), (i) such Person shall be referred to as an
"Additional Grantor" and shall be and become a Grantor hereunder and each
reference in this Agreement and the other Loan Documents to "Grantor" shall also
mean and be a reference to such Additional Grantor, and (ii) the supplemental
Schedules I through VII attached to each Security Agreement Supplement shall be
incorporated into and become a part of and supplement Schedules I through VII,
respectively, hereto, and the Collateral Agent may attach such supplemental
schedules to such Schedules; and each reference to such Schedules shall mean and
be a reference to such Schedules as supplemented pursuant to each Security
Agreement Supplement.
<PAGE>

                                       22

          Section 23.  Notices; Etc.   All notices and other communications
                       -------------
provided for hereunder shall be in writing (including telecopier communication)
and mailed, telecopied, or delivered to, in the case of the Borrower or the
Collateral Agent, addressed to it at its address specified in the Credit
Agreement and, in the case of each Grantor other than the Borrower, addressed to
it at the Borrower's address; or, as to any party, at such other address as
shall be designated by such party in a written notice to the other parties. All
such notices and other communications shall, be effective three Business Days
after deposit in the mails, or when telecopied or delivered, respectively,
addressed as aforesaid; except that notices and other communications to the
Collateral Agent shall not be effective until received by the Collateral Agent.
Delivery by telecopier of an executed counterpart of any amendment or waiver of
any provision of this Agreement or of any Security Agreement Supplement or
Schedule hereto shall be effective as delivery of an original executed
counterpart thereof.

          Section 24.  Continuing Security Interest; Assignments under the
                       ---------------------------------------------------
Credit Agreement.  This Agreement shall create a continuing security interest
-----------------
in the Collateral and shall (a) remain in full force and effect until the latest
of (i) the payment in full in cash of the Secured Obligations (other than
inchoate reimbursement or indemnification Obligations), (ii) the Termination
Date and (iii) the termination or expiration of all Letters of Credit, (b) be
binding upon each Grantor, its successors and assigns and (c) inure, together
with the rights and remedies of the Collateral Agent hereunder, to the benefit
of the Secured Parties and their respective successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), any Lender Party
may assign or otherwise transfer all or any portion of its rights and
obligations under the Credit Agreement (including, without limitation, all or
any portion of its Commitments, the Advances owing to it and the Note or Notes,
if any, held by it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to such Lender
Party herein or otherwise, in each case as provided in Section 8.07 of the
Credit Agreement.

          Section 25.  Release; Termination.  Upon any sale, lease, transfer or
                       ---------------------
other disposition of any item of Collateral of any Grantor in accordance with
the terms of the Loan Documents, the Collateral Agent will, at such Grantor's
expense, execute and deliver to such Grantor such documents as such Grantor
shall reasonably request to evidence the release of such item of Collateral from
the security interest granted hereby; provided, however, that (i) in the case of
a transaction effected under Section 5.02(e)(vi) or (vii) of the Credit
Agreement, at the time of such request and such release no Default shall have
occurred and be continuing, (ii) such Grantor shall have delivered to the
Collateral Agent, at least six Business Days prior to the date of the proposed
release, a written request for release describing the item of Collateral and the
terms of the sale, lease, transfer or other disposition in reasonable detail,
including, without limitation, the price thereof and any expenses in connection
therewith, together with a form of release for execution by the Collateral Agent
and a certificate of such Grantor to the effect that the transaction is in
compliance with the Loan Documents and as to such other matters as the
Collateral Agent may request and (iii) the proceeds of any such sale, lease,
transfer or other disposition required to be applied, or any payment to be made
in connection therewith, in accordance with Section 2.06 of the Credit Agreement
shall, to the extent so required, be paid or made to, or in accordance with the
instructions of, the Collateral Agent when and as required under Section 2.06 of
the Credit Agreement.
<PAGE>

                                       23

          (a)   Upon the sale of any Equity Interests in any Grantor in
accordance with the provisions of Section 5.02(m)(iii) of the Credit Agreement,
the Collateral Agent will, at such Grantor's expense, execute and deliver to
such Grantor such documents as such Grantor shall reasonably request to evidence
the release of all items of Collateral owned by such Grantor or in which such
Grantor has an interest from the security interest granted hereby; provided,
however, that (i) at the time of such request and such release no Default shall
have occurred and be continuing and (ii) such Grantor shall have delivered to
the Collateral Agent, at least six Business Days prior to the date of the
proposed release, a written request describing the items of Collateral and
together with a form of release for execution by the Collateral Agent and a
certificate of such Grantor to the effect that the transaction is in compliance
with the Loan Documents and as to such other matters as the Collateral Agent may
request.

          (b)   In connection with the granting of a Lien permitted by Section
5.02(a)(iv) of the Credit Agreement in any real estate or equipment owned by a
Grantor, the Collateral Agent shall, at such Grantor's request if required by
the lender or lessor providing Debt to be secured by such Lien, at such
Grantor's expense, either (i) subordinate the security interest granted hereby
in the applicable item or items of Collateral owned by such Grantor to the Debt
to be secured by such Lien on terms reasonably acceptable to the lender or
lessor providing such Debt, or (ii) if such lender or lessor is not willing to
accept a subordination of the security interest granted hereby, execute and
deliver such documents as such Grantor shall reasonably request to evidence the
release of such item or items of Collateral from the security interest granted
hereby; provided, however, that such Grantor shall have delivered to the
Collateral Agent, at least six Business Days prior to the date of the proposed
subordination or release, a written request describing the items of Collateral
and together with a form of subordination or release for execution by the
Collateral Agent and a certificate of such Grantor to the effect that the
transaction is in compliance with the Loan Documents and as to such other
matters as the Collateral Agent may request.

          (c)   Upon the latest of (i) the payment in full in cash of the
Secured Obligations (other than inchoate indemnification and reimbursement
Obligations), (ii) the Termination Date and (iii) the termination or expiration
of all Letters of Credit, the pledge, assignment and security interest granted
hereby shall terminate and all rights to the Collateral shall revert to the
applicable Grantor. Upon any such termination, the Collateral Agent will, at the
applicable Grantor's expense, execute and deliver to such Grantor such documents
as such Grantor shall reasonably request to evidence such termination.

          Section 26.  Security Interest Absolute.  The obligations of each
                       ---------------------------
Grantor under this Agreement are independent of the Secured Obligations or any
other Obligations of any other Loan Party under or in respect of the Loan
Documents, and a separate action or actions may be brought and prosecuted
against each Grantor to enforce this Agreement, irrespective of whether any
action is brought against such Grantor or any other Loan Party or whether such
Grantor or any other Loan Party is joined in any such action or actions. All
rights of the Collateral Agent and the other Secured Parties and the pledge and
security interest hereunder, and all obligations of each Grantor hereunder,
shall be irrevocable, absolute and unconditional irrespective of, and each
Grantor hereby irrevocably waives (to the maximum extent permitted by applicable
law) any defenses it may now have or may hereafter acquire in any way relating
to, any or all of the following:
<PAGE>

                                       24

          (a)   any lack of validity or enforceability of any Loan Document or
     any other agreement or instrument relating thereto;

          (b)   any change in the time, manner or place of payment of, or in any
     other term of, all or any of the Secured Obligations or any other
     Obligations of any other Loan Party under or in respect of the Loan
     Documents or any other amendment or waiver of or any consent to any
     departure from any Loan Document, including, without limitation, any
     increase in the Secured Obligations resulting from the extension of
     additional credit to any Loan Party or any of its Subsidiaries or
     otherwise;

          (c)   any taking, exchange, release or non-perfection of any
     Collateral or any other collateral, or any taking, release or amendment or
     waiver of or consent to departure from any guaranty, for all or any of the
     Secured Obligations ;

          (d)   any manner of application of any Collateral or any other
     collateral, or proceeds thereof, to all or any of the Secured Obligations,
     or any manner of sale or other disposition of any Collateral or any other
     collateral for all or any of the Secured Obligations or any other
     Obligations of any other Loan Party under or in respect of the Loan
     Documents or any other assets of any Loan Party or any of its Subsidiaries;

          (e)   any change, restructuring or termination of the corporate
     structure or existence of any Loan Party or any of its Subsidiaries;

          (f)   any failure of any Secured Party to disclose to any Loan Party
     any information relating to the business, condition (financial or
     otherwise), operations, performance, assets, nature of assets, liabilities
     or prospects of any other Loan Party now or hereafter known to such Secured
     Party (each Grantor waiving any duty on the part of the Secured Parties to
     disclose such information);

          (g)   the failure of any other Person to execute this Agreement or any
     other Collateral Document, guaranty or agreement or the release or
     reduction of liability of any Grantor or other grantor or surety with
     respect to the Secured Obligations; or

          (h)   any other circumstance (including, without limitation, any
     statute of limitations) or any existence of or reliance on any
     representation by any Secured Party that might otherwise constitute a
     defense available to, or a discharge of, such Grantor or any other Grantor
     or a third party grantor of a security interest.

This Agreement shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Secured Obligations is rescinded or
must otherwise be returned by any Secured Party or by any other Person upon the
insolvency, bankruptcy or reorganization of any Loan Party or otherwise, all as
though such payment had not been made.

          Section 27.  Execution in Counterparts.  This Agreement may be
                       --------------------------
executed in any number of counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Delivery of an executed counterpart of a signature page
to this Agreement by telecopier shall be effective as delivery of an original
executed counterpart of this Agreement.
<PAGE>

          Section 28.  Governing Law.  This Agreement shall be governed by, and
                       -------------
construed in accordance with, the laws of the State of New York.

          IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                    DAVITA INC.

                                    By _____________________________________
                                       Name:  Marshal Salomon
                                       Title: Vice President

                                      S-1
<PAGE>

                                By _____________________________________
                                   Name:  Marshal Salomon
                                   Title: Vice President
                                          on behalf of each of the entities
                                          listed on Appendix A attached hereto

                                      S-2
<PAGE>

                                    TOTAL RENAL CARE, INC., on behalf of each of
                                    the entities listed on Appendix B attached
                                    hereto

                                    By _____________________________________
                                       Name:   Marshal Salomon
                                       Title:  Vice President

                                      S-3
<PAGE>

                                    TRC WEST, INC.

                                    By _____________________________________
                                       Name:   Marshal Salomon
                                       Title:  Vice President

                                      S-4
<PAGE>

                                    TRC OF NEW YORK, INC., on behalf of each of
                                    the entities listed on Appendix C attached
                                    hereto

                                    By _____________________________________
                                       Name:  Marshal Salomon
                                       Title: Vice President

                                      S-5
<PAGE>

                                                               Appendix A to the
                                                              Security Agreement

                    Carroll County Dialysis Facility, Inc.
                      Continental Dialysis Centers, Inc.
           Continental Dialysis Center of Springfield-Fairfax, Inc.
                     Dialysis Specialists of Dallas, Inc.
                        East End Dialysis Center, Inc.
                       Elberton Dialysis Facility, Inc.
                       Flamingo Park Kidney Center, Inc.
                     Lincoln Park Dialysis Services, Inc.
                     Mason-Dixon Dialysis Facilities, Inc.
                         Open Access Sonography, Inc.
                        Peninsula Dialysis Center, Inc.
                         Renal Treatment Centers, Inc.
                  Renal Treatment Centers - California, Inc.
                    Renal Treatment Centers - Hawaii, Inc.
                   Renal Treatment Centers - Illinois, Inc.
                  Renal Treatment Centers - Mid-Atlantic,Inc.
                   Renal Treatment Centers - Northeast, Inc.
                   Renal Treatment Centers - Southeast, Inc.
                     Renal Treatment Centers - West, Inc.
                              RTC Holdings, Inc.
                         RTC - Texas Acquisition, Inc.
                                 RTC TN, Inc.
                         Total Acute Kidney Care, Inc.
                            Total Renal Care, Inc.
                      Total Renal Care of Colorado, Inc.
                     Total Renal Care of Puerto Rico, Inc.
                        Total Renal Laboratories, Inc.
                          Total Renal Research, Inc.
                      Total Renal Support Services, Inc.
                             TRC of New York, Inc.
                        Tri-City Dialysis Center, Inc.
<PAGE>

                                                               Appendix B to the
                                                              Security Agreement

                      Beverly Hills Dialysis Partnership
  Houston Kidney Center/Total Renal Care Integrated Service Network Limited
                                  Partnership
                         Sunrise Dialysis Partnership
               Total Renal Care/Peralta Renal Center Partnership
                Total Renal Care/Piedmont Dialysis Partnership
                  Total Renal Care Texas Limited Partnership
                       Total Renal Care of Utah, L.L.C.
                              TRC - Indiana, LLC
<PAGE>

                                                               Appendix C to the
                                                              Security Agreement

                                  MHS-I, LLC
                                 MHS-III, LLC
                                  MHS-IV, LLC
                                  MHS-V, LLC
                                  MHS-VI, LLC
                                 MHS-VII, LLC
                                 MHS-VIII, LLC
                                  MHS-IX, LLC
                                  MHS-X, LLC
                                  MHS-XI, LLC
                                 MHS-XII, LLC

<PAGE>

                                                               Schedule I to the
                                                              Security Agreement

                        PLEDGED SHARES AND PLEDGED DEBT

                                    Part I

<TABLE>
<CAPTION>
===============================================================================================
                                                                                     Percentage
                                                         Stock                          of
                                                       Certificate       Number     Outstanding
  Grantor    Stock Issuer   Class of Stock  Par Value    No(s)         of Shares       Shares
===============================================================================================
<S>          <C>            <C>             <C>        <C>            <C>           <C>
-----------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------

================================================================================================
</TABLE>

                                    Part II

<TABLE>
<CAPTION>
===============================================================================================
                                                                                     Outstanding
                 Debt       Description of     Debt Certificate       Final         Principal
  Grantor       Issuer           Debt              No (s).           Maturity         Amount
===============================================================================================
<S>             <C>         <C>                <C>                   <C>           <C>
-----------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------

-----------------------------------------------------------------------------------------------

================================================================================================
</TABLE>

<PAGE>

                                                              Schedule II to the

                                                              Security Agreement

                     LOCATIONS OF EQUIPMENT AND INVENTORY

[Name of Grantor]
 ---------------

     Locations of Equipment:

     Locations of Inventory:

[Name of Grantor]
 ---------------

     Locations of Equipment:

     Locations of Inventory:

[Etc.]
<PAGE>

                                                             Schedule III to the
                                                              Security Agreement

                            CHIEF EXECUTIVE OFFICE

                     AND FEDERAL TAX IDENTIFICATION NUMBER

                                                          Federal Tax
Grantor                 Chief Executive Office            Identification Number
-------                 ----------------------            ---------------------
<PAGE>

                                                              Schedule IV to the
                                                              Security Agreement

                            PATENTS, TRADEMARKS AND
                     TRADE NAMES, COPYRIGHTS AND LICENSES

                                           Applic.
                                           -------
Grantor  Patents     Country     Patent No.   No.      Filing Date    Issue Date
-------  -------     -------     ---------    ---      -----------    ----------

          Trademarks
          ----------
           and Trade                             Applic.  Filing    Issue
           ---------                             ------   ------    -----
Grantor     Names    Country     Mark   Reg. No.   No.      Date    Date
------      -----    -------     ----   -------    --       ----    ----

                                                  Applic. Filing    Issue
                                                  ------- ------    -----
Grantor   Copyrights Country     Title  Reg. No.   No.      Date    Date
-------   ---------- -------     -----  --------   ---      ----    ----

Grantor              Licenses        Title         Date            Parties
-------              --------        -----         ----            -------
<PAGE>

                                                               Schedule V to the
                                                              Security Agreement

                 ASSETS SUBJECT TO EXISTING CONTRACTS OF SALE

<PAGE>

                                                              Schedule VI to the
                                                              Security Agreement

                  RECEIVABLES EVIDENCED BY CHATTEL PAPER
<PAGE>

                                                             Schedule VII to the
                                                             Security Agreement

                            NOTICES OF TERMINATION
                          OR CANCELLATION OF LICENSES
<PAGE>

                                                                Exhibit A to the
                                                              Security Agreement

                     FORM OF SECURITY AGREEMENT SUPPLEMENT

                                         [Date of Security Agreement Supplement]

Bank of America, N.A.
 as the Collateral Agent for the
 Secured Parties referred to in the
 Credit Agreement referred to below
   __________________________
   __________________________
   Attn: ____________________

                                  DaVita Inc.
                                  ----------

Ladies and Gentlemen:

          Reference is made to (i) the Credit Agreement dated as of May 3, 2001
(as amended, amended and restated, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among DaVita Inc., a Delaware corporation, as
the Borrower, the Lender Parties party thereto, Bank of America, N.A., as
collateral agent (together with any successor collateral agent appointed
pursuant to Article VII of the Credit Agreement, the "Collateral Agent"), and as
administrative agent for the Lender Parties, and (ii) the Security Agreement
dated May 3, 2001 (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Security Agreement") made by the Grantors from
time to time party thereto in favor of the Collateral Agent for the Secured
Parties. Terms defined in the Credit Agreement or the Security Agreement and not
otherwise defined herein are used herein as defined in the Credit Agreement or
the Security Agreement.

          Section 1.  Grant of Security. The undersigned hereby pledges to the
                      ----------------
Collateral Agent for the ratable benefit of the Secured Parties, and hereby
grants to the Collateral Agent for the ratable benefit of the Secured Parties, a
security interest in, all of its right, title and interest in and to all of the
Collateral of the undersigned, whether now owned or hereafter acquired by the
undersigned, wherever located and whether now or hereafter existing or arising,
including, without limitation, the property and assets of the undersigned set
forth on the attached supplemental schedules to the Schedules to the Security
Agreement.

          Section 2.  Security for Obligations. The pledge and assignment of,
                      ------------------------
and the grant of a security interest in, the Collateral by the undersigned under
this Security Agreement Supplement and the Security Agreement secures the
payment of all Obligations of the undersigned now or hereafter existing under or
in respect of the Loan Documents, whether direct or indirect, absolute or
contingent, and whether for principal, reimbursement obligations,
<PAGE>

interest, premiums, penalties, fees, indemnifications, contract causes of
action, costs, expenses or otherwise. Without limiting the generality of the
foregoing, this Security Agreement Supplement and the Security Agreement secures
the payment of all amounts that constitute part of the Secured Obligations and
that would be owed by the undersigned to any Secured Party under the Loan
Documents but for the fact that such Secured Obligations are unenforceable or
not allowable due to the existence of a bankruptcy, reorganization or similar
proceeding involving a Loan Party.

          Section 3.  Supplements to Security Agreement Schedules. The
                      -------------------------------------------
undersigned has attached hereto supplemental Schedules I through VII to
Schedules I through VII, respectively, to the Security Agreement, and the
undersigned hereby certifies, as of the date first above written, that such
supplemental schedules have been prepared by the undersigned in substantially
the form of the equivalent Schedules to the Security Agreement and are complete
and correct in all material respects.

          Section 4.  Representations and Warranties. The undersigned hereby
                      ------------------------------
makes each representation and warranty set forth in Section 8 of the Security
Agreement (as supplemented by the attached supplemental schedules) to the same
extent as each other Grantor.

          Section 5.  Obligations Under the Security Agreement. The undersigned
                      ----------------------------------------
hereby agrees, as of the date first above written, to be bound as a Grantor by
all of the terms and provisions of the Security Agreement to the same extent as
each of the other Grantors. The undersigned further agrees, as of the date first
above written, that each reference in the Security Agreement to an "Additional
Grantor" or a "Grantor" shall also mean and be a reference to the undersigned.

          Section 6.  Governing Law. This Security Agreement Supplement shall be
                      -------------
governed by, and construed in accordance with, the laws of the State of New
York.
                                    Very truly yours,

                                    [NAME OF ADDITIONAL GRANTOR]

                                    By_______________________________
                                      Title:

                                           Address for notices:
                                           _______________________
                                           _______________________
                                           _______________________
<PAGE>

                                                                Exhibit B to the
                                                              Security Agreement

               FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

          This INTELLECTUAL PROPERTY SECURITY AGREEMENT (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "IP Security
Agreement") dated ________, ____, is made by the Persons listed on the signature
pages hereof (collectively, the "Grantors") in favor of Bank of America, N.A.
("Bank of America"), as collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement referred to below).

          WHEREAS, DaVita Inc., a Delaware corporation, has entered into a
Credit Agreement dated as of May 3, 2001 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
with Bank of America, as Administrative Agent and as Collateral Agent, and the
Lender Parties party thereto. Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as defined in the Credit Agreement.

          WHEREAS, as a condition precedent to the making of Advances and the
issuance of Letters of Credit by the Lender Parties under the Credit Agreement
and the entry into Secured Hedge Agreements by the Hedge Banks from time to
time, each Grantor has executed and delivered that certain Security Agreement
dated May 3, 2001 made by the Grantors to the Collateral Agent (as amended,
amended and restated, supplemented or otherwise modified from time to time, the
"Security Agreement").

          WHEREAS, under the terms of the Security Agreement, Grantors have
granted a security interest in, among other property, certain intellectual
property of the Grantors to the Collateral Agent for the ratable benefit of the
Secured Parties, and have agreed as a condition thereof to execute this IP
Security Agreement covering such intellectual property for recording with the
U.S. Patent and Trademark Office, the United States Copyright Office and other
governmental authorities.

          NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each Grantor agrees as follows:

          SECTION 1.  Grant of Security. Each Grantor hereby grants to the
                      -----------------
Collateral Agent for the ratable benefit of the Secured Parties a security
interest in and to all of such Grantor's right, title and interest in and to the
following (the "Collateral"):

               (i)    the United States, international, and foreign patents,
          patent applications and patent licenses set forth in Schedule A hereto
          (as such Schedule A may be supplemented from time to time by
          supplements to the Security Agreement and this IP Security Agreement,
          each such supplement being in substantially the form of Exhibit C to
          the Security Agreement (an "IP Security Agreement Supplement"),
          executed and delivered by such Grantor to the
<PAGE>

          Collateral Agent from time to time), together with all reissues,
          divisions, continuations, continuations-in-part, extensions and
          reexaminations thereof, and all rights therein provided by
          international treaties or conventions (the "Patents");

               (ii)  the United States and foreign trademark and service mark
          registrations, applications, and licenses set forth in Schedule B
          hereto (as such Schedule B may be supplemented from time to time by IP
          Security Agreement Supplements executed and delivered by such Grantor
          to the Collateral Agent from time to time) (the "Trademarks");

               (iii) the copyrights, United States and foreign copyright
          registrations and applications and copyright licenses set forth in
          Schedule C hereto (as such Schedule C may be supplemented from time to
          time by IP Security Agreement Supplements executed and delivered by
          such Grantor to the Collateral Agent from time to time) (the
          "Copyrights");

               (iv)  any and all claims for damages for past, present and future
          infringement, misappropriation or breach with respect to the Patents,
          Trademarks and Copyrights, with the right, but not the obligation, to
          sue for and collect, or otherwise recover, such damages; and

               (v)   any and all proceeds of the foregoing.

          SECTION 2. Security for Obligations. The pledge and assignment of, and
                     ------------------------
the grant of a security interest in, the Collateral by each Grantor under this
IP Security Agreement secures the payment of all Obligations of such Grantor now
or hereafter existing under or in respect of the Loan Documents, whether direct
or indirect, absolute or contingent, and whether for principal, reimbursement
obligations, interest, premiums, penalties, fees, indemnifications, contract
causes of action, costs, expenses or otherwise. Without limiting the generality
of the foregoing, this IP Security Agreement secures, as to each Grantor, the
payment of all amounts that constitute part of the Secured Obligations and that
would be owed by such Grantor to any Secured Party under the Loan Documents but
for the fact that such Secured Obligations are unenforceable or not allowable
due to the existence of a bankruptcy, reorganization or similar proceeding
involving a Loan Party.

          SECTION 3.  Recordation. Each Grantor authorizes and requests that the
                      -----------
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer record this IP Security Agreement.

          SECTION 4.  Execution in Counterparts. This Agreement may be executed
                      -------------------------
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute one and the same
agreement.

          SECTION 5.  Grants, Rights and Remedies. This IP Security Agreement
                      ---------------------------
has been entered into in conjunction with the provisions of the Security
Agreement. Each Grantor does hereby acknowledge and confirm that the grant of
the security interest hereunder to, and the rights and remedies of, the
Collateral Agent with respect to the Collateral are more fully set forth
<PAGE>

in the Security Agreement, the terms and provisions of which are incorporated
herein by reference as if fully set forth herein.

          SECTION 6.  Governing Law. This IP Security Agreement shall be
                      -------------
governed by, and construed in accordance with, the laws of the State of New
York.
          IN WITNESS WHEREOF, each Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                    DAVITA INC.

                                    By_________________________________
                                     Name:
                                     Title:

                                    Address for Notices:
                                    ____________________________________
                                    ____________________________________
                                    ____________________________________

                                    [NAME OF GRANTOR]

                                    By__________________________________
                                     Name:
                                     Title:

                                    Address for Notices:
                                    ____________________________________
                                    ____________________________________
                                    ____________________________________

<PAGE>

                                    [NAME OF GRANTOR]

                                    By__________________________________
                                     Name:
                                     Title:

                                    Address for Notices:
                                    ____________________________________
                                    ____________________________________
                                    ____________________________________

                                         [ETC.]

                      [ADD ACKNOWLEDGMENT FORM IF NEEDED]
<PAGE>

                                                                Exhibit C to the
                                                              Security Agreement

          FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT

               This INTELLECTUAL PROPERTY SECURITY AGREEMENT SUPPLEMENT (this
"IP Security Agreement Supplement") dated ________, ____, is made by the Person
listed on the signature page hereof (the "Grantor") in favor of Bank of America,
N.A. ("Bank of America"), as collateral agent (the "Collateral Agent") for the
Secured Parties (as defined in the Credit Agreement referred to below).

               WHEREAS, DaVita Inc., a Delaware corporation, has entered into a
Credit Agreement dated as of May 3, 2001 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
with Bank of America, as Administrative Agent, and as Collateral Agent, and the
Lender Parties party thereto. Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as defined in the Credit Agreement.

               WHEREAS, pursuant to the Credit Agreement, the Grantor and
certain other Persons have executed and delivered that certain Security
Agreement dated May 3, 2001 made by the Grantor and such other Persons to the
Collateral Agent (as amended, amended and restated, supplemented or otherwise
modified from time to time, the "Security Agreement"). To create a short form
version of the Security Agreement covering certain intellectual property of the
Grantor and such other Persons for recording with the U.S. Patent and Trademark
Office, the United States Copyright Office and other governmental authorities,
the Grantor and such other Persons have executed and delivered that certain
Intellectual Property Security Agreement made by the Grantor and such other
Persons to the Collateral Agent dated ________, ______ (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "IP Security
Agreement").

               WHEREAS, under the terms of the Security Agreement and the IP
Security Agreement, the Grantor has granted a security interest in the
Additional Collateral (as defined in Section 1 below) of the Grantor to the
Collateral Agent for the ratable benefit of the Secured Parties and has agreed
as a condition thereof to execute this IP Security Agreement Supplement for
recording with the U.S. Patent and Trademark Office, the United States Copyright
Office and other governmental authorities.

               NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Grantor agrees as follows:

               SECTION 1.  Confirmation of Grant of Security. The Grantor hereby
                           ---------------------------------
acknowledges and confirms the grant of a security interest to the Collateral
Agent for the ratable benefit of the Secured Parties under the Security
Agreement and the IP Security Agreement in and to all of the Grantor's right,
title and interest in and to the following (the "Additional Collateral"):
<PAGE>

          (i)   The United States, international, and foreign patents, patent
     applications, and patent licenses set forth in Schedule A hereto, together
     with all reissues, divisions, continuations, continuations-in-part,
     extensions and reexaminations thereof, and all rights therein provided by
     international treaties or conventions (the "Patents");

          (ii)  The United States and foreign trademark and service mark
     registrations, applications, and licenses set forth in Schedule B hereto
     (the "Trademarks");

          (iii) The copyrights, United States and foreign copyright
     registrations and applications and copyright licenses set forth in Schedule
     C hereto (the "Copyrights");

          (iv)  any and all claims for damages for past, present and future
     infringement, misappropriation or breach with respect to the Patents,
     Trademarks and Copyrights, with the right, but not the obligation, to sue
     for and collect, or otherwise recover, such damages; and

          (v)   any and all proceeds of the foregoing.

     SECTION 2.  Supplement to Security Agreement and IP Security Agreement.
                 ----------------------------------------------------------
Schedule V to the Security Agreement and Schedules A, B and C to the IP Security
Agreement are each, effective as of the date hereof, hereby supplemented to add
to such Schedules the Additional Collateral.

     SECTION 3.  Recordation.  The Grantor authorizes and requests that the
                 -----------
Register of Copyrights, the Commissioner of Patents and Trademarks and any other
applicable government officer to record this IP Security Agreement Supplement.

     SECTION 4.  Governing Law.  This IP Security Agreement Supplement shall be
                 -------------
governed by, and construed in accordance with, the laws of the State of New
York.
<PAGE>

          IN WITNESS WHEREOF, the Grantor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

                                    [NAME OF GRANTOR]

                                    By__________________________________
                                     Name:
                                      Title:

                                    Address for Notices:
                                    __________________________
                                    __________________________
                                    __________________________

                      [ADD ACKNOWLEDGMENT FORM IF NEEDED]

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