Document:

Exhibit
10.1

EXECUTION COPY

FOURTH
AMENDMENT TO AMENDED

AND RESTATED CREDIT AGREEMENT

THIS FOURTH AMENDMENT, dated as
of June 29, 2007 (this “Amendment”), to that certain Amended and
Restated Credit Agreement, dated as of September 3, 2003, is made among MQ
ASSOCIATES, INC., a Delaware corporation (“Holdings”), MEDQUEST, INC., a
Delaware corporation (the “Borrower”), the Lenders (as defined in the
Credit Agreement defined below) identified on the signature pages hereto, and
WACHOVIA BANK, NATIONAL ASSOCIATION (“Wachovia”), as administrative
agent for the Lenders (in such capacity, the “Administrative Agent”).

RECITALS

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

B.            Upon the occurrence of the
Conditions Satisfaction Date (as hereinafter defined) of this Amendment, each
of the Amended and Restated Lenders (as hereinafter defined) shall be deemed to
have become, by executing and delivering this Amendment, a party to the Credit
Agreement (as in effect after giving effect to this Amendment) in the form of Exhibit
A hereto as a “Lender” and shall have the rights and obligations of a
Lender thereunder and each of the Amended and Restated Lenders shall have the
interest(s) shown opposite its name on Schedule 1.1A to the Credit
Agreement (as in effect after giving effect to this Amendment) under the
heading Revolving Lender, Tranche B Term Lender and/or Incremental Term Lender,
as the case may be (each such Lender, an “Amended and Restated Lender”).

C.            Prior to the effectiveness of this
Amendment, the total principal amount outstanding on the Revolving Loans was
$12,000,000.  The Borrower has requested
that one or more of the Amended and Restated Lenders who are Tranche B Term Lenders
provide additional Tranche B Term Loans on the Conditions Satisfaction Date in
an amount sufficient to reduce the outstanding principal amount of the
Revolving Loans to $3,261,732.29 immediately after giving effect to this
Amendment.

STATEMENT
OF AGREEMENT

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

1.             Outstanding Principal Amount on Revolving Loans.  The total principal amount outstanding on the
Revolving Loan immediately after giving effect to this Amendment is
$3,261,732.29.

2.             Amendments to Body of Credit Agreement.  The Credit Agreement is hereby amended and
restated by inserting each of the provisions which appear with computerized
underscoring and by deleting each of the provisions which appear with
computerized strike-though in the document annexed hereto as Exhibit A.

3.             Amendment to Schedule 1.1A.   Schedule
1.1A to the Credit Agreement (as in effect prior to giving effect to this
Amendment) is hereby replaced in its entirety by Schedule 1.1A to the
document attached as Exhibit A hereto.

4.             Amendment to Exhibits.  (a)  Exhibit
B to the Credit Agreement is hereby replaced in its entirety by Exhibit
B to the document attached as Exhibit B hereto.

(b)   The Credit Agreement is hereby further
amended by inserting Exhibit C hereto as a new Exhibit I thereto.

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

(a)   this Amendment has been duly
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law);

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

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

 2
 

(d)   at all times, Indebtedness incurred
pursuant to the Credit Agreement constituted, and continues to constitute,
indebtedness not prohibited to be incurred pursuant to Section 3.3 of the
Senior Subordinated Note Indenture and Section 3.3 of that certain Indenture,
dated August 24, 2004, by and between MQ Associates, Inc. and Wachovia Bank,
National Association, as trustee; and

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

6.             Conditions of Effectiveness.  This Amendment shall become effective upon
the date of the satisfaction of each of the following conditions (the “Conditions
Satisfaction Date”), with effect from and after June 29, 2007 insofar as
the covenants set forth in Sections 6 and 7 of the Credit Agreement are
concerned:  (i) the Administrative Agent
shall have received executed counterparts hereof from each of Holdings, the
Borrower and the Amended and Restated Lenders and an Acknowledgment and Consent
hereto from each of the Subsidiary Guarantors in form and substance reasonably
satisfactory to the Administrative Agent; (ii) the Administrative Agent shall
have received an executed legal opinion of O’Melveny & Myers LLP, counsel
to the Borrower and the other Loan Parties, in form and substance reasonably
satisfactory to the Administrative Agent; (iii) the payments and repayments
specified in paragraph 7 below shall have been made; (iv) the Administrative
Agent shall have received an amendment fee in an aggregate amount equal to
$106,250 (1/8% of the Total Commitment on the Conditions Satisfaction Date) for
the respective account of each Amended and Restated Lender (on a pro  rata
basis based on such Amended and Restated Lender’s Commitment after giving
effect hereto) that has executed and delivered to the Administrative Agent a
counterpart of this Amendment by no later than 5:00 p.m. (Charlotte, North
Carolina time) on June 30, 2007; (v) the Administrative Agent shall have
received the fees set forth in that certain Structuring Fee Letter dated June
29, 2007 by and between Wachovia and the Borrower; and (vi) the Borrower shall
have paid all fees and expenses due and owing to Morgan, Lewis & Bockius
LLP, counsel to the Administrative Agent to the extent unpaid and invoiced on
or before the date hereof; provided that this Amendment shall be of no
force or effect if the Conditions Satisfaction Date shall not have occurred on
or before July 6, 2007.

7.             Payments upon Satisfaction of Conditions.  On the Conditions Satisfaction Date, (i) the
Revolving Commitments and the Tranche B Term Commitments, as the case may be,
of the Lenders under the Credit Agreement before giving effect to this
Amendment who are not Amended and Restated Lenders (collectively, the “Terminating
Lenders”) shall be terminated, (ii) the Amended and Restated Lenders shall
make or be deemed to have made, as the case may be, to the extent necessary,
(A) Loans or additional Loans, as the case may be, to the Borrower in
accordance with their respective Revolving Percentages and Tranche B Term
Percentages after giving effect to this Amendment in an aggregate amount
necessary to repay in full the outstanding principal amount of the Loans of the
Terminating Lenders (it being understood and agreed that no Lender shall be obligated
to increase its Commitment notwithstanding the termination of the Commitment(s)
of any Terminating Lender) and (B) Tranche B Term Loans in an aggregate amount
necessary to repay the principal amount of the Revolving Loans 

 3
 

outstanding in accordance
with Paragraph C of the recitals hereto (it being understood and agreed that no
Lender shall be obligated to make such additional Tranche B Term Loans), (iii)
if any Letters of Credit are outstanding on the Conditions Satisfaction Date,
the undivided interests and participations therein of the Terminating Lenders
that were Revolving Lenders before giving effect to this Amendment shall
terminate and each of the Amended and Restated Lenders that are Revolving
Lenders shall be deemed to have purchased from the Issuing Lender pursuant to
Section 3.4 of the Credit Agreement an undivided interest and participation in
such Letters of Credit to the extent of such Lender’s Revolving Percentage,
(iv) the Borrower shall pay any accrued but unpaid interest and fees owing to
the Terminating Lenders as of the Conditions Satisfaction Date and (v) the
Terminating Lenders shall no longer be Lenders under the Credit Agreement.

8.             Revolving Commitment Reallocation.  On the Conditions Satisfaction Date, the
Revolving Commitments of the Amended and Restated Lenders will be reallocated
such that after giving effect to this Amendment, the Revolving Commitments of
the Amended and Restated Lenders will be as set forth on Exhibit A.  The Amended and Restated Lenders whose
Revolving Commitment will increase as a result of such reallocation shall make
or be deemed to have made, as the case may be, to the extent necessary, Loans
or Additional Loans to the Borrower to repay the outstanding principal amount
of the Loans of the Amended and Restated Lenders whose Revolving Commitments
are decreasing as a result of such reallocation in an amount such that the
Outstanding Revolving Loans of each of the Amended and Restated Lenders, after
giving effect to this Amendment, shall be allocated in accordance with the
respective Revolving Percentage set forth on Exhibit A.

9.             Ratification. 
Except to the extent hereby amended, the Credit Agreement and each of
the Loan Documents remain in full force and effect and are hereby ratified and
affirmed.

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

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

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

 4
 

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

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

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

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

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

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

[Signature pages follow]

 5

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

	
  

  	
  MEDQUEST, INC.

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Todd Andrews

  	
   

  
	
   

  	
  Name: Todd Andrews

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MQ ASSOCIATES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd Andrews

  	
   

  
	
   

  	
  Name: Todd Andrews

  
	
   

  	
  Title: Chief Financial Officer

  
					

 

(signatures
continued on following pages)

Signature
Pages to Fourth Amendment

 

	
  

  	
  WACHOVIA BANK, NATIONAL

  
	
   

  	
  ASSOCIATION, as Administrative Agent

  and as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ C. Mark Hedrick

  	
   

  
	
   

  	
  Name: C. Mark Hedrick

  
	
   

  	
  Title: Managing Director

  

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  UBS AG, Stamford Branch, as Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David B. Julie

  	
   

  
	
   

  	
  Name: David B. Julie

  
	
   

  	
  Title: Associate Director Banking Products Services
  US

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Irja R. Otsa

  	
   

  
	
   

  	
  Name: Irja R. Otsa

  
	
   

  	
  Title: Associate Director Banking Products Services
  US

  

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  Foothill Group, Inc., as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Bohannon

  	
   

  
	
   

  	
  Name: Richard Bohannon

  
	
   

  	
  Title: SVP

  

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  BDC Finance L.L.C., as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  BDCM Fund Advisor, L.L.C.,

  
	
   

  	
   

  	
  Its Investment Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen H. Deckoff

  	
   

  
	
   

  	
  Name: Stephen H. Deckoff

  
	
   

  	
  Title: Managing Principal

  

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  General Electric Capital Corporation, as

  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Adam N. Willis

  	
   

  
	
   

  	
  Name: Adam N. Willis

  
	
   

  	
  Title: 

  	
  Vice President

  
	
   

  	
   

  	
  Duly Authorized Signatory

  
					

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  JPMorgan Chase Bank, NA, as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Dawn L. LeeLum

  	
   

  
	
   

  	
  Name: Dawn L. LeeLum

  
	
   

  	
  Title: 

  	
  Executive Director

  
	
   

  	
   

  	
   

  
					

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  ORIX Funding LLC, as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Tara E. Kenny

  	
   

  
	
   

  	
  Name: Tara E. Kenny

  
	
   

  	
  Title: Assistant Vice President

  

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  Landmark V CDO Ltd., as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Aladdin Capital Management LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Giulio Ponte

  	
   

  
	
   

  	
  Name: Giulio Ponte

  
	
   

  	
  Title: Authorized Signatory

  
					

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  Black Diamond International Funding, Ltd.,

  As Advised by BDCM Fund Adviser, L.L.C.

  as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Simon Wetherell

  	
   

  
	
   

  	
  Name: Simon Wetherell

  
	
   

  	
  Title: Director

  

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  Black Diamond CLO 2005-1, Ltd., as

  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Black Diamond CLO 2005-1

  
	
   

  	
   

  	
  Advisor, L.L.C.

  
	
   

  	
   

  	
  as its Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen H. Deckoff

  	
   

  
	
   

  	
  Name: Stephen H. Deckoff

  
	
   

  	
  Title: Managing Principal

  
					

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  Black Diamond CLO 2005-2, Ltd., as

  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Black Diamond CLO 2005-2 Advisor, L.L.C.,

  
	
   

  	
   

  	
  As its Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Stephen H. Deckoff

  	
   

  
	
   

  	
  Name: Stephen H. Deckoff

  
	
   

  	
  Title: Managing Principal

  
					

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  Grand Central Asset Trust, BDC Series, as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Janet Haack

  	
   

  
	
   

  	
  Name: Janet Haack

  
	
   

  	
  Title: As Attorney In Fact

  

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  Cent CDO 10 Limited, as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RiverSource Investments LLC

  
	
   

  	
   

  	
  as Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robin C. Stancil

  	
   

  
	
   

  	
  Name: Robin C. Stancil

  
	
   

  	
  Title: Director of Operations

  

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  Centurion CDO VI, as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RiverSource Investments, L.L.C.

  
	
   

  	
   

  	
  as Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robin C. Stancil

  	
   

  
	
   

  	
  Name: Robin C. Stancil

  
	
   

  	
  Title: Director of Operations

  

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  Centurion CDO VII, Ltd., as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RiverSource Investments, LLC

  
	
   

  	
   

  	
  as Collateral Manager

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robin C. Stancil

  	
   

  
	
   

  	
  Name: Robin C. Stancil

  
	
   

  	
  Title: Director of Operations

  

 

Signature
Pages to Fourth Amendment

 

	
  

  	
  Sequils Centurion V, as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  RiverSource Investments LLC

  
	
   

  	
   

  	
  as Collateral Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Robin C. Stancil

  	
   

  
	
   

  	
  Name: Robin C. Stancil

  
	
   

  	
  Title: Director of Operations

  

 

Signature
Pages to Fourth Amendment

ACKNOWLEDGMENT
AND CONSENT

Pursuant to Section 6 of the Fourth Amendment to
Amended and Restated Credit Agreement, dated as of June 29, 2007 among MQ
Associates, Inc., a Delaware corporation (“Holdings”), MedQuest, Inc., a
Delaware corporation (the “Borrower”), the Lenders identified on the
signature pages thereto, and Wachovia Bank, National Association (“Wachovia”),
as administrative agent for the Lenders (the “Amendment”), to which this
acknowledgment is attached, each of the undersigned hereby acknowledges receipt
of a copy of and consents to the execution and delivery by Holdings and the
Borrower of the Amendment and acknowledges and grants the releases contained
therein.  Each of the undersigned further
confirms and agrees that, after giving effect to the Amendment, each Loan
Document to which it is a party shall continue in full force and effect in
accordance with its terms. Capitalized terms used herein without definition
shall have the meanings given to them in the Amended and Restated Credit Agreement,
dated September 3, 2003 (as amended, restated, amended and restated,
supplemented or otherwise modified from time to time), among Holdings, the
Borrower, the Lenders, JPMorgan Chase Bank, as Syndication Agent, Wachovia and
General Electric Capital Corporation, as Co-Documentation Agents, and
Wachovia, as Administrative Agent.

[Remainder
of this page intentionally left blank.]

Acknowledgement
to Fourth Amendment

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

	
  ANDERSON DIAGNOSTIC IMAGING,
  INC.

  	
  MOBILE OPEN MRI, INC.

  
	
  BIOIMAGING AT CHARLOTTE, INC.

  	
  MRI & IMAGING OF WISCONSIN, INC.

  
	
  BIOIMAGING OF COOL SPRINGS, INC.

  	
  NORTHEAST COLUMBIA DIAGNOSTIC IMAGING, INC.

  
	
  BIOIMAGING AT HARDING, INC.

  	
  NORTHWEST DIAGNOSTIC IMAGING, INC.

  
	
  CAROLINAS DIAGNOSTIC IMAGING, INC.

  	
  OCCUPATIONAL SOLUTIONS, INC.

  
	
  CHATTANOOGA DIAGNOSTIC IMAGING, INC.

  	
  OPEN MRI OF GEORGIA, INC.

  
	
  DOTHAN DIAGNOSTIC IMAGING, INC.

  	
  OPEN MRI & IMAGING OF GEORGIA, INC.

  
	
  FLORIDA DIAGNOSTIC IMAGING CENTER, INC.

  	
  OPEN MRI & IMAGING OF RICHMOND, INC.

  
	
  GROVE DIAGNOSTIC IMAGING CENTER, INC.

  	
  PALMETTO IMAGING, INC.

  
	
  ILLINOIS DIAGNOSTIC IMAGING, INC.

  	
  PHOENIX DIAGNOSTIC IMAGING, INC.

  
	
  IMAGING SERVICES OF ALABAMA, INC.

  	
  PIEDMONT IMAGING, INC. (SPARTANBURG)

  
	
  KANSAS DIAGNOSTIC IMAGING, INC.

  	
  SOUTH CAROLINA DIAGNOSTIC IMAGING, INC.

  
	
  LEXINGTON OPEN MRI, INC.

  	
  SUN VIEW HOLDINGS, INC.

  
	
  MEDQUEST ASSOCIATES, INC.

  	
  TEXAS IMAGING SERVICES OF EL PASO, INC.

  
	
  MISSOURI IMAGING, INC.

  	
  TYSON’S CORNER DIAGNOSTIC IMAGING, INC.

  
	
  On behalf of each of the entities listed above:

  	
  VIENNA DIAGNOSTIC IMAGING, INC.

  
	
   

  	
  VIRGINIA DIAGNOSTIC IMAGING, INC.

  
	
   

  	
  WILLIAM S. WITT, INC.

  
	
  By:

  	
  /s/ Todd Andrews

  	
   

  	
  WISCONSIN DIAGNOSTIC IMAGING, INC.

  
	
  Name: Todd Andrews

  	
  On behalf of each of the entities listed above:

  
	
  Title: Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Todd Andrews

  	
   

  
	
   

  	
  Name: Todd Andrews

  
	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  
						

 

Signature Page to Acknowledgment to Fourth
Amendment

 

	
  ASHEVILLE OPEN MRI, LLC

  	
   

  	
  MECKLENBURG DIAGNOSTIC IMAGING, LLC

  
	
  ATHENS MRI, LLC

  	
   

  	
  MEDICAL SCHEDULING OF MISSOURI, LLC

  
	
  BIRMINGHAM DIAGNOSTIC IMAGING, LLC

  	
   

  	
  MIDTOWN DIAGNOSTIC IMAGING, LLC

  
	
  BRIDGETON MRI AND IMAGING CENTER, LLC

  	
   

  	
  MONTGOMERY OPEN MRI, LLC

  
	
  BRUNSWICK DIAGNOSTIC IMAGING, LLC

  	
   

  	
  OPEN MRI & IMAGING OF CONYERS, LLC

  
	
  BUCKHEAD DIAGNOSTIC IMAGING, LLC

  	
   

  	
  OPEN MRI & IMAGING OF ALBANY, LLC

  
	
  CABARRUS DIAGNOSTIC IMAGING, LLC

  	
   

  	
  OPEN MRI & IMAGING OF ATHENS, LLC

  
	
  CAPE FEAR DIAGNOSTIC IMAGING, LLC

  	
   

  	
  OPEN MRI & IMAGING OF DOUGLASVILLE, LLC

  
	
  CAPE FEAR MOBILE IMAGING, LLC

  	
   

  	
  OPEN MRI OF ATLANTA, LLC

  
	
  CAPE IMAGING, L.L.C.

  	
   

  	
  OPEN MRI OF CENTRAL GEORGIA, LLC

  
	
  CAROLINA IMAGING, LLC OF FAYETTEVILLE

  	
   

  	
  OPEN MRI & IMAGING OF DEKALB, LLC

  
	
  CAROLINA MEDICAL IMAGING, LLC

  	
   

  	
  OPEN MRI & IMAGING OF NORTH FULTON, LLC

  
	
  CHAPEL HILL DIAGNOSTIC IMAGING, LLC

  	
   

  	
  OPEN MRI & IMAGING OF MACON, LLC

  
	
  CLAYTON OPEN MRI, LLC

  	
   

  	
  OPEN MRI & IMAGING OF N.E. GEORGIA, LLC

  
	
  COASTAL IMAGING, LLC

  	
   

  	
  OPEN MRI AND IMAGING OF SNELLVILLE, LLC

  
	
  CUMMING DIAGNOSTIC IMAGING, LLC

  	
   

  	
  OPEN MRI OF SIMPSONVILLE, LLC

  
	
  DIAGNOSTIC IMAGING OF ATLANTA, LLC

  	
   

  	
  OPEN MRI & IMAGING OF RICHMOND, LLC

  
	
  DIAGNOSTIC IMAGING OF GEORGIA, LLC

  	
   

  	
  PIEDMONT IMAGING, LLC. (FORSYTH)

  
	
  DIAGNOSTIC IMAGING OF HIRAM, LLC

  	
   

  	
  RICHMOND WEST END DIAGNOSTIC IMAGING, LLC

  
	
  DIAGNOSTIC IMAGING OF MARIETTA, LLC

  	
   

  	
  SIMPSONVILLE OPEN MRI, LLC

  
	
  DULUTH DIAGNOSTIC IMAGING, LLC

  	
   

  	
  ST. PETERS MRI & IMAGING CENTER, LLC

  
	
  DULUTH CT CENTER, LLC

  	
   

  	
  TOWN & COUNTRY OPEN MRI, LLC

  
	
  DURHAM DIAGNOSTIC IMAGING, LLC

  	
   

  	
  TRIAD IMAGING, LLC

  
	
  EAST COOPER DIAGNOSTIC IMAGING, LLC

  	
   

  	
  TRICOM DIAGNOSTIC IMAGING, LLC

  
	
  FARMFIELD DIAGNOSTIC IMAGING, LLC

  	
   

  	
  WEST ASHLEY DIAGNOSTIC IMAGING, LLC

  
	
  FORT MILL DIAGNOSTIC IMAGING, LLC

  	
   

  	
  WEST PACES DIAGNOSTIC IMAGING, LLC

  
	
  HAPEVILLE DIAGNOSTIC IMAGING, LLC

  	
   

  	
  WOODSTOCK DIAGNOSTIC IMAGING, LLC

  
	
  IMAGING CENTER OF CENTRAL GEORGIA, LLC

  	
   

  	
   

  
	
  JACKSONVILLE DIAGNOSTIC IMAGING, LLC

  	
   

  	
   

  
	
  KIRKWOOD MRI AND IMAGING CENTER, LLC

  	
   

  	
   

  

 

Signature Page to Acknowledgment
to Fourth Amendment

 

	
  On behalf of each of the entities listed above:

  	
   

  	
  On behalf of each of the entities listed above:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Todd Andrews

  	
   

  	
   

  	
  By: 

  	
  /s/ Todd Andrews

  	
   

  
	
  Name: Todd Andrews

  	
   

  	
  Name: Todd Andrews

  
	
  Title: Chief Financial Officer

  	
   

  	
  Title: Chief Financial Officer

  
	
   

  	
   

  	
   

  
							

 

Signature Page to Acknowledgment to Fourth
Amendment

 

	
   

  	
   

  	
  OPEN MRI OF MYRTLE BEACH, LLC

  
	
   

  	
   

  	
  OPEN MRI & IMAGING OF FLORENCE, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By: Palmetto Imaging, Inc., as sole member 

  of each of the entities listed above

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Todd Andrews

  	
   

  
	
   

  	
   

  	
  Name: Todd Andrews

  
	
   

  	
   

  	
  Title: Chief Financial Officer

  

 

Signature Page to Acknowledgment
to Fourth Amendment

 

 

 

EXHIBIT A

[BLACKLINE OF
CREDIT AGREEMENT]

Exhibit C to Fourth Amendment

EXHIBIT A TO FOURTH AMENDMENT

[$140,000,000]

$85,000,000

SECOND AMENDED AND RESTATED CREDIT
AGREEMENT

among

MQ ASSOCIATES, INC.,

MEDQUEST, INC.,

as Borrower,

The Several Lenders from Time to Time Parties Hereto,

JPMORGAN CHASE BANK,

as Syndication Agent,

GENERAL ELECTRIC CAPITAL CORPORATION

[and]

and

WACHOVIA
BANK, NATIONAL ASSOCIATION,

as Co-Documentation Agents

and

WACHOVIA BANK, NATIONAL ASSOCIATION,

as [Co-Documentation Agents]

[and]

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

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

 

TABLE OF CONTENTS

(continued)

Page

[WACHOVIA BANK, NATIONAL ASSOCIATION,][as
]Administrative
Agent

Dated as of [September 3, 2003]  June 29, 2007

[J.P.
MORGAN SECURITIES INC.,]

[as
Sole Lead Arranger and Bookrunner]

 

 i
 

TABLE OF
CONTENTS

[TABLE OF CONTENTS]

[Page]

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 1.

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  Defined Terms

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Other Definitional Provisions

  	
   

  	
  [26]25

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
   

  	
  AMOUNT AND TERMS
  OF COMMITMENTS

  	
   

  	
  26

  
	
  2.1

  	
   

  	
  Term Commitments

  	
   

  	
  26

  
	
  2.2

  	
   

  	
  Procedure for Term Loan Borrowings

  	
   

  	
  28

  
	
  2.3

  	
   

  	
  Repayment of Term Loans

  	
   

  	
  28

  
	
  2.4

  	
   

  	
  Revolving Commitments

  	
   

  	
  [29]28

  
	
  2.5

  	
   

  	
  Procedure for Revolving Loan Borrowing

  	
   

  	
  [30]29

  
	
  2.6

  	
   

  	
  Swingline Commitment

  	
   

  	
  [30]29

  
	
  2.7

  	
   

  	
  Procedure for Swingline Borrowing; Refunding of
  Swingline Loans

  	
   

  	
  30

  
	
  2.8

  	
   

  	
  Commitment Fees, etc.

  	
   

  	
  [32]31

  
	
  2.9

  	
   

  	
  Termination or Reduction of Revolving Commitments

  	
   

  	
  [32]31

  
	
  2.10

  	
   

  	
  Optional Prepayments

  	
   

  	
  [32]31

  
	
  2.11

  	
   

  	
  Mandatory Prepayments and Commitment Reductions

  	
   

  	
  32

  
	
  2.12

  	
   

  	
  Conversion and Continuation Options

  	
   

  	
  33

  
	
  2.13

  	
   

  	
  Limitations on Eurodollar Tranches

  	
   

  	
  [34]33

  
	
  2.14

  	
   

  	
  Interest Rates and Payment Dates

  	
   

  	
  [34]33

  
	
  2.15

  	
   

  	
  Computation of Interest and Fees

  	
   

  	
  [35]34

  
	
  2.16

  	
   

  	
  Inability to Determine Interest Rate

  	
   

  	
  [35]34

  
	
  2.17

  	
   

  	
  Pro Rata Treatment and Payments

  	
   

  	
  35

  
	
  2.18

  	
   

  	
  Requirements of Law

  	
   

  	
  [37]36

  
	
  2.19

  	
   

  	
  Taxes

  	
   

  	
  [38]37

  
	
  2.20

  	
   

  	
  Indemnity

  	
   

  	
  [39]38

  
	
  2.21

  	
   

  	
  Change of Lending Office

  	
   

  	
  [40]39

  
	
  2.22

  	
   

  	
  Replacement of Lenders

  	
   

  	
  [40]39

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
   

  	
  LETTERS OF
  CREDIT

  	
   

  	
  [40]39

  
	
  3.1

  	
   

  	
  L/C Commitment

  	
   

  	
  [40]39

  
	
  3.2

  	
   

  	
  Procedure for Issuance of Letter of Credit

  	
   

  	
  [41]40

  
	
  3.3

  	
   

  	
  Fees and Other Charges

  	
   

  	
  [41]40

  
	
  3.4

  	
   

  	
  L/C Participations

  	
   

  	
  [41]40

  

 

 ii
 

 

 

	
  3.5

  	
   

  	
  Reimbursement Obligation of the Borrower

  	
   

  	
  [42]41

  
	
  3.6

  	
   

  	
  Obligations Absolute

  	
   

  	
  [42]41

  
	
  3.7

  	
   

  	
  Letter of Credit Payments

  	
   

  	
  42

  
	
  3.8

  	
   

  	
  Applications

  	
   

  	
  [43]42

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
   

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  	
  [43]42

  
	
  4.1

  	
   

  	
  Financial Condition

  	
   

  	
  [43]42

  
	
  4.2

  	
   

  	
  No Change

  	
   

  	
  [43]42

  
	
  4.3

  	
   

  	
  Existence; Compliance with Law

  	
   

  	
  43

  
	
  4.4

  	
   

  	
  Power; Authorization; Enforceable Obligations

  	
   

  	
  [44]43

  
	
  4.5

  	
   

  	
  No Legal Bar

  	
   

  	
  [44]43

  
	
  4.6

  	
   

  	
  Litigation

  	
   

  	
  [44]43

  
	
  4.7

  	
   

  	
  No Default

  	
   

  	
  [44]43

  
	
  4.8

  	
   

  	
  Ownership of Property; Liens

  	
   

  	
  44

  
	
  4.9

  	
   

  	
  Intellectual Property

  	
   

  	
  [45]44

  
	
  4.10

  	
   

  	
  Taxes

  	
   

  	
  [45]44

  
	
  4.11

  	
   

  	
  Federal Regulations

  	
   

  	
  [45]44

  
	
  4.12

  	
   

  	
  Labor Matters

  	
   

  	
  [45]44

  
	
  4.13

  	
   

  	
  ERISA

  	
   

  	
  [45]44

  
	
  4.14

  	
   

  	
  Investment Company Act; Other Regulations

  	
   

  	
  [46]45

  
	
  4.15

  	
   

  	
  Subsidiaries

  	
   

  	
  [46]45

  
	
  4.16

  	
   

  	
  Use of Proceeds

  	
   

  	
  [46]45

  
	
  4.17

  	
   

  	
  Environmental Matters

  	
   

  	
  [46]45

  
	
  4.18

  	
   

  	
  Accuracy of Information, etc.

  	
   

  	
  [47]46

  
	
  4.19

  	
   

  	
  Security Documents

  	
   

  	
  [47]46

  
	
  4.20

  	
   

  	
  Solvency

  	
   

  	
  [48]47

  
	
  4.21

  	
   

  	
  Senior Indebtedness

  	
   

  	
  [48]47

  
	
  4.22

  	
   

  	
  Regulation H

  	
   

  	
  [48]47

  
	
  4.23

  	
   

  	
  Certain Documents

  	
   

  	
  [48]47

  
	
  4.24

  	
   

  	
  Inspections and Investigations

  	
   

  	
  [48]47

  
	
  4.25

  	
   

  	
  Medicare Participation

  	
   

  	
  [48]47

  
	
  4.26

  	
   

  	
  Fraud and Abuse

  	
   

  	
  48

  
	
  4.27

  	
   

  	
  HIPAA Compliance

  	
   

  	
  [49]48

  

 

 iii
 

 

	
  4.28

  	
   

  	
  Prior Representations and Warranties

  	
   

  	
  48

  
	
  4.29

  	
   

  	
  Schedules

  	
   

  	
  49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
   

  	
  CONDITIONS
  PRECEDENT

  	
   

  	
  49

  
	
  [5.1

  	
   

  	
  Conditions to Effectiveness of Amended and Restated
  Credit Agreement

  	
   

  	
  50]

  
	
  5.1

  	
   

  	
  [INTENTIONALLY OMITTED]

  	
   

  	
  49

  
	
  5.2

  	
   

  	
  Conditions to Each Extension of Credit

  	
   

  	
  [51]49

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
   

  	
  AFFIRMATIVE
  COVENANTS

  	
   

  	
  [51]49

  
	
  6.1

  	
   

  	
  Financial Statements

  	
   

  	
  [51]49

  
	
  6.2

  	
   

  	
  Certificates; Other Information

  	
   

  	
  [52]50

  
	
  6.3

  	
   

  	
  Payment of Obligations

  	
   

  	
  [53]51

  
	
  6.4

  	
   

  	
  Maintenance of Existence; Compliance

  	
   

  	
  [53]51

  
	
  6.5

  	
   

  	
  Maintenance of Property; Insurance

  	
   

  	
  [54]51

  
	
  6.6

  	
   

  	
  Inspection of Property; Books and Records;
  Discussions

  	
   

  	
  [54]52

  
	
  6.7

  	
   

  	
  Notices

  	
   

  	
  [54]52

  
	
  6.8

  	
   

  	
  Environmental Laws

  	
   

  	
  [55]53

  
	
  6.9

  	
   

  	
  Additional Collateral, etc

  	
   

  	
  [55]53

  
	
  6.10

  	
   

  	
  Matters Relating to Collateral

  	
   

  	
  [56]54

  
	
  6.11

  	
   

  	
  USA PATRIOT Act Compliance

  	
   

  	
  [57]55

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
   

  	
  NEGATIVE
  COVENANTS

  	
   

  	
  [58]55

  
	
  7.1

  	
   

  	
  Financial Condition Covenants

  	
   

  	
  [58]56

  
	
  7.2

  	
   

  	
  Indebtedness

  	
   

  	
  [60]57

  
	
  7.3

  	
   

  	
  Liens

  	
   

  	
  [62]58

  
	
  7.4

  	
   

  	
  Fundamental Changes

  	
   

  	
  [63]60

  
	
  7.5

  	
   

  	
  Disposition of Property

  	
   

  	
  [64]60

  
	
  7.6

  	
   

  	
  Restricted Payments

  	
   

  	
  [64]61

  
	
  7.7

  	
   

  	
  Investments

  	
   

  	
  [66]63

  
	
  7.8

  	
   

  	
  Optional Payments and Modifications of Certain Debt
  Instruments

  	
   

  	
  [68]65

  
	
  7.9

  	
   

  	
  Transactions with Affiliates

  	
   

  	
  [69]65

  
	
  7.10

  	
   

  	
  Sales and Leasebacks

  	
   

  	
  [69]65

  
	
  7.11

  	
   

  	
  Changes in Fiscal Periods

  	
   

  	
  [69]65

  
	
  7.12

  	
   

  	
  Negative Pledge Clauses

  	
   

  	
  [69]65

  
	
  7.13

  	
   

  	
  Clauses Restricting Subsidiary Distributions

  	
   

  	
  [69]66

  

 

 iv
 

 

	
  7.14

  	
   

  	
  Lines of Business

  	
   

  	
  [70]66

  
	
  7.15

  	
   

  	
  Amendments to Recapitalization Documents

  	
   

  	
  [70]66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
   

  	
  EVENTS OF
  DEFAULT

  	
   

  	
  [70]66

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
   

  	
  THE AGENTS

  	
   

  	
  [73]69

  
	
  9.1

  	
   

  	
  Appointment

  	
   

  	
  [73]70

  
	
  9.2

  	
   

  	
  Delegation of Duties

  	
   

  	
  [73]70

  
	
  9.3

  	
   

  	
  Exculpatory Provisions

  	
   

  	
  [74]70

  
	
  9.4

  	
   

  	
  Reliance by Administrative Agent

  	
   

  	
  [74]70

  
	
  9.5

  	
   

  	
  Notice of Default

  	
   

  	
  [74]71

  
	
  9.6

  	
   

  	
  Non-Reliance on Agents and Other Lenders

  	
   

  	
  [75]71

  
	
  9.7

  	
   

  	
  Indemnification

  	
   

  	
  [75]71

  
	
  9.8

  	
   

  	
  Agents in Their Individual Capacities

  	
   

  	
  [75]72

  
	
  9.9

  	
   

  	
  Successor Administrative Agent

  	
   

  	
  [75]72

  
	
  9.10

  	
   

  	
  Closing Agent, Co-Documentation Agents and
  Syndication Agent

  	
   

  	
  [76]72

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  [76]72

  
	
  10.1

  	
   

  	
  Amendments and Waivers

  	
   

  	
  [76]72

  
	
  10.2

  	
   

  	
  Notices

  	
   

  	
  [77]74

  
	
  10.3

  	
   

  	
  No Waiver; Cumulative Remedies

  	
   

  	
  [79]76

  
	
  10.4

  	
   

  	
  Survival of Representations and Warranties

  	
   

  	
  [79]76

  
	
  10.5

  	
   

  	
  Payment of Expenses and Taxes

  	
   

  	
  [79]76

  
	
  10.6

  	
   

  	
  Successors and Assigns; Participations and
  Assignments

  	
   

  	
  [80]77

  
	
  10.7

  	
   

  	
  Adjustments; Set off

  	
   

  	
  [83]80

  
	
  10.8

  	
   

  	
  Counterparts

  	
   

  	
  [84]80

  
	
  10.9

  	
   

  	
  Severability

  	
   

  	
  [84]80

  
	
  10.10

  	
   

  	
  Integration

  	
   

  	
  [84]80

  
	
  10.11

  	
   

  	
  [GOVERNING LAW           84]Governing Law

  	
   

  	
  80

  
	
  10.12

  	
   

  	
  Submission [To]to
  Jurisdiction; Waivers

  	
   

  	
  [84]81

  
	
  10.13

  	
   

  	
  Acknowledgements

  	
   

  	
  [85]81

  
	
  10.14

  	
   

  	
  Releases of Guarantees and Liens

  	
   

  	
  [85]81

  
	
  10.15

  	
   

  	
  Confidentiality

  	
   

  	
  [85]82

  
	
  10.16

  	
   

  	
  WAIVERS OF JURY TRIAL

  	
   

  	
  [86]82

  

 

 v
 

 

	
  ANNEX:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.1A

  	
   

  	
  Commitments

  	
   

  	
   

  
	
  1.1B

  	
   

  	
  Mortgaged Property

  	
   

  	
   

  
	
  1.1C

  	
   

  	
  Excluded Subsidiaries

  	
   

  	
   

  
	
  4.2

  	
   

  	
  No Changes

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Consents, Authorizations, Filings and Notices

  	
   

  	
   

  
	
  4.6

  	
   

  	
  Litigation

  	
   

  	
   

  
	
  4.9

  	
   

  	
  Intellectual Property

  	
   

  	
   

  
	
  4.15

  	
   

  	
  Subsidiaries

  	
   

  	
   

  
	
  4.19(a)

  	
   

  	
  UCC Filing Jurisdictions

  	
   

  	
   

  
	
  4.19(b)

  	
   

  	
  Mortgage Filing Jurisdictions

  	
   

  	
   

  
	
  7.2(d)

  	
   

  	
  Existing Indebtedness

  	
   

  	
   

  
	
  7.3(f)

  	
   

  	
  Existing Liens

  	
   

  	
   

  
	
  7.7

  	
   

  	
  Existing Investments

  	
   

  	
   

  
	
  7.9

  	
   

  	
  Permitted Affiliate Transactions

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  Form of Guarantee and Collateral Agreement

  	
   

  	
   

  
	
  B

  	
   

  	
  Form of Compliance Certificate

  	
   

  	
   

  
	
  C

  	
   

  	
  Form of Closing Certificate

  	
   

  	
   

  
	
  D

  	
   

  	
  Form of Assignment and Assumption

  	
   

  	
   

  
	
  E

  	
   

  	
  Form of Legal Opinion of O’Melveny & Myers LLP

  	
   

  	
   

  
	
  F

  	
   

  	
  Form of Exemption Certificate

  	
   

  	
   

  
	
  G

  	
   

  	
  Form of Solvency Certificate

  	
   

  	
   

  
	
  H-1

  	
   

  	
  Form of New Lender Supplement

  	
   

  	
   

  
	
  H-2

  	
   

  	
  Form of Incremental Facility Activation Notice

  	
   

  	
   

  
	
  I

  	
   

  	
  Form of PEI Savings Schedule

  	
   

  	
   

  

 

 vi

AMENDED AND RESTATED CREDIT AGREEMENT (this “Agreement”), dated as
of [September 3, 2003,]June 29, 2007, among MQ ASSOCIATES, INC., a Delaware corporation (“Holdings”),
MEDQUEST, INC., a Delaware corporation (the “Borrower”), the several
banks and other financial institutions or entities from time to time parties to
this Agreement (the “Lenders”), JPMORGAN CHASE BANK, as syndication
agent (in such capacity, the “Syndication Agent”), GENERAL ELECTRIC
CAPITAL CORPORATION and WACHOVIA BANK, NATIONAL ASSOCIATION, as
co-documentation agents (in such capacities, the “Co-Documentation Agents”),
and WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent (in such
capacity, the “Administrative Agent”).

W  I  T  N
E  S  S  E  T  H:

WHEREAS, Holdings, the Borrower, the
lenders parties thereto (the “Existing Lenders”) and the Administrative
Agent are parties to a Credit Agreement, dated as of August 15, 2002 (as amended and restated as of
September 3, 2003, the “Existing
Credit Agreement”), as in effect immediately prior to the Amendment
Effective Date (as defined herein);

WHEREAS, Holdings and the Borrower
have requested that, among other
things, the Existing
Credit Agreement be amended and restated to provide for [a term loan facility in the amount of $60,000,000]an extension of the Revolving
Termination Date and a shortening of the Tranche B Term Maturity Date (as
defined herein) and as
otherwise provided herein; and

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

SECTION 1.           DEFINITIONS

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

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

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

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

“Adjustment Date”:  as defined in the [Pricing Grid]definition of Commitment Fee Rate.

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

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

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

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

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

“Agreement”:  as defined in the preamble hereto.

“Amendment Effective Date”:  [the date on which the conditions
precedent set forth in Section 5.1 shall have been satisfied or waived. ]June 29, 2007.

“Applicable Margin”:  [Subject to the terms set forth in
the Third Amendment with respect to “Applicable Margin”,](a) with respect to Tranche B Term Loans, Revolving Loans and Swingline
Loans that are (i) ABR
Loans, 2.75% per annum and (ii) Eurodollar Loans, 3.75% per annum, subject to adjustment as
specified in Section 2.1(b)[ with respect to Revolving Loans
and Swingline Loans, the rates per annum determined pursuant to the Pricing
Grid, and (c], and (b) with respect to Incremental Term Loans, such per
annum rates as shall be agreed to by the Borrower and the applicable
Incremental Term Lenders as shown in the applicable Incremental Facility
Activation Notice.

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

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

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

 2
 

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

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

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

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

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

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

“Borrower”:  as defined in the preamble hereto.

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

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

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

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

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

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

 3
 

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

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

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

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

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

 4
 

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

“CMS”:  the Centers for Medicare and Medicaid
Services, formerly known as the Health Care Financing Administration, the
entity within the United States Department of Health and Human Services
responsible for administering the Medicare program and the federal aspects of
the Medicaid programs, directly and through its fiscal intermediaries and
agents, and any successor entities.

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

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

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

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

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

“Commitment Fee Rate”:  the rate per annum equal to (a) from the
Amendment Effective Date through June 30, 2008, 1.00%; (b) from July 1, 2008
through September 30, 2008 (i) if the Holdings Consolidated Leverage Ratio is
less than or equal to 7.0 to 1, 1.00% or (ii) if the Holdings Consolidated
Leverage Ratio is greater than 7.01 to 1, 1.50%; and (c) from and after October
1, 2008 (i) if the Holdings Consolidated Leverage Ratio is less than or equal
to 7.0 to 1, 1.00% or (ii) if the Holdings Consolidated Leverage Ratio is greater
than 7.0 to 1, 1.875%.  Changes in the
Commitment Fee Rate resulting from changes in the Holdings Consolidated
Leverage Ratio shall become effective on the date (the “Adjustment Date”) that
is three Business Days after the date on which financial statements are
delivered to the Lenders pursuant to Section 6.1 and shall remain in effect
until the next change to be effected pursuant to this paragraph.  If any financial statements referred to above
are not delivered within the time periods specified in Section 6.1, then, until
the date that is three Business Days after the date on which such financial
statements are delivered, the highest rate set forth in this definition shall
apply.  In addition, at all times while an
Event of Default shall have occurred and be continuing, the highest rate set
forth in this definition shall apply.

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

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

“Conduit Lender”: any special
purpose corporation organized and administered by any Lender for the purpose of
making Loans otherwise required to be made by such Lender and designated by
such Lender in a written instrument; provided, that the designation by
any Lender of a Conduit Lender shall not relieve the designating Lender of any
of its obligations to fund a Loan under this Agreement if, for any reason, its
Conduit Lender fails to fund any such Loan, and the designating Lender (and not
the Conduit Lender) shall have the sole right and responsibility to deliver all
consents and waivers required or requested under this Agreement with respect to
its Conduit Lender (including, without limitation, all consents and waivers
under Section 10.1), and provided, further, that no Conduit
Lender shall (a) be 

 5
 

entitled to receive any greater
amount pursuant to Section 2.18, 2.19, 2.20 or 10.5 than the designating Lender
would have been entitled to receive in respect of the extensions of credit made
by such Conduit Lender (it being understood that the designating Lender shall
not be entitled to any such amount) or (b) be deemed to have any Revolving
Commitment.

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

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

“Consolidated EBITDA”:  for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period, the
sum of (a) income tax expense, (b) interest expense, amortization or writeoff
of debt discount and debt issuance costs and all commissions, discounts and
other fees and charges associated with Indebtedness (including the Loans,
letters of credit, bankers’ acceptance financing), and net costs under Swap
Agreements, (c) depreciation and amortization expense, (d) amortization or
write-off of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any non-cash expenses or losses, (f) any non-cash
expenses or charges resulting from the grant of stock options, equity or profit
related employment incentives, (g) any extraordinary, unusual or non-recurring
cash expenses or losses, which, together with any cash payments made during
such period in respect of items reflected as extraordinary, unusual or
non-recurring non-cash expenses or losses in the statement of Consolidated Net
Income in a prior period, shall not exceed an aggregate amount of $2,000,000 in
any fiscal year, [and](h) Excluded Charges and (i)(A) the PEI Savings for
the fiscal quarter most recently ended multiplied by four less (B) the sum of
PEI Savings for such fiscal quarter and the previous three fiscal quarters, it
being agreed that the PEI Savings for each fiscal quarter in fiscal year 2006
shall be zero, and minus,
(a) to the extent included in the statement of such Consolidated Net Income for
such period, the sum of (i) interest income, (ii) any extraordinary, unusual or
non-recurring non-cash income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated Net Income
for such period, gains on the sales of assets outside of the ordinary course of
business) and (iii) any other non-cash income and (b) any cash payments made
during such period in respect of items reflected as extraordinary, unusual or
non-recurring non-cash expenses or losses in the statement of Consolidated Net
Income in a prior period to the extent such non-cash expense or loss was
previously included in the calculation of Consolidated EBITDA and is in excess
of the limitation set forth in clause (g) above, all as determined on a consolidated
basis.  For the purposes of calculating
Consolidated EBITDA for any period of four consecutive fiscal quarters (each, a
“Reference Period”) pursuant to any determination of the Consolidated
Leverage Ratio or the Consolidated Senior Leverage Ratio, (i) if at any time
during such Reference Period the Borrower or any Subsidiary shall have made any
Material Disposition, the Consolidated EBITDA for such Reference Period shall,
after giving Pro Forma Effect thereto, be reduced by an amount equal to the Consolidated
EBITDA (if positive) attributable to the property that is the subject of such
Material Disposition for such Reference Period or increased by an amount equal
to the Consolidated EBITDA (if negative) attributable thereto for such
Reference Period, in each case, to the same extent that the Indebtedness
attributable to such property was deducted from Consolidated Total Debt in the
determination of the Consolidated Leverage Ratio or the Consolidated Senior
Leverage Ratio, and (ii) if during such Reference Period the Borrower or any
Subsidiary shall have made a Material Acquisition, Consolidated EBITDA for such
Reference Period shall be calculated after 

 6
 

giving Pro Forma Effect
thereto.  As used in this definition, “Material
Acquisition” means any acquisition of property or series of related
acquisitions of property that (a) constitutes assets comprising all or
substantially all of an operating unit of a business or constitutes all or
substantially all of the common stock of a Person and (b) involves the payment
of consideration by the Borrower and its Subsidiaries in excess of $300,000;
and “Material Disposition” means any Disposition of property or series of
related Dispositions of property that yields total consideration to the
Borrower or any of its Subsidiaries in excess of $300,000.

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

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

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

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

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

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

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

“Consolidated Net Income”:  for any period, the consolidated net income
(or loss) of the Borrower and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; provided that there shall be excluded (a)
the income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the Borrower
or any of its Subsidiaries, 

 7
 

(b) the income (or deficit) of any
Person (other than a Subsidiary of the Borrower) in which the Borrower or any
of its Subsidiaries has an ownership interest, except to the extent that any
such income is actually received by the Borrower or such Subsidiary in the form
of dividends or similar distributions and (c) the undistributed earnings of any
Subsidiary of the Borrower to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.

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

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

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

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

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

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

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

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

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

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

 8
 

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

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

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

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

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

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

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

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

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

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

 9
 

eurodollar and foreign currency and
exchange operations are then being conducted for delivery on the first day of
such Interest Period for the number of days comprised therein.

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

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

	
  

  	
   

  	
  Eurodollar Base Rate

  	
   

  	
   

  
	
   

  	
   

  	
  1.00 - Eurocurrency Reserve
  Requirements

  	
   

  	
   

  

 

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

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

“Excess Cash Flow”:  for any fiscal year of the Borrower, the
excess, if any, of (a) the sum, without duplication, of (i) Consolidated Net
Income for such fiscal year, (ii) the amount of all non-cash charges (including
depreciation and amortization) deducted in arriving at such Consolidated Net
Income, (iii) any decrease in Consolidated Working Capital for such fiscal
year, (iv) the aggregate net amount of non-cash loss on the Disposition of
property by the Borrower and its Subsidiaries during such fiscal year (other
than sales of inventory in the ordinary course of business), to the extent
deducted in arriving at such Consolidated Net Income, and (v) the amount of all
income tax expense, interest expense, amortization or writeoff of debt discount
and debt issuance costs and all commissions, discounts and other fees and
charges associated with Indebtedness (including the Loans, letters of credit,
bankers’ acceptance financing), and net costs under Swap Agreements, in each
case to the extent deducted in arriving at such Consolidated Net Income, over
(b) the sum, without duplication, of (i) the amount of all non-cash credits,
income and gains included in arriving at such Consolidated Net Income, (ii) the
aggregate amount actually paid by the Borrower and its Subsidiaries in cash
during such fiscal year on account of Capital Expenditures (excluding the
principal amount of Funded Debt (other than Funded Debt hereunder) incurred in connection
with such expenditures and any such expenditures financed with the proceeds of
any Reinvestment Deferred Amount or issuance of equity), (iii) the aggregate
amount actually paid by the Borrower and its Subsidiaries in cash during such
fiscal year on account of Permitted Acquisitions in such fiscal year (as such
sum shall be reduced by the principal amount of Funded Debt (other than Funded
Debt hereunder) incurred in connection with such Permitted Acquisitions and any
such expenditures for such Permitted Acquisitions financed with the proceeds of
any Reinvestment Deferred Amount or issuance of equity), (iv) (x) the aggregate
amount of all prepayments of Revolving Loans and Swingline Loans during such
fiscal year to the extent of accompanying permanent optional reductions of the
Revolving Commitments and all optional prepayments of the Term Loans (together
with any prepayment fees accompanying such prepayments) during such fiscal
year, in each such case, divided by (y) the Prepayment Percentage, provided that any prepayment of
Revolving Loans made pursuant to the terms of the Fourth Amendment from the
proceeds of Tranche B Term Loans shall not be included in the amount of
prepayments calculated pursuant to this clause (iv), (v) the aggregate proceeds of Asset Sales and
Recovery Events during such fiscal year, but only to the extent that such Asset
Sales and Recovery Events increased Consolidated Net Income during such fiscal
year, (vi) the aggregate amount of all regularly scheduled principal payments of
Funded Debt (including the Term Loans and Funded Debt incurred to finance
Capital Expenditures and Permitted Acquisitions) of the 

 10
 

Borrower and its Subsidiaries made
during such fiscal year (other than in respect of any revolving credit facility
to the extent there is not an equivalent permanent reduction in commitments
thereunder), (vii) any increase in Consolidated Working Capital for such fiscal
year, (viii) any cash payments made during such period in respect of items
described in clauses (a)(ii) and (a)(iv) above subsequent to the fiscal quarter
in which such relevant non-cash expenses or losses were reflected as a charge
in the statement of Consolidated Net Income, (ix) the aggregate net amount of
non-cash gain on the Disposition of property by the Borrower and its
Subsidiaries during such fiscal year (other than sales of inventory in the
ordinary course of business), to the extent included in arriving at such
Consolidated Net Income, (x) the aggregate amount actually paid by the Borrower
and its Subsidiaries in cash during such fiscal year on account of income tax
expense, interest expense and all commissions, discounts and other fees and
charges associated with Indebtedness (including the Loans, letters of credit,
bankers’ acceptance financing), and net costs under Swap Agreements, (xi) the
aggregate amount of dividends and other distributions actually paid by the
Borrower and its Subsidiaries (without duplication) in cash during such period
to Holdings in accordance with Section 7.6(h)[,] and (xii) solely to the extent not deducted in
determining Consolidated Net Income, the aggregate amount actually paid by the
Borrower and its Subsidiaries in cash during such period in respect of fees,
costs and expenses actually incurred in connection with the [restatement of the financial statements of Holdings and its
Subsidiaries arising out of or in connection with the Accounting Matter and the
Other Accounting Matter]amendment and restatement of this Agreement, including, without limitation, fees, costs and expenses
incurred in connection with the [Third Amendment and each of the
waivers and other modifications to this Agreement granted by the Administrative
Agent and the Lenders during fiscal year 2005,]Fourth Amendment and the amendments to other Indebtedness of the
Borrower and Holdings effected in connection with the [Third]Fourth
Amendment, in each case without duplication.

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

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

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

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

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

 11
 

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

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

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

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

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

“Fourth Amendment”: the
Fourth Amendment to Amended and Restated Credit Agreement, dated as of June 29,
2007, among Holdings, the Borrower, the Lenders party thereto and the
Administrative Agent.

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

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

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

 12
 

rule, regulation, pronouncement or
opinion by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants or, if applicable, the SEC.

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

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

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

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

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

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

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

 13
 

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

“Holdings”:  as defined in the preamble hereto.

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

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

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

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

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

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

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

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

“Indebtedness”:  of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables and other current liabilities incurred in
the ordinary course of such Person’s business and contingent purchase price
adjustments), (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property), (e) all Capital Lease
Obligations of such Person, (f) all obligations of such Person, contingent or
otherwise, as an account party or applicant under or in respect of acceptances,
letters of credit, surety bonds or similar arrangements, (g) the liquidation
value of all Disqualified Capital Stock of such Person, (h) all Guarantee
Obligations of such Person in 

 14
 

respect of obligations of the kind
referred to in clauses (a) through (g) above, (i) all obligations of the kind
referred to in clauses (a) through (h) above secured by (or for which the
holder of such obligation has an existing right, contingent or otherwise, to be
secured by) any Lien on property (including accounts and contract rights) owned
by such Person, whether or not such Person has assumed or become liable for the
payment of such obligation, and (j) for the purposes of Section 8(e) only, all
obligations of such Person in respect of Swap Agreements.  The Indebtedness of any Person shall include
the Indebtedness of any other entity (including any partnership in which such
Person is a general partner) to the extent such Person is liable therefor as a
result of such Person’s ownership interest in or other relationship with such
entity, except to the extent the terms of such Indebtedness expressly provide
that such Person is not liable therefor.

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

“Insolvent”:  pertaining to a condition of Insolvency.

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

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

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

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

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

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

“Investments”:  as defined in Section 7.7.

 15
 

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

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

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

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

“L/C Commitment”:  $5,000,000.

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

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

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

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

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

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

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

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

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

 16
 

Commitments, or after termination of
the Total Revolving Commitments, the Revolving Extensions of Credit of such
Defaulting Lender then outstanding.

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

“Materials of Environmental
Concern”:  any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as
such in or under any Environmental Law, including asbestos and polychlorinated
biphenyls.

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

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

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

“Medicare”:  collectively, the health insurance program
for the aged and disabled established by Title XVIII of the Social Security Act
(42 U.S.C. §§ 1395 et seq.) and any statutes succeeding thereto, and all laws,
rules, regulations, manuals, orders or guidelines pertaining to such program
including (a) all federal statutes (whether set forth in Title XVIII of the
Social Security Act or elsewhere) regulating such program; and (b) all
applicable provisions of all rules, regulations, manuals, orders and
administrative, reimbursement, guidelines and requirements of all Governmental
Authorities promulgated in connection with such program (whether or not having
the force of law), in each case as the same may be amended, supplemented or
otherwise modified from time to time.

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

 17
 

“Minority Lenders”: as
defined in Section 10.1(b).

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

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

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

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

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

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

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

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

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

 18
 

amount) or any other document made,
delivered or given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses (including all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by the
Borrower pursuant hereto) or otherwise.

“Original Closing Date”:  August 15, 2002.

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

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

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

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

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

“PEI Savings”:  for any fiscal quarter, the identifiable
savings included in the Loan Parties’ financial statements for such fiscal
quarter pursuant to the Loan Parties’ performance enhancement initiatives as
set forth on the PEI Savings Schedule.

“PEI Savings Schedule”:  a schedule prepared by a Responsible Officer
substantially in the form of Exhibit I to be delivered to the Administrative
Agent in accordance with Section 6.2(b)(iv).

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

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

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

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

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

 19

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

[“Pricing Grid”:  the table set forth below.]

	
  [Consolidated

  Leverage Ratio]

  	
   

  	
  [Applicable Margin for

  Eurodollar Loans]

  	
   

  	
  [Applicable Margin

  for ABR Loans]

  	
   

  	
  [Commitment Fee Rate]

  	
   

  
	
  [Greater than or
  equal to 4.0 to 1.0]

  	
   

  	
  [2.75

  	
  ]%

  	
  [1.75

  	
  ]%

  	
  [.500

  	
  ]%

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

  	
   

  	
  [2.50

  	
  ]%

  	
  [1.50

  	
  ]%

  	
  [.500

  	
  ]%

  
	
  [Less than 3.25 but
  greater than 2.5 to 1.0]

  	
   

  	
  [2.25

  	
  ]%

  	
  [1.25

  	
  ]%

  	
  [.500

  	
  ]%

  
	
  [Equal to or less than 2.5 to 1.0]

  	
   

  	
  [2.00

  	
  ]%

  	
  [1.00

  	
  ]%

  	
  [.375

  	
  ]%

  

 

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

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

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

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

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

“Qualified
Capital Stock”:  any Capital Stock
that by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable or exercisable) or upon the happening of any
event does not provide for scheduled payments of dividends in cash and does not
(i) mature or 

 20
 

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

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

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

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

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

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

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

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

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

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

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

 21
 

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

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

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

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

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

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

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

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

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

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

 22
 

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

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

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

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

“Restricted
Payments”:  as defined in Section
7.6.

“Revolving
Commitment”:  as to any Lender, the
obligation of such Lender, if any, to make Revolving Loans and participate in
Swingline Loans and Letters of Credit in an aggregate principal and/or face
amount not to exceed the amount set forth under the heading “Revolving
Commitment” opposite such Lender’s name on Schedule 1.1A or in the Assignment
and Assumption pursuant to which such Lender became a party hereto, as the same
may be changed from time to time pursuant to the terms hereof, including, without limitation, pursuant to Section 2.1(b).  The [original ]amount of the Total Revolving Commitments [is $80,000,000.]after giving effect to the
Fourth Amendment is $25,000,000.

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

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

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

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

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

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

 23
 

“Revolving Termination Date”:  [August
15, 2007. ]January 31, 2009.

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

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

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

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

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

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

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

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

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

“Specified
Holdings Securities”: unsecured notes and/or Disqualified Capital Stock
issued by Holdings, in one or more series from time to time, together with any
accretion in the principal amount or liquidation value thereof and any
pay-in-kind notes or Capital Stock issued for the payment of interest or
dividends thereon.

 24
 

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

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

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

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

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

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

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

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

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

“Swingline
Loans”:  as defined in Section 2.6.

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

 25
 

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

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

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

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

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

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

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

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

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

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

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

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

“Tranche
B Term Maturity Date”:  [September 3,]January 31, 2009.

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

“Transferee”:  any Assignee or Participant.

 26
 

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

“United
States”:  the United States of
America.

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

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

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

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

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

SECTION 2.                                AMOUNT AND TERMS OF COMMITMENTS

2.1                                 Term Commitments.  (a)  Subject to the terms and conditions hereof,
(i) each Tranche B Term Lender severally agrees to make one or more term loans
(each, a “Tranche B Term Loan”) to the Borrower (A) [on the Amendment Effective Date ]in an amount equal to but not to exceed the amount of
the Tranche B Term Commitment of such Lender and (B) from time to time to the
extent provided in Section 2.1(b), and (ii) each Incremental Term Lender
severally agrees to make one or more term loans (each, an “Incremental Term
Loan”) to the Borrower to the extent provided in Section 2.1(b).  The Term Loans may from time to time be
Eurodollar Loans or ABR Loans, as determined by the Borrower and notified to
the Administrative Agent in accordance with Sections 2.2 and 2.12. Tranche B Term Loans
outstanding under the Existing Credit Agreement on the Amendment Effective Date
shall continue hereunder. On the Amendment Effective Date, each Tranche B Term
Lender shall, if applicable, increase its portion of the Tranche B Term
Commitment and make an additional Tranche B Term Loan in a principal amount not
to exceed an amount that, when added to the amount of its outstanding Tranche B
Term Loan as of the Amendment Effective Date (prior to giving effect to 

 27
 

the
Fourth Amendment), equals the amount set forth under the heading “Tranche B
Term Commitment” opposite such Lender’s name on Schedule 1.1A.

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

(c)                                  Any additional bank, financial institution or other
entity that, with the consent of the Borrower and the Administrative Agent
(which consent shall not be unreasonably withheld), elects to become a “Lender”
under this Agreement in connection with any transaction described in Section
2.1(b) 

 28
 

shall execute a New Lender
Supplement (each, a “New Lender Supplement”), substantially in the form
of Exhibit H-1, whereupon such bank, financial institution or other entity (a “New
Lender”) shall become a Lender for all purposes and shall be bound by and
entitled to the benefits of this Agreement.

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

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

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

2.3                                 Repayment of Term Loans.  (a)  The Tranche B Term Loan of each Tranche B
Term Lender shall mature in [23]7 consecutive quarterly installments and a final
installment on the Tranche B Term Maturity Date, each of which shall be in an
amount equal to such Lender’s Tranche B Term Percentage multiplied by the
amount set forth below opposite such installment:

 29
 

 

	
  Installment

  	
   

  	
  Principal Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [September 30, 2003]

  	
   

  	
  [$150,000]

  	
   

  
	
  [December 31, 2003]

  	
   

  	
  [$150,000]

  	
   

  
	
  [March 31, 2004]

  	
   

  	
  [$150,000]

  	
   

  
	
  [June 30, 2004]

  	
   

  	
  [$150,000]

  	
   

  
	
  [September 30, 2004]

  	
   

  	
  [$150,000]

  	
   

  
	
  [December 31, 2004]

  	
   

  	
  [$150,000]

  	
   

  
	
  [March 31, 2005]

  	
   

  	
  [$150,000]

  	
   

  
	
  [June 30, 2005]

  	
   

  	
  [$150,000]

  	
   

  
	
  [September 30, 2005]

  	
   

  	
  [$150,000]

  	
   

  
	
  [December 31, 2005]

  	
   

  	
  [$150,000]

  	
   

  
	
  [March 31, 2006]

  	
   

  	
  [$150,000]

  	
   

  
	
  [June 30, 2006]

  	
   

  	
  [$150,000]

  	
   

  
	
  [September 30, 2006]

  	
   

  	
  [$150,000]

  	
   

  
	
  [December 31, 2006]

  	
   

  	
  [$150,000]

  	
   

  
	
  [March 31, 2007]

  	
   

  	
  [$150,000]

  	
   

  
	
  June 30, 2007

  	
   

  	
  $150,000

  	
   

  
	
  September 30, 2007

  	
   

  	
  $150,000

  	
   

  
	
  December 31, 2007

  	
   

  	
  $150,000

  	
   

  
	
  March 31, 2008

  	
   

  	
  $150,000

  	
   

  
	
  June 30, 2008

  	
   

  	
  $150,000

  	
   

  
	
  September 30, 2008

  	
   

  	
  $[14,250,000]150,000

  	
   

  
	
  December 31, 2008

  	
   

  	
  $[14,250,000]150,000

  	
   

  
	
  [March 31, 2009]

  	
   

  	
  [$14,250,000]

  	
   

  
	
  

  Tranche B Term Maturity Date

  	
   

  	
  $[14,250,000]58,950,000 or such other amount as may be outstanding on such date.

  	
   

  

 

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

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

 30
 

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

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

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

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

2.7                                 Procedure for Swingline Borrowing; Refunding of
Swingline Loans.  (a) 
Whenever the Borrower desires that the Swingline Lender make Swingline
Loans it shall give the Swingline Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Swingline Lender not later than 1:00 P.M., Charlotte time, on the proposed
Borrowing Date), 

 31
 

specifying (i) the amount to be
borrowed and (ii) the requested Borrowing Date (which shall be a Business Day
during the Revolving Commitment Period). 
Each borrowing under the Swingline Commitment shall be in an amount
equal to $250,000 or a whole multiple of $50,000 in excess thereof.  Not later than 3:00 P.M., Charlotte time, on
the Borrowing Date specified in a notice in respect of Swingline Loans, the Swingline
Lender shall make available to the Administrative Agent at the Funding Office
an amount in immediately available funds equal to the amount of the Swingline
Loan to be made by the Swingline Lender. 
The Administrative Agent shall make the proceeds of such Swingline Loan
available to the Borrower on such Borrowing Date by depositing such proceeds in
the account of the Borrower with the Administrative Agent on such Borrowing
Date in immediately available funds.

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

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

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

(e)                                  Each Revolving Lender’s obligation to make the Loans
referred to in Section 2.7(b) and to purchase participating interests pursuant
to Section 2.7(c) shall be absolute and unconditional and shall not be affected
by any circumstance, including (i) any setoff, counterclaim, recoupment,
defense or other right that such Revolving Lender or the Borrower may have
against the 

 32
 

Swingline Lender, the Borrower or
any other Person for any reason whatsoever; (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 5; (iii) any adverse change in the condition
(financial or otherwise) of the Borrower; (iv) any breach of this Agreement or
any other Loan Document by the Borrower, any other Loan Party or any other
Lender; or (v) any other circumstance, happening or event whatsoever, whether
or not similar to any of the foregoing.

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

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

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

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

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

 33
 

(b)                                 If on any date any Group Member shall receive Net
Cash Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof, such Net Cash Proceeds shall be
applied on such date toward the prepayment of the Loans and, if applicable, the
reduction of the Revolving Commitments as set forth in Section 2.11(d); provided,
that, notwithstanding the foregoing, on each Reinvestment Prepayment Date, an
amount equal to the Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied toward the prepayment of the Loans and, if
applicable, the reduction of the Revolving Commitments as set forth in Section
2.11(d).

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

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

2.12                           Conversion and Continuation Options.  (a)  The Borrower may elect from time to time to
convert Eurodollar Loans to ABR Loans by giving the Administrative Agent prior
irrevocable notice of 

 34
 

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

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

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

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

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

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

 35
 

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

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

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

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

(a)                                  the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by reason
of circumstances affecting the relevant market, adequate and reasonable means
do not exist for ascertaining the Eurodollar Rate for such Interest Period, or

(b)                                 the Administrative Agent shall have received notice
from the Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period will
not adequately and fairly reflect the cost to such Lenders (as conclusively
certified by such Lenders) of making or maintaining their affected Loans during
such Interest Period, the Administrative Agent shall give telecopy or
telephonic notice thereof to the Borrower and the relevant Lenders as soon as
practicable thereafter.  If such notice
is given (x) any Eurodollar Loans under the relevant Facility requested to be
made on the first day of such Interest Period shall be made as ABR Loans, (y)
any Loans under the relevant Facility that were to have been converted on the
first day of such Interest Period to Eurodollar Loans shall be continued as ABR
Loans and (z) any outstanding Eurodollar Loans under the relevant Facility
shall be converted, on the last day of the then-current Interest Period, to ABR
Loans.  Until such notice has been
withdrawn by the Administrative Agent, no further Eurodollar Loans under the
relevant Facility shall be made or continued as such, nor shall the Borrower
have the right to convert Loans under the relevant Facility to Eurodollar
Loans.

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

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

 36
 

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

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

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

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

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

 37
 

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

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

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

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

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

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

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

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

 38
 

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

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

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

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

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

 39
 

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

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

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

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

2.20                           Indemnity.  The Borrower agrees to indemnify each Lender
for, and to hold each Lender harmless from, any loss or expense that such
Lender may sustain or incur as a consequence of (a) default by the Borrower in
making a borrowing of, conversion into or continuation of Eurodollar Loans
after the Borrower has given a notice requesting the same in accordance with
the provisions of this Agreement, (b) default by the Borrower in making any
prepayment of or conversion from Eurodollar Loans after the Borrower has given
a notice thereof in accordance with the provisions of this Agreement or (c) the
making of a prepayment of Eurodollar Loans on a day that is not the last day of
an Interest Period with respect thereto. 
Such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest that would have accrued on the amount so prepaid,
or not so borrowed, converted or continued, for the period from the date of
such prepayment or of such failure to borrow, convert or continue to the last
day of such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest Period that would have commenced on the date of such
failure) in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included
therein, if any) over (ii) the amount of interest (as reasonably determined by
such Lender) that would have accrued to such Lender on such amount by placing
such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market.  A
certificate as to any amounts payable pursuant to this 

 40
 

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

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

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

SECTION 3.           LETTERS OF CREDIT

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

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

 41

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

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

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

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

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

 42
 

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

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

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

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

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

 43
 

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

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

SECTION 4.                                REPRESENTATIONS AND WARRANTIES

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

4.1                                 Financial
Condition.[(a)]  (a)  [(i)](i) 
The audited consolidated balance sheet of Holdings as at December 31, [2002,]2006, and
the related consolidated statements of income and of cash flows for the fiscal
year ended on such date, reported on by and accompanied by an unqualified
report from PricewaterhouseCoopers LLP, present fairly the consolidated
financial condition of Holdings as at such date, and the consolidated results
of its operations and its consolidated cash flows for the fiscal year then
ended, (ii) the unaudited consolidated balance sheet of Holdings as at March
31, [2003,]2007,
and the related unaudited consolidated statements of income and cash flows for
the three-month period ended on such date, present fairly the consolidated
financial condition of Holdings as at such date, and the consolidated results
of its operations and its consolidated cash flows for the three-month period
then ended (subject to normal year-end audit adjustments) and (iii) all such
financial statements, including any related schedules and notes thereto, have
been prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by the aforementioned firm of accountants
and disclosed therein and, in the case of clause (ii), except for the absence
of footnotes).  As of the Amendment
Effective Date, no Group Member has any material Guarantee Obligations,
contingent liabilities and liabilities for taxes, or any long-term leases or
unusual forward or long-term commitments, including any interest rate or
foreign currency swap or exchange transaction or other obligation in respect of
derivatives, that are not reflected in the financial statements referred to in
this paragraph[, any financial statements for any periods after March 31,
2003 delivered prior to the Amendment Effective Date or the Confidential
Information Memorandum dated June 26, 2003 relating to the syndication of the
Tranche B Term Loans] (it being understood that “material” shall be
construed in the context of all Group Members taken as a whole).  During the period from December 31, [2002]2006 to and
including the date hereof, there has been no Disposition by any Group Member of
any material part of the business or property of the Group Members taken as a whole.

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

4.3                                 Existence; Compliance with Law.  Each Group
Member (a) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (b) has the power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently
engaged, (c) is duly qualified as a foreign corporation and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification except to
the extent that the failure to be so qualified could not reasonably be expected
to have a Material Adverse Effect, and (d) is in compliance with all
Requirements of Law (including, without limitation, Certificate of Need
Regulations and any 

 44
 

requirement to timely file reports,
data and other information with any relevant Governmental Authority) except to the
extent that the failure to comply therewith could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

4.4                                 Power; Authorization; Enforceable Obligations.  Each Loan
Party has the power and authority to make, deliver and perform the Loan
Documents to which it is a party and, in the case of the Borrower, to obtain
extensions of credit hereunder.  Each
Loan Party has taken all necessary organizational action to authorize the
execution, delivery and performance of the Loan Documents to which it is a
party and, in the case of the Borrower, to authorize the extensions of credit
on the terms and conditions of this Agreement. 
No material consent or authorization of, filing with, notice to or other
act by or in respect of, any Governmental Authority or any other Person is
required in connection with the extensions of credit hereunder or with the
execution, delivery, performance, validity or enforceability of this Agreement
or any of the Loan Documents, except (i) consents, authorizations, filings and
notices described in Schedule 4.4, which consents, authorizations, filings and
notices have been obtained or made and are in full force and effect, and (ii)
the filings referred to in Section 4.19. 
Each Loan Document has been duly executed and delivered on behalf of
each Loan Party party thereto.  This
Agreement constitutes, and each other Loan Document upon execution will
constitute, a legal, valid and binding obligation of each Loan Party party thereto,
enforceable against each such Loan Party in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’ rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

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

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

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

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

 45
 

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

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

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

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

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

 46
 

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

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

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

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

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

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

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

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

 47
 

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

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

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

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

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

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

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

 48
 

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

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

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

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

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

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

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

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

 49
 

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

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

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

(c)                                  failing to disclose knowledge by a claimant of the
occurrence of any event affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another, with intent to secure
such benefit or payment fraudulently; and

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

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

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

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

 50
 

SECTION 5.                                CONDITIONS PRECEDENT

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

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

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

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

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

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

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

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

 51
 

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

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

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

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

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

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

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

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

SECTION 6.                                AFFIRMATIVE COVENANTS

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

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

(a)                                  as soon as available, but in any event within 90 days
after the end of each fiscal year of Holdings, a copy of the audited
consolidated balance sheet of Holdings and its consolidated Subsidiaries as at
the end of such year and the related audited consolidated statements of income
and of cash flows for such year, setting forth in each case in comparative form
the figures for the previous year, 

 52
 

reported on without a “going concern”
or like qualification or exception, or qualification arising out of the scope
of the audit, by PricewaterhouseCoopers LLP, or other independent certified
public accountants of nationally recognized standing, reasonably satisfactory
to the Administrative Agent; and

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

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

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

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

(b)                                 concurrently with the delivery of any financial
statements pursuant to Section 6.1, (i) a certificate of a Responsible Officer
stating that such Responsible Officer has obtained no knowledge of any Default
or Event of Default except as specified in such certificate, (ii) a Compliance
Certificate containing all information and calculations necessary for
determining compliance by the Borrower with the provisions of Section 7.1, [and
](iii) to the extent not previously
disclosed to the Administrative Agent, a description of any change in the
jurisdiction of organization of any Loan Party, and (iv) a PEI Savings Schedule setting forth the
PEI Savings for the most recently ended fiscal quarter and for each of the
three previous fiscal quarters;

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

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

(e)                                  within five Business Days (i) after obtaining
knowledge thereof, the occurrence of any event that would (with the giving of
notice, the passage of time, or both) be a violation of any 

 53
 

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

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

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

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

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

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

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

 54
 

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

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

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

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

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

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

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

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

 55
 

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

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

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

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

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

(c)                                  With respect to any new Subsidiary (other than an
Excluded Foreign Subsidiary) created or acquired after the Amendment Effective
Date by any Group Member (which, for the purposes of this paragraph (c), shall
include any existing Subsidiary that ceases to be an Excluded Foreign
Subsidiary), promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative
Agent deems necessary or advisable to grant to the Administrative Agent, for
the benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary that is owned by any Group Member, (ii)
deliver to the Administrative Agent the certificates (if any) representing such
Capital Stock, together with (if 

 56
 

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

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

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

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

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

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

 57
 

Receivable or (e) amend, supplement
or modify any Receivable in any manner that could adversely affect the value
thereof.

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

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

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

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

(h)                                 Except as could not reasonably be expected to have a
Material Adverse Effect, each Loan Party will take all reasonable and necessary
steps, including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the United States Copyright Office or any
similar office or agency in any other country or any political subdivision
thereof, to maintain and pursue each application (and to obtain the relevant
registration) and to maintain each registration of the material Intellectual
Property, including, without limitation, filing of applications for renewal,
affidavits of use and affidavits of incontestability.

6.11                           USA PATRIOT Act Compliance.  Holdings and
the Borrower shall, and shall cause each of their Subsidiaries and Affiliates
to, provide, to the extent commercially reasonable, such information and take
such actions as are reasonably requested by the Administrative Agent or any
Lenders in order to assist the Administrative Agent and the Lenders in
maintaining compliance with the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 or
similar laws, rules or regulations.

 58
 

SECTION 7.                                NEGATIVE COVENANTS

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

7.1                                 Financial Condition Covenants.

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

	
  Fiscal Quarters Ending

  	
   

  	
  Consolidated

  Leverage Ratio

  
	
   

  	
   

  	
   

  
	
  [December 31, 2004]

  	
   

  	
  [5.25]

  
	
  [March 31, 2005]

  	
   

  	
  [5.40]

  
	
  [June 30, 2005]

  	
   

  	
  [5.25]

  
	
  [September 30, 2005]

  	
   

  	
  [5.25]

  
	
  [December 31, 2005]

  	
   

  	
  [5.25]

  
	
  [March 31, 2006]

  	
   

  	
  [5.50]

  
	
  [June 30, 2006]

  	
   

  	
  [5.25]

  
	
  [September 30, 2006]

  	
   

  	
  [5.00]

  
	
  [December 31, 2006]

  	
   

  	
  [4.75]

  
	
  March 31, 2007

  	
   

  	
  4.75

  
	
  June 30, 2007

  	
   

  	
  [4.50]5.25

  
	
  September 30, 2007

  	
   

  	
  [4.50]6.00

  
	
  December 31, 2007

  	
   

  	
  [4.25]6.00

  
	
  March 31, 2008[ and the 

  last day of each fiscal 

  quarter thereafter]

  	
   

  	
  [4.00]6.00

  
	
  June
  30, 2008

  	
   

  	
  5.75

  
	
  September
  30, 2008

  	
   

  	
  5.50

  
	
  December
  31, 2008

  	
   

  	
  5.25

  

 

(b)                                 Consolidated Senior Leverage Ratio.  Permit the
Consolidated Senior Leverage Ratio for any period of four consecutive fiscal
quarters of the Borrower ending on [each of the dates set forth below
to exceed the ratio set forth below opposite such date:]March 31, 2007, and the last day of each fiscal quarter thereafter, to
exceed 2.00.

 

 59
 

 

	
  [Fiscal Quarters Ending ]

  	
   

  	
  [Consolidated Senior

  Leverage Ratio]

  
	
   

  
	
  [December 31, 2004]

  	
   

  	
  [1.75]

  
	
  [March 31, 2005]

  	
   

  	
  [1.75]

  
	
  [June 30, 2005]

  	
   

  	
  [1.75]

  
	
  [September 30, 2005]

  	
   

  	
  [1.75]

  
	
  [December 31, 2005]

  	
   

  	
  [1.75]

  
	
  [March 31, 2006 and the 

  last day of each fiscal 

  quarter thereafter]

  	
   

  	
  [2.00]

  

 

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

	
  Fiscal Quarter Ending

  	
   

  	
  Consolidated Fixed

  Charge Coverage Ratio

  
	
  [December 31, 2004]

  	
   

  	
  [1.00]

  
	
  March 31, [2005]2007

  	
   

  	
  [1.00]1.15

  
	
  June 30, [2005 ]2007

  	
   

  	
  [1.05]1.10

  
	
  September 30, [2005]2007

  	
   

  	
  [1.05]1.10

  
	
  December 31, [2005]2007

  	
   

  	
  [1.05]1.10

  
	
  March 31, [2006]2008

  	
   

  	
  [1.05]1.15

  
	
  June 30, [2006]2008

  	
   

  	
  [1.05]1.15

  
	
  September 30, [2006]2008

  	
   

  	
  [1.05]1.20

  
	
  December 31, [2006 and
  the last day of each fiscal quarter thereafter]2008

  	
   

  	
  [1.15]1.20

  

 

(d)                                 [Holdings Consolidated Leverage Ratio.
Permit the Holdings Consolidated Leverage Ratio for any period of four
consecutive fiscal quarters of Holdings ending on each of the dates]Capital Expenditures.  Permit
Capital Expenditures for any period set forth below to exceed [the ratio set forth below opposite
such date]an aggregate amount in excess of the amount
specified opposite such period, provided that if the amount of the actual
Capital Expenditures that are made during any four consecutive fiscal quarters
is less than such amount set forth below, the unused portion thereof may be
carried forward to and made during any subsequent four consecutive fiscal
quarters:

 60

	
  [Fiscal Quarters Ending ]

  	
   

  	
  [Holdings
  Consolidated

  Leverage Ratio]

  
	
  [December 31,
  2004]

  	
   

  	
  [7.20]

  
	
  [March 31,
  2005]

  	
   

  	
  [7.50]

  
	
  [June 30,
  2005]

  	
   

  	
  [7.50]

  
	
  [September
  30, 2005]

  	
   

  	
  [7.50]

  
	
  [December 31,
  2005]

  	
   

  	
  [7.50]

  
	
  [March 31,
  2006]

  	
   

  	
  [7.50]

  
	
  [June 30,
  2006]

  	
   

  	
  [7.50]

  
	
  [September
  30, 2006]

  	
   

  	
  [7.25]

  
	
  [December 31,
  2006]

  	
   

  	
  [7.25]

  
	
  [March 31,
  2007 ]

  	
   

  	
  [7.00]

  
	
  [June 30,
  2007]

  	
   

  	
  [6.75]

  
	
  [September
  30, 2007]

  	
   

  	
  [6.75]

  
	
  [December 31,
  2007 ]

  	
   

  	
  [6.50]

  
	
  [March 31,
  2008 ]

  	
   

  	
  [6.00]

  
	
  [June 30,
  2008]

  	
   

  	
  [6.00]

  
	
  [September
  30, 2008]

  	
   

  	
  [6.00]

  
	
  [December 31,
  2008]

  	
   

  	
  [6.00]

  
	
  [March 31,
  2009 and the 

  last day of each fiscal 

  quarter thereafter]

  	
   

  	
  [5.50]

  

 

	
  Fiscal Year

  	
   

  	
  Maximum Consolidated

  Capital Expenditures

  	
   

  
	
  2007

  	
   

  	
  $                                         25,000,000

  	
   

  
	
  2008

  	
   

  	
  $                                         25,000,000

  	
   

  
	
  2009

  	
   

  	
  $                                           2,000,000

  	
   

  

 

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

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

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

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

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

 61
 

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

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

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

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

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

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

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

(l)            Indebtedness of Holdings in respect of Specified
Holdings Securities, so long as (i) on the date of incurrence thereof, no
Default or Event of Default shall have occurred and be continuing or would
result therefrom, (ii) after giving Pro Forma Effect in the calculation of
Consolidated Holdings Total Debt to the incurrence thereof, the use of the
proceeds thereof to repay Indebtedness and any Indebtedness repaid since the
end of the last fiscal quarter ending prior to the incurrence thereof for which
financial statements have been delivered to the Lenders, the Holdings
Consolidated Leverage Ratio (as calculated as of the end of the last fiscal
quarter ending prior to the incurrence of Indebtedness in respect 

 62
 

of such Specified Holdings
Securities for which financial statements have been delivered to the Lenders)
does not exceed 5.75 to 1.0, and ([ii]iii) such Indebtedness has a final maturity date at
least 91 days after, and does not provide for any scheduled payments of
principal thereon or (other than pursuant to customary requirements to make
prepayment or redemption offers upon asset sales or change of control events)
any mandatory redemption or redemption at the option of the holder thereof (in
whole or in part) prior to, the later of the Tranche B Term Maturity Date and
the latest Incremental Term Maturity Date. 
For purposes of clarification, the conditions in clauses (i)-(iii) in
the immediately preceding sentence shall not apply to any accretion in the
principal amount or liquidation value of any Specified Holdings Securities or
any pay-in-kind notes or Capital Stock issued for the payment of interest or
dividends thereon.

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

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

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

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

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

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

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

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

 63
 

(h)           Liens created pursuant to the Security Documents;

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

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

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

(l)            any Lien existing on any asset prior to the
acquisition thereof by the Borrower or any Subsidiary or on any asset of any
Person that becomes a Subsidiary; provided that (i) such Lien is not created in
contemplation of, or in connection with, such acquisition or such Person
becoming a Subsidiary Guarantor and (ii) such Liens shall not apply to any
other assets except assets financed by the same financing source);

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

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

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

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

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

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

(c)           any Disposition permitted by Section 7.5;

 64
 

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

(e)           any Subsidiary may liquidate, wind-up or dissolve if
the Borrower determines in good faith, and the Administrative Agent concurs
with such determination if such Subsidiary has contributed more than 5% to
Consolidated EBITDA in the immediately preceding twelve months, that such
liquidation, winding-up or dissolution is in the best interests of the Borrower
and is not adverse to the interests of the Lenders hereunder in any material
respect, provided that any remaining assets of such Subsidiary are
transferred to a Loan Party or are otherwise disposed of in accordance with to
Section 7.5.

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

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

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

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

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

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

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

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

 65
 

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

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

7.6           Restricted Payments.  Declare or pay any dividend (other
than dividends payable solely in shares of Qualified Capital Stock or
equivalent equity interests) on, or make any payment on account of, or set
apart assets for a sinking or other analogous fund for, the purchase,
redemption, defeasance, retirement or other acquisition of, any Capital Stock
of any Group Member, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of any Group Member (collectively, “Restricted
Payments”), except that:

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

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

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

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

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

(f)            so long as no Default or Event of Default shall have
occurred and be continuing, the Borrower may pay dividends to Holdings to
permit Holdings to, and Holdings may, purchase 

 66
 

Holdings’ Capital Stock or options
from present or former directors, officers, employees or consultants of any
Group Member upon the death of such director, officer, employee or consultant
from the proceeds of any “key-man” life insurance policies with respect to such
person received by the Borrower or Holdings;

(g)           Holdings may at any time and from time to time pay
dividends or make other distributions on, or repurchase or redeem, shares of
its Qualified or Disqualified Capital Stock with the proceeds of any issuance
of Specified Holdings Securities permitted under Section 7.2(l) or the issuance
of any Qualified Capital Stock or, with respect to dividends or other
distributions on shares of Disqualified Capital Stock, in shares of
Disqualified Capital Stock permitted under Section 7.2(l);

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

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

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

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

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

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

7.7           Investments.  Make any advance, loan, extension
of credit (by way of guaranty or otherwise) or capital contribution to, or
purchase any Capital Stock, bonds, notes, debentures or other 

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debt securities of, or any assets
constituting a business unit of, or make any other investment in, any Person
(all of the foregoing, “Investments”), except:

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

(b)           investments in Cash Equivalents;

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

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

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

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

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

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

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(i)            Investments received in connection with (A) the
bankruptcy, insolvency or reorganization of suppliers and customers, (B) in
settlement of delinquent obligations of, and other disputes with, or judgments
against customers and suppliers arising in the ordinary course of business and
(C) the Disposition of assets permitted under Section 7.5 (other than Section
7.5(g); provided, that the consideration for any such Disposition under
Section 7.5(e) shall consist of at least 75% cash and cash equivalents (for
purposes of this clause (i), assumption of any Indebtedness related to the
assets subject to such Disposition shall be deemed to be cash);

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

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

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

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

 69
 

additional Specified Holdings
Securities issued by Holdings in accordance with Section 7.2(l), proceeds of
Qualified Capital Stock issued by Holdings, or proceeds of dividends or other
distributions permitted under Section 7.6(h)(ii).

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

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

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

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

7.13         Clauses Restricting Subsidiary Distributions.  Enter into
or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of the Borrower to (a) make
Restricted Payments in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, the Borrower or any other Subsidiary of the
Borrower, (b) make loans or advances to, or other Investments in, the Borrower
or any other Subsidiary of the Borrower or (c) transfer any of its assets to
the Borrower or any other Subsidiary of the Borrower, except for such
encumbrances or restrictions existing under or by reason of (i) any
restrictions existing under the Loan Documents, (ii) any restrictions with
respect to a Subsidiary imposed pursuant to an agreement that has been entered
into in connection with the Disposition of all or substantially all of the
Capital Stock or assets of such Subsidiary, (iii) any restrictions existing
under any agreements governing (x) any Indebtedness permitted 

 70
 

under Section 7.2(f), (g), (i) and
(l), and (y) the Permitted Investor Preferred Stock, (iv) as imposed by any
Requirement of Law, and (v) as relating to any Excluded Foreign Subsidiary.

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

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

SECTION 8.           EVENTS OF DEFAULT

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

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

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

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

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

(e)           any Group Member shall (i) default in making any
payment of any principal of any Indebtedness (including any Guarantee
Obligation of any Group Member in respect thereof, but excluding the Loans) on
the scheduled or original due date with respect thereto beyond the period of
grace, if any, provided in the instrument or agreement under which such
Indebtedness was created; or (ii) default in making any payment of any interest
on any such Indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created; or (iii)
default in the observance or performance of any other agreement or condition
relating to any such Indebtedness or contained in any instrument or agreement
evidencing, securing or relating thereto, or any other event shall occur or
condition exist, the effect of which default or other event or condition is to
cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with the
giving of notice if required, such Indebtedness to become due prior to its
stated maturity or (in the case of any such Indebtedness constituting a Guarantee
Obligation) to become payable; provided, that a default, event or
condition described in clause (i), (ii) or (iii) of this paragraph 

 71
 

(e) shall not at any time constitute
an Event of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the aggregate
$2,000,000; or

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

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

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

 72
 

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

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

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

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

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

 73
 

Indenture, or any Loan Party, the
trustee in respect of the Senior Subordinated Notes or the holders of at least
25% in aggregate principal amount of the Senior Subordinated Notes shall so
assert;

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

SECTION 9.           THE AGENTS

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

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

 74
 

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

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

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

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

 75
 

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

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

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

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

 76
 

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

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

SECTION 10.         MISCELLANEOUS

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

 77
 

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

(b)           Notwithstanding anything to the contrary
contained in Section 10.1(a), (i) in the event that the Borrower requests that
this Agreement be modified or amended in a manner which would require the
consent of all of the Lenders affected by such modification or amendment
pursuant to Section 10.1(a) and such modification or amendment is agreed to by
the Required Lenders, then with the consent of the Borrower and the Required
Lenders, the Borrower and the Required Lenders shall be permitted to amend the
Agreement without the consent of the Lender or Lenders the consent of which was
otherwise required under Section 10.1(a) but which did not agree to the
modification or amendment requested by the Borrower (such Lender or Lenders,
collectively the “Minority Lenders”) to provide for (A) the termination of the
Revolving Commitment, Incremental Term Commitment or Tranche B Term Commitment
(as the case may be) of each of the Minority Lenders, (B) the addition to this
Agreement of one or more other financial institutions in accordance with Section
10.6, or an increase in the Revolving Commitment, Incremental Term Commitment
or Tranche B Term Commitment (as the case may be) of one or more of the
Required Lenders, so that the aggregate amount of the Commitments after giving
effect to such amendment shall be in the same amount as the aggregate amount of
the Commitments immediately before giving effect to such amendment, (C) if any
Loans are outstanding at the time of such amendment, the making of such
additional Loans by such new financial institutions or Required Lender or
Lenders, as the case may be, as may be necessary to repay in full the
outstanding Loans of the Minority Lenders immediately before giving effect to
such amendment and (D) such other modifications to this Agreement as may be appropriate;
and (ii) no Defaulting Lender shall have any right to approve or disapprove any
amendment, waiver or consent hereunder, except that the aggregate amount of the
Commitments of such Lender may not be increased or extended without the consent
of such Lender (it being understood that any Loans held or deemed held by any 

 78
 

Defaulting
Lender shall be excluded for a vote of the Lenders hereunder requiring any
consent of the Lenders).

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

	
  Holdings:

  	
   

  	
  MQ Associates, Inc.

  
	
   

  	
   

  	
  [4300 North Point Parkway]

  
	
   

  	
   

  	
  3480
  Preston Ridge Road, Suite 600

  
	
   

  	
   

  	
  Alpharetta, Georgia[ 30022] 30005

  
	
   

  	
   

  	
  Attention: Todd [Latz, General Counsel]Andrews, Chief
  Financial Officer

  
	
   

  	
   

  	
  Telecopy: 770-246-0202

  
	
   

  	
   

  	
  Telephone: 770-300-0101

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with copies to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  O’Melveny & Myers LLP

  
	
   

  	
   

  	
  Times Square Tower

  
	
   

  	
   

  	
  7 Times Square

  
	
   

  	
   

  	
  [NY]New York, [NY ]New York 10036

  
	
   

  	
   

  	
  Attention: Ilan Nissan, Esq.

  
	
   

  	
   

  	
  Telecopy: 212-326-2061

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [J.P. Morgan Partners LLC]

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CCMP
  Capital Advisors, LLC

  
	
   

  	
   

  	
  39th Floor

  
	
   

  	
   

  	
  1221 Avenue of the Americas

  
	
   

  	
   

  	
  [new]New York, New York 10020-1080

  
	
   

  	
   

  	
  Attention: Notices Department

  
	
   

  	
   

  	
   

  
	
  Borrower:

  	
   

  	
  MedQuest, Inc.

  
	
   

  	
   

  	
  [4300 North Point Parkway]3480 Preston
  Ridge Road,

  Suite 600

  

 79
 

 

	
  

  	
   

  	
  Alpharetta, Georgia[ 30022] 30005

  
	
   

  	
   

  	
  Attention: Todd [Latz, General Counsel]Andrews, Chief 

  Financial Officer

  
	
   

  	
   

  	
  Telecopy: 770-246-0202

  
	
   

  	
   

  	
  Telephone: 770-300-0101

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with copies to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  O’Melveny & Myers LLP

  
	
   

  	
   

  	
  Times Square Tower

  
	
   

  	
   

  	
  7 Times Square

  
	
   

  	
   

  	
  [NY]New York, [NY ]New York
  10036

  
	
   

  	
   

  	
  Attention: Ilan Nissan, Esq.

  
	
   

  	
   

  	
  Telecopy: 212-326-2061

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [J.P. Morgan Partners]CCMP Capital Advisors,
  LLC

  
	
   

  	
   

  	
  39th Floor

  
	
   

  	
   

  	
  1221 Avenue of the Americas

  
	
   

  	
   

  	
  [new]New York, New York 10020-1080

  
	
   

  	
   

  	
  Attention: Notices Department

  
	
   

  	
   

  	
   

  
	
  Administrative Agent:

  	
   

  	
  Wachovia Bank, National Association

  
	
   

  	
   

  	
  Syndication Agency Services

  
	
   

  	
   

  	
  201 South College Street, 8th Floor

  
	
   

  	
   

  	
  Charlotte, North Carolina 28288-0608

  
	
   

  	
   

  	
  Attention: Syndication Agency Services

  
	
   

  	
   

  	
  Telecopy: 704-383-0288

  
	
   

  	
   

  	
  Telephone: 704-374-2698

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  with a copy to:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Wachovia Bank, National Association

  
	
   

  	
   

  	
  One Wachovia Center, 5th Floor

  
	
   

  	
   

  	
  301 South College Street, NC 0537

  
	
   

  	
   

  	
  Charlotte, North Carolina 28288-0537

  
	
   

  	
   

  	
  Attention: Mr. Mark Hedrick

  
	
   

  	
   

  	
  Telecopy: 704-383-6249

  
	
   

  	
   

  	
  Telephone: 704-383-0297

  

 

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

 80

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

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

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

10.5         Payment of Expenses and Taxes.  The Borrower agrees (a) to pay or reimburse
each Agent for all its out-of-pocket costs and expenses incurred in
connection with the development, preparation and execution of, and any
amendment, supplement or modification to this Agreement, and the other Loan
Documents and any other documents prepared in connection herewith or therewith,
and the consummation and administration of the transactions contemplated hereby
and thereby, including but not limited to the reasonable fees and disbursements
of counsel for the Administrative Agent, any other counsel that any of the
Agents shall retain and any other third-party appraisers, consultants,
financial consultants and auditors advising the Administrative Agent or
retained by counsel for the Administrative Agent, and filing and recording fees
and expenses, with statements with respect to the foregoing to be submitted to
the Borrower prior to the effectiveness of the Fourth Amendment[
Effective Date] (in the case of amounts to
be paid [on the]as a condition to
the effectiveness of the Fourth Amendment[Effective Date]) and from time to time thereafter on a quarterly
basis or such other periodic basis as each Agent shall deem appropriate, (b) to
pay or reimburse each Lender and the Administrative Agent for all its costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the other Loan Documents and any such other
documents, including the fees and disbursements of counsel (including the
allocated fees and expenses of in-house counsel) to each Lender and of counsel
to the Administrative Agent and any third-party appraisers, consultants,
financial consultants and auditors advising the Administrative Agent or
retained by counsel for the Administrative Agent, (c) to pay, indemnify, and
hold each Lender and the Administrative Agent harmless from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise and other taxes, if any, that
may be payable or determined to be payable in connection with the execution and
delivery of, or consummation or administration of any of the transactions contemplated
by, or any amendment, supplement or modification of, or any waiver or consent
under or in respect of, this Agreement, the other Loan Documents and any such
other documents, and (d) to pay, indemnify, and hold each Lender and the
Administrative Agent and their respective officers, directors, employees,
affiliates, agents and controlling persons (each, an “Indemnitee”) harmless
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents and
any such other documents, including any of the foregoing relating to the use of
proceeds of the Loans or 

 81
 

the violation of, noncompliance with
or liability under, any Environmental Law applicable to the operations of any
Group Member or any of the Properties and the reasonable fees and expenses of
legal counsel in connection with claims, actions or proceedings by any
Indemnitee against any Loan Party under any Loan Document (all the foregoing in
this clause (d), collectively, the “Indemnified Liabilities”), provided, that
the Borrower shall have no obligation hereunder to any Indemnitee with respect
to Indemnified Liabilities to the extent such Indemnified Liabilities resulted
from the gross negligence or willful misconduct of such Indemnitee.  All amounts due under this Section 10.5 shall
be payable not later than 10 days after written demand therefor.  Statements payable by the Borrower pursuant
to this Section 10.5 shall be submitted at the address of the Borrower set
forth in Section 10.2, or to such other Person or address as may be hereafter
designated by the Borrower in a written notice to the Administrative
Agent.  The agreements in this Section
10.5 shall survive repayment of the Loans and all other amounts payable
hereunder.

10.6         Successors and Assigns;
Participations and Assignments. 
(a)  The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted hereby (including any
affiliate of the Issuing Lender that issues any Letter of Credit), except that
(i) the Borrower may not assign or otherwise transfer any of its rights or
obligations hereunder without the prior written consent of each Lender (and any
attempted assignment or transfer by the Borrower without such consent shall be
null and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section.

(b)           (i)            Subject
to the conditions set forth in paragraph (b)(ii) below, any Lender may assign
to one or more assignees (each, an “Assignee”) all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Revolving Commitments and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:

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

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

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

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

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

 82
 

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

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

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

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

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

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

(iv)          The Administrative Agent, acting for
this purpose as an agent of the Borrower, shall maintain at one of its offices
a copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Revolving
Commitments of, and principal amount of the Loans and L/C Obligations owing to,
each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be conclusive,
and the Borrower, the Administrative Agent, the Issuing Lender and the Lenders
may treat each Person whose name is recorded in the Register pursuant to the
terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. 
The Register shall be available for inspection by the Borrower, the
Issuing Lender and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.

(v)           Upon its receipt of a duly completed
Assignment and Assumption executed by an assigning Lender and an Assignee, the
Assignee’s completed administrative questionnaire (unless the Assignee shall
already be a Lender hereunder), the processing and recordation fee referred to
in paragraph (b) of this Section and any written consent to such assignment
required by paragraph (b) of this Section, the Administrative Agent shall
accept such Assignment and Assumption and record the

 83
 

information contained therein in the
Register.  No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.

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

(ii)           A Participant shall not be entitled
to receive any greater payment under Section 2.18 or 2.19 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent.  Any Participant that is a Non-U.S. Lender
shall not be entitled to the benefits of Section 2.19 unless such Participant
complies with Section 2.19(d).

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

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

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

 84
 

expense arising out of its inability
to institute such a proceeding against such Conduit Lender during such period
of forbearance.

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

(b)           In addition to any rights and
remedies of the Lenders provided by law, upon the occurrence and during the
continuance of an Event of Default, each Lender shall have the right, without
prior notice to Holdings or the Borrower, any such notice being expressly
waived by Holdings and the Borrower to the extent permitted by applicable law,
upon any amount becoming due and payable by Holdings or the Borrower hereunder
(whether at the stated maturity, by acceleration or otherwise), to set off and
appropriate and apply against such amount any and all deposits (general or
special, time or demand, provisional or final), in any currency, and any other
credits, indebtedness or claims, in any currency, in each case whether direct
or indirect, absolute or contingent, matured or unmatured, at any time held or
owing by such Lender or any branch or agency thereof to or for the credit or
the account of Holdings or the Borrower, as the case may be.  Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application
made by such Lender, provided that the failure to give such notice shall
not affect the validity of such setoff and application.

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

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

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

 85
 

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

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

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

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

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

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

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

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

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

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

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

10.14       Releases of Guarantees and Liens.  (a) 
Notwithstanding anything to the contrary contained herein or in any
other Loan Document, the Administrative Agent is hereby irrevocably authorized
by each Lender (without requirement of notice to or consent of any Lender
except as expressly required by Section 10.1) to take any action requested by
the Borrower having the effect of releasing any Collateral or Guarantee
Obligations (i) to the extent necessary to permit consummation of any
transaction 

 86
 

not prohibited by any Loan Document
or that has been consented to in accordance with Section 10.1 or (ii) under the
circumstances described in paragraph (b) below.

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

10.15       Confidentiality.  Each of the Administrative Agent and each
Lender agrees to keep confidential all non-public information provided to it by
any Loan Party pursuant to this Agreement that is designated by such Loan Party
as confidential; provided that nothing herein shall prevent the Administrative
Agent or any Lender from disclosing any such information (a) to the
Administrative Agent, any other Lender or any affiliate thereof, (b) subject to
an agreement to comply with the provisions of this Section, to any actual or
prospective Transferee or any direct or indirect counterparty to any Swap
Agreement (or any professional advisor to such counterparty), (c) on a
confidential basis, to its employees, directors, agents, attorneys, accountants
and other professional advisors or those of any of its affiliates, (d) upon the
request or demand of any Governmental Authority, (e) in response to any order
of any court or other Governmental Authority or as may otherwise be required
pursuant to any Requirement of Law, (f) if requested or required to do so in
connection with any litigation or similar proceeding, (g) that has been
publicly disclosed other than by the Administrative Agent, any Lender or their
respective affiliates, (h) to the National Association of Insurance
Commissioners or any similar organization or any nationally recognized rating
agency that requires access to information about a Lender’s investment
portfolio in connection with ratings issued with respect to such Lender, or (i)
in connection with the exercise of any remedy hereunder or under any other Loan
Document.  Each Lender shall have the
right to review and approve any public announcement made after the date hereof
relating to such Lender or any of its affiliates or to any matters contemplated
hereby, before any such announcement is made (such approval not to be
unreasonably withheld or delayed); provided that this paragraph shall not apply
to the extent any such disclosure may be compelled in a judicial or
administrative proceeding or as otherwise required by law (including any
filings required by the SEC). Notwithstanding anything herein to the contrary,
any party to this Agreement (and any employee, representative, or other agent
of any party to this Agreement) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including
opinions or other tax analyses) that are provided to it relating to such tax
treatment and tax structure.  However,
any such information relating to the tax treatment or tax structure is required
to be kept confidential to the extent necessary to comply with any applicable
federal or state securities laws.

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

 87Exhibit 10.1

EMPLOYMENT
AGREEMENT

THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of the 26th day of June, 2007 (the “Effective Date”) by and between Rite Aid Corporation, a Delaware
corporation (the “Company”) and Brian Fiala (the “Executive”).

WHEREAS, Executive desires to
provide the Company with his services and the Company
desires to hire and employ Executive on the terms and subject to the conditions
set forth herein.

NOW, THEREFORE, in
consideration of the mutual representations, warranties, covenants and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and
Executive (individually a “Party” and together the “Parties”), intending to be
legally bound, agree as follows:

1.                              Term Of Employment.

The term of
Executive’s employment under this Agreement shall commence on the Effective
Date and, unless earlier terminated pursuant to Section 5 below, shall
continue for a period ending on the date that is two (2) years following the
Effective Date (the “Original Term of Employment”). The Original Term of
Employment shall be automatically renewed for successive one-year terms (the “Renewal
Terms”) unless at least 120 days prior to
the expiration of the Original Term of Employment or any Renewal Term,
either Party notifies the other Party in writing that he or it is electing to
terminate this Agreement at the expiration of the then current Term of
Employment. “Term” shall mean the Original Term of Employment and all Renewal
Terms. For purposes of this Agreement, except as otherwise provided herein, the
phrase “year during the Term” or similar
language shall refer to each 12-month period commencing on the Effective
Date or applicable anniversaries thereof.

2.                              Position And Duties.

2.1             Generally.   During
the Term, Executive shall serve as an officer of the Company and shall have such officer level duties, responsibilities and
authority as shall be assigned by the Company from time to time. Executive
shall devote his full working time, attention, knowledge and skills faithfully
and to the best of his ability, to the duties and responsibilities assigned by the Company in
furtherance of the business affairs and activities
of the Company and its subsidiaries, affiliates and strategic partners.
Following termination of Executive’s employment for any reason, Executive shall
immediately resign from all offices and positions he holds with the Company or
any subsidiary.

2.2        Other Activities.   Anything herein to the
contrary notwithstanding, nothing in this
Agreement shall preclude the Executive from engaging in the following activities: (i) serving on the board of directors of a reasonable
number of other corporations or
the boards of a reasonable number of trade associations and/or charitable
organizations, subject to the Company’s approval, which shall not be
unreasonably withheld, (ii) engaging in charitable activities and
community affairs, and (iii) managing
his personal investments and affairs, provided that such activities do not
violate Sections 6 or 7 below or materially
interfere with the proper performance of his duties and responsibilities under this
Agreement. Executive shall at all times be subject to, observe and carry out
such rules, regulations, policies, directions, and restrictions as the Company
may from time to time establish for officers of the Company.

3.                              Compensation.

3.1             Base
Salary.   During the Term, as compensation for his
services hereunder, Executive shall receive a salary at the annualized rate of
Four Hundred Forty Thousand Dollars
($440,000.00) per year (“Base Salary” as may be adjusted from time to time),
which shall be paid in accordance with the Company’s 

 1
 

normal
payroll practices and procedures, less such deductions or offsets
required by applicable law or otherwise authorized by Executive.

3.2        Annual
Performance Bonus.   The Executive shall participate
each fiscal year during the Term in the Company’s annual bonus plan as adopted
and approved by the Board or the Compensation Committee from time to time. For
the current fiscal year (Fiscal Year 2008), Executive’s annual bonus
opportunity pursuant to such plan shall equal 60% (the “Annual Target Bonus”)
of the Base Salary, with a one time opportunity for fiscal year 2008 of an
additional payment equal to 50% of your individual (on plan) bonus target
provided the Company achieves 100% of more of the Adjusted EBITDA target for
fiscal year 2008, and if inclusive in such results are costs savings of at
least $155 million related to the recent acquisition of the Brooks and Eckerd
drugstore chains. For subsequent fiscal years, the Annual Target Bonus may be
adjusted and shall be based upon the Board approved plan for that year.

3.3                       Equity Awards.

(a)        At the
first regular meeting of the Board of Directors following the Effective Date
and subject to the approval by the Compensation Committee of the Board,
Executive will be granted an option (the “Option”) to purchase 200,000 shares
of the Company’s Common Stock, par value $1.00 per share (“Company Stock”).
The Option shall (i) be a non-qualified stock option, (ii) have an
exercise price equal to the closing price of the Company Stock as reported on
the New York Stock Exchange (“NYSE”) on the
date of grant, (iii) have a term of ten (10) years following the
date of grant, (iv) vest and become exercisable as to one-fourth of the
shares of the Company Stock subject to the option on each of the first four (4) anniversaries
from the date of grant, (v) be subject to the acceleration exercise and
termination provisions set forth in Section 3.3(d) and Article 5
hereof and (vi) otherwise be evidenced by and subject to the terms of the
Company’s stock option and equity plans.

(b)        At the first regular meeting of the Board of Directors
following the Effective Date and subject to the approval by the Compensation
Committee of the Board, Executive will be recommended for participation in the
Company’s Senior Executive Equity Plan (the “SEEP”). The award will be based
upon Executive’s annual Base Salary and the
stock closing price on the date of grant. For the current fiscal year (FY 2008)
only, Executive’s participation in the SERP will be on a prorated basis.

(c)              At the first regular meeting of the Board of
Directors following the Effective Date and subject to the approval by the
Compensation Committee of the Board, Executive will be granted 50,000 shares of
restricted Company Stock (the “Restricted Stock”).
Subject to (i) acceleration and forfeiture provisions set forth in Section 3.3(d) and
Article 5 hereof and (ii) the terms of the Company’s stock
option and equity plans, the restrictions applicable to the Restricted Stock
shall lapse as to one-third of such shares on each of the first three
anniversaries from the date of grant.

(d)        Upon the occurrence of a Change in Control of the
Company following the first anniversary of the Effective Date and prior to the
termination of Executive’s employment with the Company, the Options awarded
pursuant to subsection (a) above then held by Executive shall immediately
vest and become exercisable in full and all remaining restrictions on any
Restricted Stock granted to Executive pursuant to subsection (c) above
shall immediately lapse. For purposes of this Agreement “Change in Control”
shall have the meaning set forth in the attached Appendix A.

(e)        It is understood and acknowledged by Executive that
the securities underlying the Options and the Restricted Stock may not be
subject to an effective registration statement under the federal securities
laws until some time after the Effective Date. The Company agrees that if, as 

 2
 

of the date of termination
of Executive’s employment under the circumstances described in Sections 5.2
(except termination for Cause), 5.3 and
5.5, the securities underlying the then vested and exercisable portion of the
Options are not subject to an effective registration statement, the 90-day
periods in Section 5.2 (except termination for Cause), 5.3 and 5.5,
as applicable, will be deemed to run from the
first date such securities become subject to an effective registration
statement.

4.                              Additional Benefits.

4.1        Employee Benefits.   During the Term,
Executive shall be entitled to participate in the employee benefit plans
(including, but not limited to medical, dental and life insurance plans,
short-term and long-term disability coverage, the Supplemental Executive
Retirement Plan and 401(k) plans) in which management employees of the
Company are generally eligible to participate, subject to any eligibility
requirements and the other generally applicable terms of such plans.

4.2        Expenses.   During the Term, the
Company shall reimburse Executive for any expenses reasonably incurred by him
in furtherance of his duties hereunder, including without limitation travel, meals and accommodations, upon submission of
vouchers or receipts and in compliance with such rules and policies
relating thereto as the Company may from time to time adopt or as may be required in
order to permit such payments to be taken as proper deductions by the Company or any
subsidiary under the Internal Revenue Code of 1986, as amended, and the rules and
regulations adopted pursuant thereto now or hereafter in effect.

4.3             Vacation.   Executive
shall be entitled to four (4) weeks paid vacation during each year of the Term.

4.4        Automobile
Allowance.   During the Term, the Company shall
provide Executive with an automobile allowance of $1,000_ per month.

4.5        Annual
Financial Planning Allowance.   During each year of
the Term, the Company shall provide Executive with an executive planning
allowance in the amount of $3,000.

4.6        Relocation
Expenses.   Executive shall be entitled to benefits
under the Company’s Executive Level
relocation policy as from time to time in effect. Executive will have up
to twelve (12) months from his employment date to utilize this benefit.

4.7        Indemnification.   The
Company shall (a) indemnify and hold Executive harmless, to the full
extent permitted under applicable law, for, from and against any and all
losses, claims, costs, expenses, damages, liabilities or actions (including
security holder actions, in respect thereof) relating to or arising out of the
Executive’s employment with and service as an Officer of the Company; and (b) pay
all reasonable costs, expenses and attorney’s fees incurred by Executive in
connection with or relating to the defense of any such loss, claim, cost,
expense, damage, liability or action, subject to Executive’s undertaking to
repay in the event it is ultimately determined that Executive is not entitled
to be indemnified by the Company. Following termination (except for termination
by the Company for Cause) of the Executive’s employment or service with the
Company, the Company shall cause any Director and Officer liability insurance
policies applicable to the Executive prior to such termination to remain in
effect for six (6) years following the date of termination of employment.

5.                              Termination.

5.1        Termination of
Executive’s Employment by the Company
for Cause.   The
Company may terminate Executive’s employment hereunder for Cause (as defined
below). Such termination shall be effected by written notice thereof delivered
by the Company to Executive, indicating in
reasonable detail the facts and circumstances alleged to provide a basis
for such termination, and shall be effective as of the date of such notice in accordance with Section 12 hereof. “Cause”
as determined in reasonable good faith 

 3
 

by a
committee comprised of three senior officers (one of which shall be
Executive’s supervisor) of the Company or the Board of Directors shall mean: (i) Executive’s
gross negligence or willful misconduct in
the performance of the duties or responsibilities of his position with the Company or any subsidiary,
or failure to timely carry out any lawful directive
of the Company; (ii) Executive’s misappropriation of any funds or property
of the Company or any subsidiary; (iii) the conduct by Executive which is a material
violation of this Agreement or Company Policy or which materially
interferes with the Executive’s ability to perform his duties; (iv) the
commission by Executive of an act of fraud or dishonesty toward the Company or
any subsidiary; (v) Executive’s misconduct or negligence which damages or
injures the Company or the Company’s reputation; (vi) Executive is convicted of or pleads to a felony
involving moral turpitude; or (vii) the use or imparting by
Executive of any confidential or proprietary information of the Company, or any
subsidiary in violation of any confidentiality or proprietary agreement to
which Executive is a party.

5.2        Compensation upon Termination by the Company for Cause or by Executive
without Good Reason.   In the event of
Executive’s termination of employment (i) by
the Company for Cause or (ii) by Executive voluntarily without Good Reason:

(a)        Executive shall be entitled to receive (i) all
amounts of accrued but unpaid Base Salary through the effective date of such
termination, (ii) reimbursement for reasonable and necessary expenses
incurred by Executive through the date of notice of such termination, to the
extent otherwise provided under Section 4.2 above and (iii) all other vested payments and benefits to which
Executive may otherwise be entitled pursuant to the terms of the
applicable benefit plan or arrangement through the effective date of such
termination ((i), (ii) and (iii), the (“Accrued Benefits”). All other
rights of Executive (and, except as provided in Section 5.6 below, all
obligations of the Company) hereunder or
otherwise in connection with Executive’s employment with the Company shall
terminate effective as of the date of such termination of employment and
Executive shall not be entitled to any payments or benefits not specifically
described in this subsection (a) or (b) below.

(b)        Except as provided in Section 3.3(e), any portion
of any Restricted Stock or any other equity incentive awards as to which the
restrictions have not lapsed or as to which any other conditions shall not have
been satisfied prior to the date of termination shall be forfeited as of such
date and any portion of Executive’s stock options that have vested and become
exercisable prior to the date of termination shall remain exercisable for a
period of 90 days following the date of termination of employment (or, such
later date as may be permitted by the relevant stock option or equity plan, or,
if earlier, until the expiration of the respective terms of the options), whereupon
all such options shall terminate; provided,
however, in the event of termination of Executive by the Company for
Cause, any stock options that have not been exercised prior to the date of
termination shall immediately terminate as of such date.

Any termination of
Executive’s employment by Executive voluntarily without Good Reason shall be effective upon 30 days’ notice to
the Company or such earlier date as the Company determines in its
discretion and designates in writing. A termination of Executive’s employment
by the Company for Cause or by the Executive other than for Good Reason shall not constitute a breach of
this Agreement.

5.3        Compensation upon Termination of Executive’s
Employment by the Company Other Than for
Cause or by Executive for Good Reason.   Executive’s
employment hereunder may be terminated by the Company other than for Cause or
by Executive for Good Reason. In the event that Executive’s employment
hereunder is terminated by the Company
other than for Cause or by Executive for Good Reason:

(a)        Executive shall be entitled to receive (i) the
Accrued Benefits, (ii) an amount equal to two times Executive’s then Base
Salary as of the date of termination of employment,
such amount payable in equal installments pursuant to the Company’s standard
payroll procedures for 

 4
 

management employees over
a period of two years following the date of termination of employment, and (iii) continued
health insurance coverage for Executive and his immediate family for a period
of two years following the date of termination of employment.

(b)        The Executive’s stock option awards held by Executive
shall vest and become immediately exercisable and the restrictions with respect
to any awards of restricted stock shall lapse, in each case to the extent such
options would otherwise have become vested and exercisable (or such
restrictions would have lapsed) had Executive remained in the employ of the
Company for a period of two years following the date of termination. Except as provided in Section 3.3(e), such portion of
Executive’s stock options (together with any portion of Executive’s
stock options that have vested and become exercisable prior to the date of
termination) shall remain exercisable for a period of 90 days following the
date of termination of employment (or, such later date as may be permitted by
the relevant stock option or equity plan, or, if earlier, until the expiration
of the respective terms of the options), whereupon all such options shall
terminate. Any remaining portion of Executive’s stock options that have not
vested (or deemed to have vested) as of the date of termination shall terminate
as of such date; and all shares of Restricted Stock as to which the
restrictions shall not have lapsed as of the date of termination shall be
forfeited as of such date.

(c)              All other rights of Executive (and, except as
provided in Section 5.6 below, all obligations of the Company) hereunder
or otherwise in connection with Executive’s
employment with the Company shall terminate effective as of the date of such
termination of employment and Executive shall not be entitled to any payments
or benefits not specifically described in 5.3(a) through (c).

Any termination of
employment pursuant to this Section 5.3 shall be effective upon thirty
(30) days notice thereof or the Company may elect in its sole discretion to
reduce or eliminate the notice period and pay the Executive his base salary for
some or all of the notice period in lieu of notice. A termination of
Executive’s employment by the Company other than for Cause or by the Executive for Good
Reason shall not constitute a breach of this Agreement. To be eligible for the payment, benefits and stock
rights described in Section 5.3(a)(ii)-(iii), (b) and (c) above, Executive must execute, not revoke and
abide by a release of all other
claims, cooperate in the event of litigation and fully comply with Executive’s
obligations under Sections 6 and 7 below.

5.4        Definition of Good Reason.   For purposes of this Agreement, “Good
Reason” shall mean the occurrence of any one of the following:

(a)              the assignment to Executive of any duties or
responsibilities materially inconsistent with Executive’s status as an officer
of the Company; or

(b)        any decrease in Executive’s then Base Salary as set
forth in Section 3.1 to which Executive has not agreed in writing; or

(c)        a
material breach by the Company of this Agreement

provided, however, that in each such case the Company
shall have the right, within thirty (30) days after receipt of written notice
(which shall set forth in reasonable detail the specific conduct of Company that constitutes Good Reason and the
specific provision(s) of this Agreement on which Executive relies)
from Executive of the Company’s violation of any of the foregoing, to cure the
event or circumstances giving rise to such Good Reason and in the event of
which cure, such event or circumstances shall not constitute Good Reason
hereunder.

 5
 

5.5        Compensation upon
Termination of Executive’s Employment by Reason of Executive’s Death or Total
Disability.   In the event that Executive’s employment with the Company is terminated by
reason of Executive’s death or Total Disability (as defined below):

(a)        Executive or Executive’s estate, as the case may be,
shall be entitled to receive (i) the Accrued Benefits, (ii) any other
benefits payable under the then current disability and/or death benefit plans,
as applicable, in which Executive is a participant and (iii) continued
health insurance coverage for Executive and/or his immediate family, as
applicable, for a period of one year following the date of termination of
employment.

(b)             All stock option awards held by Executive shall
vest and become immediately exercisable and
the restrictions with respect to any awards of Restricted Stock shall
lapse, in each case to the extent such options would otherwise have become
vested and exercisable (or such restrictions would have lapsed) had Executive
remained in the employ of the Company for a period of two years following the
date of termination. Except as provided in Section 3.3(e) such
portion of Executive’s stock options (together with any portion of Executive’s
stock options that have vested and become exercisable prior to the date of
termination) shall remain exercisable for a period of 90 days following the date of termination of employment (or, such
later date as may be permitted by the relevant stock option or equity
plan, or, if earlier, until the expiration of the respective terms of the
options), whereupon all such options shall terminate. Any remaining portion of Executive’s stock options that have not vested
(or deemed to have vested) as of the date of termination shall terminate as of
such date; and all shares of Restricted Stock as to which the restrictions
shall not have lapsed as of the date of termination shall be forfeited as of such date.

(c)        All
other rights of Executive (and, except as provided in Section 5.6 below,
all obligations of the Company) hereunder or otherwise in connection with
Executive’s employment with the Company shall terminate effective as of the
date of such termination of employment and Executive shall not be entitled to
any payments or benefits not specifically described in Section 5.5(a) through
(c).

“Total
Disability” shall mean any physical or mental disability that prevents
Executive from: (a)(1) performing
one or more of the essential functions of his position for a period of not less
than 90 days in any 12-month period and (ii) which is expected to be
of permanent or indeterminate duration but
expected to last at least 12 continuous months or result in death of the
Executive as determined (y) by a physician selected by the Company or
its insurer or (z) pursuant to the Company’s benefit programs; or (b) reporting
to work for 90 or more consecutive business days or unable to engage in any
substantial activity.

5.6        Survival.   In the event of any
termination of Executive’s employment, Executive and the Company nevertheless
shall continue to be bound by the terms and conditions set forth in Section 4.7
above and Sections 6 through 10 below, which shall survive the expiration of the Term; provided, however, the
indemnification obligations in Section 4.7 shall not survive
expiration of the Term in the event of termination of Executive’s employment by
the Company for Cause.

5.7        Excise Tax Gross-Up.

(a)        In the
event that any payment or benefit received or to be received by the Executive
pursuant to the terms of this Agreement or any other plan, arrangement or
agreement of the Company (or any affiliate) (collectively, the “Payments”)
would be equal to the Excise Tax (the “Excise Tax”) imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the “Code”), as determined as
provided below, the Company shall pay to the Executive, at the time specified
in Section 5.7(b) below an additional amount (the “Gross-Up Payment”)
such that the net amount retained by the Executive, after deduction of the
Excise Tax on payments and any federal, 

 6
 

state and local income and
employment or other tax and the Excise Tax
upon the Gross-Up Payment, and any interest, penalties or additions to
tax payable by the company Executive with respect thereto, shall be equal to
the total Payments. For purposes of determining whether any of the Payments
will be subject to the Excise Tax and the amounts of such Excise Tax, (1) the
total amount of the Payments shall be treated as “parachute payments”
within the meaning of section 280G(b)(2) of the Code, and all “excise
parachute payments” within the meaning of section 280G(b)(l) of the
Code shall be treated as subject to the Excise Tax, except to the extent that,
in the opinion of tax counsel (“Tax Counsel”) reasonably acceptable to
Executive and selected by the Company, a Payment (in whole or in part) does not
constitute a “parachute payment” within the
meaning of section 280G(b)(2) of the Code, or such “excess
parachute payments” (in whole or in
part) are not subject to the Excise Tax, (2) the amount of the Payments
that shall be treated as subject to the Excise Tax shall be equal to the lesser of (A) the total
amount of the Payments or (B) the amount of “excess parachute payments” within the meaning of section
280G(b)(l) of the Code (after applying clause (1) hereof), and
(3) the value of any noncash benefits or any deferred payment or benefit
shall be determined by the Tax Counsel in accordance with the principles of
sections 280G(d)(3) and (4) of the Code. For purposes of determining
the amount of the Gross-Up Payment, the Executive shall be deemed to pay
federal income taxes at the highest marginal rates of federal income taxation
applicable to individuals in the calendar year in which the Gross-Up Payment is
to be made and state and local income taxes at the highest marginal rates of
taxation applicable to individuals as are in effect in the state and locality of the Executive’s residence in the
calendar year in which the Gross-Up Payment is to be made, net of the
maximum reduction in federal income taxes that can be obtained from deduction of such state and local taxes,
taking into account any limitations applicable to individuals subject to
federal income tax at the highest marginal rates.

(b)        The Gross-Up Payment provided for in Section 5.7(a) hereof
shall be made upon the earlier of (i) thirty (30) days following the date
of termination of Executive’s employment or (ii) the imposition upon the
Executive or payment by the Executive of any Excise Tax.

(c)        If it is established pursuant to a final determination
of a court or an Internal Revenue Service
proceeding that the Excise Tax is less than the amount taken into account
under Section 5.7(a) hereof, the Executive shall repay to the Company
within thirty (30) days of the Executive’s receipt of notice of such final
determination the portion of the Gross-Up Payment attributable to such
reduction (plus the portion of the Gross-Up Payment attributable to the Excise
Tax and federal, state and local income tax imposed on the portion of the Gross-Up Payment being repaid by the Executive if
and to the extent that such repayment results in a reduction in Excise Tax and
a dollar-for-dollar reduction in the Executive’s taxable income and
wages for the purpose of federal, state and local income taxes) plus any interest received by the
Executive on the amount of such repayment. If it is established pursuant
to a final determination of a court or an Internal Revenue Service proceeding
that the Excise Tax exceeds the amount taken into account hereunder (including
without limitation by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment pursuant to Section 5.7(a) in
respect of such excess within thirty (30) days of the Company’s receipt of
notice of such final determination or proceeding.
The Executive and the Company shall each reasonably cooperate with the other
in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax
with respect to the Payments.

 7

(d)        In the
event of any change in, or further interpretation of, sections 280G or 4999 of
the Code and the regulations promulgated thereunder, the Executive shall be entitled, by written notice to the Company, to
request an opinion of Tax Counsel regarding the application of such change to
any of the foregoing, and the Company shall use its best efforts to
cause such opinion to be rendered as promptly as practicable. All fees and
expenses of the Tax Counsel incurred in connection with this Agreement shall be
borne by the Company.

5.8        No Other Severance or Termination Benefits.   Except
as expressly set forth herein, Executive shall not be entitled to damages or to
any severance or other benefits upon termination of employment with the Company
under any circumstances and for any or no reason, including, but not limited to
any severance pay under any Company severance plan, policy or practice.

6.                              Protection of Confidential Information.

Executive
acknowledges that during the course of his employment with the Company, its
subsidiaries, affiliates and strategic partners, he will be exposed to
documents and other information regarding the confidential affairs of the
Company, its subsidiaries, affiliates and strategic partners, including without
limitation information about their past,
present and future financial condition, pricing strategy, prices, suppliers, cost
information, business and marketing plans, the markets for their products, key
personnel, past, present or future actual or threatened litigation, trade secrets
and other intellectual property, current and prospective customer lists,
operational methods, acquisition plans,
prospects, plans for future development and other business affairs and information
about the Company and its subsidiaries, affiliates and strategic partners not
readily available to the public (the “Confidential Information”). Executive
further acknowledges that the services to be performed under this Agreement are
of a special, unique, unusual,
extraordinary and intellectual character. In recognition of the foregoing, the
Executive covenants and agrees as follows:

6.1             No
Disclosure or Use of Confidential Information.   At
no time shall Executive ever divulge,
disclose, or otherwise use any Confidential Information (other than as
necessary to perform his duties under this Agreement and in furtherance of the
Company’s best interests), unless and until such information is readily
available in the public domain by reason
other than Executive’s disclosure or use thereof in violation of the first
clause of this Section 6.1. Executive acknowledges that Company is the
owner of, and that Executive has no rights to, any trade secrets,
patents, copyrights, trademarks, know-how or similar rights of any type,
including any modifications or improvements to any work or other property
developed, created or worked on by Executive during the Term of this Agreement.

6.2             Return of
Company Property, Records and Files.   Upon the termination of Executive’s employment at any time
and for any reason, or at any other time the Board may so direct, Executive
shall promptly deliver to the Company’s offices in Harrisburg. Pennsylvania all
of the property and equipment of the Company, its subsidiaries, affiliates and
strategic partners (including any cell phones, pagers, credit cards, personal
computers, etc.) and any and all documents, records, and files, including any
notes, memoranda, customer lists, reports or any and all other documents,
including any copies thereof, whether in
hard copy form or on a computer disk or hard drive, which relate to the
Company, its subsidiaries, affiliates, strategic partners, successors or
assigns, and/or their respective
past and present officers, directors, employees or consultants (collectively, the “Company Property, Records and
Files”); it being expressly understood that, upon termination of
Executive’s employment at any time and for any reason, Executive shall not be
authorized to retain any of the Company Property, Records and Files, any copies
thereof or excerpts therefrom.

7.                              Noncompetition and Other Matters.

7.1             Noncompetition.   During
the Executive’s employment with the Company and for the two-year period
immediately following the date of termination of Executive’s employment (the 

 8
 

“Restricted Period”)
Executive shall not, directly or indirectly, in any city, town, county, parish
or other municipality in any state of the United States (the names of each such
city, town, parish, or other municipality, including, without limitation, the
name of each county in the Commonwealth of Pennsylvania being expressly
incorporated by reference herein), or any other place in the world, where the
Company, or its subsidiaries, affiliates, strategic partners, successors, or
assigns, engages in the ownership, management and operation of retail
drugstores (i) engage in a Competing Business for Executive’s own account;
(ii) enter the employ of, or render any consulting or contracting services
to, any Competing Business; or (iii) become interested in or otherwise
associated or connected with any Competing Business in any capacity, including,
without limitation, as an individual, partner, shareholder, officer, director,
principal, agent, trustee, employee, contractor, consultant or management
position with any entity providing consulting services to a Competing Business;
provided, however, Executive may (i) own,
directly or indirectly, solely as a passive investment, securities of any
entity traded on any national securities exchange if Executive is not a
controlling person of, or a member of a group which controls, such entity and
does not, directly or indirectly, own 1% or more of any class of securities of
such entity. For purposes of this Section 7.1, the phrase “Competing
Business” shall mean any entity a majority of whose business involves the
ownership and operation of retail or internet based drug stores.

7.2        Noninterference.   During
the Restricted Period, Executive shall not, directly or indirectly, solicit,
induce, or attempt to solicit or induce any officer, director, employee, agent or consultant of the Company or
any of its subsidiaries, affiliates, strategic partners, successors or
assigns to terminate his, her or its employment or other relationship with the Company or its
subsidiaries, affiliates, strategic partners, successors or assigns for the
purpose of associating with any competitor of the Company or its subsidiaries,
affiliates, strategic partners, successors or assigns, or otherwise encourage
any such person or entity to leave or sever his, her or its employment or other
relationship with the Company or its subsidiaries, affiliates, strategic
partners, successors or assigns for any other reason.

7.3             Nonsolicitation.   During
the Restricted Period, Executive shall not, directly
or indirectly, solicit, induce, or attempt to solicit or induce any customers,
clients, vendors, suppliers or consultants then under contract to the
Company or its subsidiaries, affiliates,
strategic partners, successors or assigns, to terminate, limit or otherwise
modify his, her or its relationship with the Company or its
subsidiaries, affiliates, strategic partners, successors or assigns, for the
purpose of associating with any competitor of the Company or its subsidiaries,
affiliates, strategic partners, successors or assigns, or otherwise encourage such customers, clients,
vendors, suppliers or consultants then under contract to terminate his,
her or its relationship with the Company or its subsidiaries, affiliates,
strategic partners, successors or assigns for any reason. During the Restricted
Period, Executive shall not hire, either directly or through any employee,
agent or representative, any field and corporate management employee of the
Company or any subsidiary or any such person who was employed by the Company or
any subsidiary within 180 days of such hiring.

8.                              Rights and Remedies upon Breach.

If
Executive breaches, or threatens to commit a breach of, any of the provisions
of Sections 6 or 7 above (the “Restrictive Covenants”), the Company and
its subsidiaries, affiliates, strategic partners, successors or assigns shall
have the following rights and remedies,
each of which shall be independent of the others and severally enforceable, and
each of which shall be in addition to, and not in lieu of, any other
rights or remedies available to the Company or its subsidiaries, affiliates,
strategic partners, successors or assigns at law or in equity.

8.1             Specific
Performance.   The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction by injunctive decree or
otherwise, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company or
its subsidiaries, affiliates, strategic partners, successors or assigns and
that money damages would not 

 9
 

provide an adequate remedy
to the Company or its subsidiaries, affiliates, strategic partners, successors
or assigns.

8.2        Accounting.   The
right and remedy to require Executive to account for and pay over to the Company or its subsidiaries, affiliates, strategic
partners, successors or assigns, as the case may be, all compensation,
profits, monies, accruals, increments or other benefits derived or received by
Executive as a result of any transaction or activity constituting a breach of
any of the Restrictive Covenants.

8.3        Severability
of Covenants.   Executive acknowledges and agrees
that the Restrictive Covenants are reasonable and valid in geographic and
temporal scope and in all other respects. If any court determines that any of the Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the remainder of
the Restrictive Covenants shall not thereby be affected and shall be given full force
and effect without regard to the invalid portions.

8.4        Modification
by the Court.   If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or scope of such provision, such court shall have the power (and is
hereby instructed by the parties) to modify
or reduce the duration or scope of such provision, as the case may be (it being
the intent of the parties that any such modification or reduction be limited to
the minimum extent necessary to render such
provision enforceable), and, in its
modified or reduced form, such provision shall then be enforceable.

8.5        Enforceability
in Jurisdictions.   Executive intends to and hereby
confers jurisdiction to enforce the Restrictive Covenants upon the courts of
any jurisdiction within the geographic scope of such covenants. If the courts
of any one or more of such jurisdictions hold the Restrictive Covenants
unenforceable by reason of the breadth of such scope or otherwise, it is the
intention of Executive that such determination not bar or in any way affect the
right of the Company or its subsidiaries, affiliates, strategic partners,
successors or assigns to the relief provided herein in the courts of any other
jurisdiction within the geographic scope of such covenants, as to breaches of
such covenants in such other respective jurisdictions, such covenants as they
relate to each jurisdiction being, for this purpose, severable into diverse and
independent covenants.

8.6        Extension of
Restriction in the Event of Breach.   In the event
that Executive breaches any of the
provisions set forth in this Section 8, the length of time of the
Restricted Period shall be extended for a period of time equal to the period of
time during which Executive is in breach of such provision.

9.                              No Violation
of Third-Party Rights.   Executive represents, warrants and
covenants that he:

(i)         will
not, in the course of employment, infringe upon or violate any proprietary
rights of any third party (including, without limitation, any third party
confidential relationships, patents, copyrights, mask works, trade secrets, or
other proprietary rights);

(ii)       is not a party to any conflicting agreements with third
parties, which will prevent him from fulfilling the terms of employment
and the obligations of this Agreement;

(iii)      does
not have in his possession any confidential or proprietary information or documents belonging to others and will not
disclose to the Company, use, or induce the Company to use, any
confidential or proprietary information or documents of others; and

(iv)       agrees
to respect any and all valid obligations which he may now have to prior
employers or to others relating to confidential information, inventions,
discoveries or other intellectual property which are the property of those
prior employers or others, as the case may be.

Executive has supplied to the Company a copy of each
written agreement with any of Executive’s prior employers, as well as any other
agreements to which Executive is subject, which includes any 

 10
 

obligation of
confidentiality, assignment of intellectual property, nonsolicitation or
non-competition. Executive has listed each of such agreements in Appendix “B”.

Executive agrees to
indemnify and save harmless the Company from any loss, claim, damage, cost or
expense of any kind (including without limitation, reasonable attorney fees) to which the Company may be
subjected by virtue of a breach by Executive of the foregoing
representations, warranties, and covenants.

10.                       Arbitration.

Except as necessary
for the Company and its subsidiaries, affiliates, strategic partners,
successors or assigns or Executive to specifically enforce or enjoin a breach
of this Agreement (to the extent such
remedies are otherwise available), the parties agree that any and all
disputes that may arise in connection with, arising out of or relating to this
Agreement, or any dispute that relates in any way, in whole or in part, to
Executive’s employment with the Company or any subsidiary, affiliate or
strategic partner, the termination of that employment or any other dispute by
and between the parties or their subsidiaries, affiliates, strategic partners,
successors or assigns, shall be submitted to final and binding arbitration in Harrisburg, Pennsylvania according to the
National Employment Dispute Resolution Rules and procedures of the
American Arbitration Association at the time in effect. This arbitration
obligation extends to any and all claims that may arise by and between the
parties or their subsidiaries, affiliates, strategic partners, successors or
assigns, and expressly extends to, without limitation, claims or causes of
action for wrongful termination, impairment
of ability to compete in the open labor market, breach of an express or
implied contract, breach of the covenant of good faith and fair dealing, breach
of fiduciary duty, fraud, misrepresentation, defamation, slander, infliction of
emotional distress, disability, loss of future earnings, and claims under the
Pennsylvania Constitution, the United States Constitution, and applicable state
and federal fair employment laws, federal
and state equal employment opportunity laws, and federal and state labor
statutes and regulations, including, but not limited to, the Civil Rights Act
of 1964, as amended, the Fair Labor
Standards Act, as amended, the Americans With Disabilities Act of 1990, as
amended, the Rehabilitation Act of 1973, as amended, the Employee Retirement
Income Security Act of 1974, as amended, the Age Discrimination in
Employment Act of 1967, as amended, and any other state or federal law.
Executive understands that by entering into this Agreement, Executive is
waiving Executive’s rights to have a court
determine Executive’s rights, including under federal, state or local statutes prohibiting
employment discrimination, including sexual harassment and discrimination on
the basis of age, race, color, religion, national origin, disability, veteran
status or any other factor prohibited by governing law.

11.                       Assignment.

Neither this Agreement, nor any of Executive’s rights
or obligations hereunder, may be assigned or otherwise subject to hypothecation
by Executive. The Company may assign its rights and obligations hereunder, and
hereby consents to any such assignment, in whole or in part, (i) to any of
the Company’s subsidiaries, affiliates, or parent corporations; or (ii) to
any other successor or assign in connection with the sale of all or
substantially all of the Company’s assets or stock or in connection with any
merger, acquisition and/or reorganization
involving the Company.

 11
 

12.                       Notices.

All
notices and other communications under this Agreement shall be in writing and
shall be given by fax or first class mail, certified or registered with return
receipt requested, and shall be deemed to have been duly given three (3) days
after mailing or twenty-four (24) hours after transmission of a fax to the
respective persons named below:

	
  If to the Company:

  	
  Rite Aid Corporation

  
	
   

  	
  30 Hunter Lane

  
	
   

  	
  Camp Hill, Pennsylvania
  17011

  
	
   

  	
  Attention: General Counsel

  
	
   

  	
  Fax: (717) 760-7867

  
	
  If to Executive:

  	
  Brian Fiala

  
	
   

  	
  1109 Legacy Lane

  
	
   

  	
  West Chester, Pennsylvania 19382

  

 

Any party may
change such party’s address for notices by notice duly given pursuant hereto.

13.                       General.

13.1          No Offset or
Mitigation.   The Company’s obligation to make the
payments provided for in, and otherwise to perform its obligations under this
Agreement shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action that the Company may have against the
Executive or others whether in respect of claims made under this Agreement or
otherwise. In no event shall the Executive be
obligated to seek other employment or take any other action by way of
mitigation of the amounts, benefits and other compensation payable or
otherwise provided to the Executive under any of the provisions of this
Agreement, and such amounts shall not be reduced, regardless of whether the
Executive obtains other employment.

13.2          Governing
Law.   This Agreement is executed in Pennsylvania and
shall be governed by and construed and enforced in accordance with the laws of
the Commonwealth of Pennsylvania without giving effect to conflicts of laws
principles thereof which might refer
such interpretations to the laws of a different state or jurisdiction. Any
court action instituted by Executive relating in any way to this Agreement shall be filed exclusively in state or
federal court in Harrisburg, Pennsylvania and Executive consents to the
jurisdiction and venue of said courts in any action instituted by or on
behalf of the Company against him.

13.3     Entire Agreement.   This Agreement
sets forth the entire understanding of the parties relating to Executive’s
employment with the Company and cancels and supersedes
all agreements, arrangements and understandings relating thereto made prior to the
date hereof, written or oral, between the Executive and the Company and/or any
subsidiary or affiliate.

13.4          Amendments:
Waivers.   This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants hereof
may be waived, only by a written instrument
executed by the parties, or in the case of a waiver, by the party
waiving compliance. The failure of any party at any time or times to require
performance of any provision hereof shall in no manner affect the right of such
party at a later time to enforce the same. No waiver by any party of the breach
of any term or covenant contained in this Agreement, whether by conduct or
otherwise, in any one or more instances, shall be deemed to be, or construed
as, a further or continuing waiver of any such breach, or a waiver of the
breach of any other term or covenant contained in this Agreement.

 12
 

13.5          Conflict
with Other Agreements.   Executive represents and
warrants that neither his execution of this
Agreement nor the full and complete performance of his obligations
hereunder will violate or conflict in any respect with any written or oral
agreement or understanding with any person or entity.

13.6          Successors
and Assigns.   This Agreement shall inure to the
benefit of and shall be binding upon the
Company (and its successors and assigns) and Executive and his heirs,
executors and personal representatives.

13.7          Withholding.   Notwithstanding
any other provision of this Agreement, the Company may withhold from amounts
payable under this Agreement all federal, state, local and foreign taxes that
are required to be withheld by applicable laws or regulations.

13.8          Severability.   The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement. If any provision of this Agreement
shall be held invalid or unenforceable in part, the remaining portion of
such provision, together with all other provisions of this Agreement, shall remain valid and enforceable and
continue in full force and effect to the fullest extent consistent with
law.

13.9          No
Assignment.   The rights and benefits of the Executive under
this Agreement may not be anticipated,
assigned, alienated or subject to attachment, garnishment, levy, execution or other legal or equitable process except
as required by law. Any attempt by
the Executive to anticipate, alienate, assign, sell, transfer, pledge, encumber
or charge the same shall be void. Payments hereunder shall not be considered assets
of the Executive in the event of insolvency or bankruptcy.

13.10       Survival.   This Agreement shall
survive the termination of Executive’s employment and the expiration of the
Term to the extent necessary to give effect to its provisions.

13.11       Captions.   The section headings
contained herein are for reference purposes only and shall not in any way
affect the meaning or interpretation of this Agreement.

13.12   Counterparts.   This Agreement may be executed by the parties
hereto in separate counterparts; each of which when so executed and
delivered shall be an original but all such counterparts together shall
constitute one and the same instrument.

 13
 

IN
WITNESS WHEREOF, Executive and the Company have executed this
Agreement as of the date first written above.

	
  

  	
  RITE
  AID CORPORATION

  
	
   

  	
  

  
	
   

  	
  By:

  	
  Todd McCarty

  
	
   

  	
  Its:

  	
  Senior Vice President Human
  Resources

  
	
   

  	
  EXECUTIVE

  
	
   

  	
  

  
	
   

  	
  Brian Fiala

  

 

 14

APPENDIX A

A “Change in
Control of the Company” shall be deemed to have occurred if, as the result of a
single transaction or a series of transactions, the event set forth in any one
of the following paragraphs shall have occurred:

(1)        any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 25% or more
of the combined voting power of the Company’s then outstanding voting
securities; or

(2)        Incumbent Directors cease at any time and for any
reason to constitute a majority of the number of directors then serving on the
Board. “Incumbent Directors” shall mean directors who either (A) are
directors of the Company as of the Effective Date or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Incumbent Directors at the time of such election or nomination
(but shall not include an individual whose election or nomination is in
connection with an actual or threatened election contest, including but not
limited to a consent solicitation, relating to the election of directors to the Board); or

(3)        there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation, other than (i) a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior to such
merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity or any parent thereof) at least 60% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or (ii) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company representing 25% or more
of the combined voting power of the Company’s then outstanding voting
securities; or

(4)        the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or an agreement for the sale
or disposition by the Company of all or substantially all of the Company’s
assets, other than a sale or disposition by the Company of all or substantially
all of the Company’s assets to an entity, at least 60% of the combined voting
power of the voting securities of which are owned by stockholders of the
Company in substantially the same proportions as their ownership of the Company
immediately prior to such sale.

“Affiliate” shall have the meaning set forth in Rule 12b-2
under Section 12 of the Exchange Act.

“Beneficial Owner” shall have the meaning set forth in
Rule 13d-3 under the Exchange Act, except that a Person shall not be
deemed to be the Beneficial Owner of any securities which are properly filed on
a Form 13G.

“Exchange Act” shall mean the Securities Exchange Act
of 1934, as amended from time to time.

“Person” shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an employee benefit plan of the
Company or any of its subsidiaries, (iii) an underwriter temporarily
holding securities pursuant to an offering of such securities or (iv) a
corporation owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their ownership of stock of the
Company.

 15

APPENDIX B

The following is a list of all written agreements with
any of Executive’s prior employers, as well
as any other agreements to which Executive is subject, which includes any
obligation of confidentiality, assignment of intellectual property, nonsolicitation
or non-competition. If none, type “None”.

Nonsolicitation agreement—Expires July 2008

 16

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