Document:

Exhibit 10.66
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                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                         dated as of September 30, 2002

                                  by and among

                            RURAL/METRO CORPORATION,
                             a Delaware corporation,

                                  as Borrower,

                         the Lenders referred to herein,

                                       and

                       WACHOVIA BANK NATIONAL ASSOCIATION

                                    as Agent

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<PAGE>
                                TABLE OF CONTENTS

                                                                            PAGE

Article 1 DEFINITIONS..........................................................2
    Section 1.1    Definitions.................................................2
    Section 1.2    General....................................................18
    Section 1.3    Accounting Matters.........................................19
    Section 1.4    Other Definitions and Provisions...........................19

Article 2 ACKNOWLEDGMENTS AND WAIVERS.........................................19
    Section 2.1    Acknowledgments by Borrower and the other Credit Parties...19
    Section 2.2    Acknowledgment  of Events of Default by the Borrower
                   and Waiver Thereof by the Lenders..........................21
    Section 2.3    Release of Claims..........................................22

Article 3 CREDIT FACILITIES...................................................22
    Section 3.1    Loans......................................................22
    Section 3.2    Procedure for Advance of New Facility Loans................24
    Section 3.3    Repayment of Loans.........................................25
    Section 3.4    Notes......................................................28
    Section 3.5    Permanent Reduction of Aggregate Commitment and the
                   New Facility Loans.........................................28
    Section 3.6    Termination of Credit Facility.............................28
    Section 3.7    Use of Proceeds............................................28

Article 4 LETTERS OF CREDIT...................................................28
    Section 4.1    Lenders' Obligations in respect of Letters of Credit.......28
    Section 4.2    L/C Participations.........................................30
    Section 4.3    Reimbursement Obligation of the Borrower...................30
    Section 4.4    Obligations Absolute.......................................31
    Section 4.5    Fees and Other Charges.....................................32

Article 5 GENERAL LOAN PROVISIONS.............................................32
    Section 5.1    Interest...................................................32
    Section 5.2    Commitments and Agency Fees................................34
    Section 5.3    Manner of Payment..........................................34
    Section 5.4    Nature of Obligations of Lenders Regarding Extensions
                   of Credit; Assumption by the Agent.........................35
    Section 5.5    Changed Circumstances......................................35
    Section 5.6    Indemnity..................................................38
    Section 5.7    Capital Requirements.......................................38

                                       i
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    Section 5.8    Taxes......................................................38
    Section 5.9    Change in Lending Office...................................40

Article 6 CLOSING; CONDITIONS OF CLOSING, BORROWING AND ACQUISITIONS..........40
    Section 6.1    Closing....................................................40
    Section 6.2    Conditions to Closing and Initial Extensions of Credit.....40
    Section 6.3    Conditions to All Permitted Acquisitions...................44
    Section 6.4    Conditions to Major Permitted Acquisitions.................44
    Section 6.5    Conditions to All Extensions of Credit.....................45

Article 7 REPRESENTATIONS AND WARRANTIES OF THE BORROWER......................46
    Section 7.1    Representations and Warranties.............................46
    Section 7.2    Survival of Representations and Warranties, Etc............54

Article 8 FINANCIAL INFORMATION AND NOTICES...................................54
    Section 8.1    Financial Statements.......................................54
    Section 8.2    Officers' Compliance Certificate...........................56
    Section 8.3    Accountants' Certificate...................................57
    Section 8.4    Other Reports..............................................57
    Section 8.5    Notice of Litigation and Other Matters.....................58
    Section 8.6    Accuracy of Information....................................59

Article 9 AFFIRMATIVE COVENANTS...............................................59
    Section 9.1    Preservation of Corporate Existence and Related Matters....59
    Section 9.2    Maintenance of Property....................................59
    Section 9.3    Insurance..................................................59
    Section 9.4    Accounting Methods and Financial Records...................60
    Section 9.5    Payment and Performance of Obligations.....................60
    Section 9.6    Compliance with Laws, Approvals and Material Contracts.....60
    Section 9.7    Environmental Management...................................60
    Section 9.8    Compliance with ERISA......................................60
    Section 9.9    Conduct of Business........................................61
    Section 9.10   Visits and Inspections.....................................61
    Section 9.11   Additional Subsidiary Guarantors...........................61
    Section 9.12   Board Information Rights...................................61
    Section 9.13   New Facility Loan Advances.................................61
    Section 9.14   Delivery of Audited Financial Statements...................62
    Section 9.15   Post-Closing Items.........................................62
    Section 9.16   Projections of New Contract Contribution and
                   Terminated Contract Contribution...........................62
    Section 9.17   Further Assurances.........................................62

Article 10 FINANCIAL COVENANTS................................................63
    Section 10.1   Total Debt Leverage Ratio..................................63
    Section 10.2   Minimum Tangible Net Worth.................................63

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    Section 10.3   Fixed Charge Coverage Ratio................................64
    Section 10.4   Limitation on Capital Expenditures.........................64
    Section 10.5   Limitation on Operating Leases.............................64

Article 11 NEGATIVE COVENANTS.................................................64
    Section 11.1   Limitations on Debt........................................64
    Section 11.2   Limitations on Guarantees..................................66
    Section 11.3   Limitations on Liens.......................................66
    Section 11.4   Limitations on Loans, Advances, Investments
                   and Acquisitions...........................................67
    Section 11.5   Limitations on Mergers and Liquidation.....................69
    Section 11.6   Limitations on Sale of Assets..............................70
    Section 11.7   Limitations on Dividends and Distributions.................71
    Section 11.8   Transactions with Affiliates...............................71
    Section 11.9   Certain Accounting Changes.................................72
    Section 11.10  Payments and Prepayments of Non-Seller Financing
                   Subordinated Debt; Amendments to Certain Agreements........72
    Section 11.11  Restrictive Agreements.....................................72
    Section 11.12  Amendments to Senior Note Indenture or Senior Notes........72

Article 12 DEFAULT AND REMEDIES...............................................72
    Section 12.1   Events of Default..........................................72
    Section 12.2   Remedies...................................................75
    Section 12.3   Rights and Remedies Cumulative; Non-Waiver; etc............76
    Section 12.4   Crediting of Payments and Proceeds.........................76
    Section 12.5   Set-off....................................................76

Article 13 THE AGENT..........................................................77
    Section 13.1   Appointment................................................77
    Section 13.2   Delegation of Duties.......................................77
    Section 13.3   Exculpatory Provisions.....................................77
    Section 13.4   Reliance by the Agent and Issuing Bank.....................77
    Section 13.5   Notice of Default..........................................78
    Section 13.6   Non-Reliance on the Agent and Other Lenders................78
    Section 13.7   Indemnification............................................79
    Section 13.8   The Agent and Issuing Bank in their Individual
                   Capacities.................................................79
    Section 13.9   Resignation of the Agent; Successor Agents.................79

Article 14 MISCELLANEOUS......................................................80
    Section 14.1   Notices....................................................80
    Section 14.2   Expenses...................................................81
    Section 14.3   Governing Law..............................................82
    Section 14.4   Consent to Jurisdiction....................................82
    Section 14.5   Arbitration................................................82
    Section 14.6   Waiver of Jury Trial.......................................83
    Section 14.7   Reversal of Payments.......................................83

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    Section 14.8   Injunctive Relief..........................................84
    Section 14.9   Successors and Assigns; Participations.....................84
    Section 14.10  Amendments, Waivers and Consents...........................87
    Section 14.11  Performance of the Borrower's Duties.......................87
    Section 14.12  Indemnification............................................87
    Section 14.13  All Powers Coupled with Interest...........................88
    Section 14.14  Survival of Indemnities....................................88
    Section 14.15  Titles and Captions........................................88
    Section 14.16  Severability of Provisions.................................88
    Section 14.17  Counterparts...............................................88
    Section 14.18  Term of Agreement..........................................88
    Section 14.19  Adjustments................................................88
    Section 14.20  Independent Effect of Covenants............................89
    Section 14.21  Non-Disclosure Agreement...................................89
    Section 14.22  Representations Regarding the Series B Preferred Stock.....89
    Section 14.23  Covenant Regarding Voting the Series B Preferred Stock.....90
    Section 14.24  Cancellation of the New Facility...........................90
    Section 14.25  Cancellation of the Existing Notes.........................90

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                                    EXHIBITS

Exhibit A-1     -  Form of Term Note
Exhibit A-2     -  Form of New Facility Note
Exhibit B       -  Form of Notice of Borrowing
Exhibit C       -  Form of Notice of Prepayment
Exhibit D       -  Form of Officers' Compliance Certificate
Exhibit E       -  Form of Assignment and Acceptance
Exhibit F       -  Form of Subsidiary Guaranty Agreement
Exhibit G       -  Intentionally Omitted
Exhibit H       -  Form of Intercompany Subordination Agreement
Exhibit I       -  Intentionally Omitted
Exhibit J       -  Terms of Subordinated Debt and Earn-Out Obligations
Exhibit K       -  Form of Notice of Account Designation

                                     SCHEDULES

Schedule 1      -  Commitments
Schedule 1.1    -  Net Rental and Operating Lease Expense
Schedule 1.2       List of Subsidiaries being sold in Latin American Divestiture
Schedule 2.1(a) -  Existing Obligations
Schedule 2.1(c) -  Existing Loan Documents
Schedule 2.2    -  Acknowledged Defaults
Schedule 7.1(a) -  Organization; Power; Qualifications
Schedule 7.1(b) -  Subsidiaries of Borrower and Capitalization of Borrower and
                   Subsidiaries
Schedule 7.1(i) -  Environmental Matters
Schedule 7.1(j) -  ERISA Plans
Schedule 7.1(m) -  Intellectual Property Matters
Schedule 7.1(n) -  Material Contracts
Schedule 7.1(q) -  Financial Statements
Schedule 7.1(r) -  No Material Adverse Change
Schedule 7.1(u) -  Liens
Schedule 7.1(v) -  Debt and Guarantees
Schedule 7.1(w) -  Litigation
Schedule 11.1   -  Limitation on Debt
Schedule 11.4   -  Limitations on Loans, Advances, Investments and Acquisitions
Schedule 11.5      Permitted Dissolutions

                                       v
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                                     ANNEXES

Annex A - Certificate of Designation
Annex B - Non-Disclosure Agreement
Annex C - Registration Rights Agreement
Annex D - Preferred Stock

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<PAGE>
                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

     This SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 30th day
of September,  2002,  is entered into by and among  RURAL/METRO  CORPORATION,  a
corporation  organized under the laws of Delaware as Borrower (the  "BORROWER"),
the Lenders who are or may become a party to this Agreement  (collectively,  the
"LENDERS"),  and WACHOVIA BANK NATIONAL  ASSOCIATION (f/k/a First Union National
Bank),  a  national  banking  association,  as the  Agent for the  Lenders  (the
"AGENT").

                                    RECITALS

     A. The Borrower,  as borrower,  certain  Subsidiaries  of the Borrower,  as
guarantors,  the lenders  party  thereto and the Agent entered into that certain
Credit  Agreement,  dated as of  September  29,  1995,  as amended and  restated
pursuant to that certain  Amended and  Restated  Credit  Agreement,  dated as of
March 16, 1998, by and among the Borrower, the Lenders and the Agent, as amended
by that certain First Amendment to Amended and Restated Credit Agreement,  dated
as of June 30, 1998 (such Credit Agreement, as so amended, restated, and further
amended, modified, and supplemented, the "EXISTING CREDIT AGREEMENT").

     B. Pursuant to the Provisional Waiver and Standstill Agreement, dated as of
March 14, 2000;  the First  Amendment to the  Provisional  Waiver and Standstill
Agreement,  dated as of April 13, 2000; the Second  Amendment to the Provisional
Waiver and Standstill Agreement,  dated as of July 14, 2000; the Third Amendment
to the  Provisional  Waiver and  Standstill  Agreement,  dated as of October 16,
2000; the Fourth Amendment to the Provisional  Waiver and Standstill  Agreement,
dated as of January 31, 2001; the Fifth Amendment to the Provisional  Waiver and
Standstill  Agreement,  dated as of April 23, 2001;  the Sixth  Amendment to the
Provisional Waiver and Standstill Agreement, dated as of August 1, 2001; and the
Seventh  Amendment to the  Provisional  Waiver and Standstill  Agreement,  dated
December 4, 2001 (collectively, the "WAIVER AGREEMENT"), each as entered into by
and among the  Borrower,  the Agent and the  Lenders,  the Agent and the Lenders
agreed,  among other  things,  to waive the  Acknowledged  Defaults  (as defined
therein)  provisionally until April 1, 2002, or until an earlier date if certain
other events occur,  and the Borrower agreed,  among other things,  to negotiate
with the  Agent  and  Lenders  to  amend  or  restructure  the  Existing  Credit
Agreement.

     C. The  Borrower  has  requested  and the Lenders  have agreed to amend and
restate the Existing  Credit  Agreement  and to extend a credit  facility to the
Borrower on the terms and  conditions  of this  Agreement.  The Borrower and the
Subsidiary  Guarantors  (as  defined  below) are and will be members of the same
affiliated  group and conduct their  operations  for their mutual benefit as one
integrated  financial  enterprise,   with  each  of  the  Subsidiary  Guarantors
benefiting  from the business  operations of the other members of the affiliated
group. All Extensions of Credit to the Borrower will inure to the benefit of the
Subsidiary Guarantors, directly or indirectly.
<PAGE>
     D. The parties to this Agreement intend that this amendment and restatement
qualify  under  Section   368(a)(1)(E)  of  the  Internal   Revenue  Code  as  a
reorganization and  recapitalization  and that this Agreement shall constitute a
"plan of  reorganization"  for  purposes of Sections 354 and 361 of the Internal
Revenue Code.

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

                                    ARTICLE 1
                                   DEFINITIONS

     Section 1.1 DEFINITIONS.

     The  following  terms when used in this  Agreement  shall have the meanings
assigned to them below:

     "ACKNOWLEDGED  DEFAULTS" shall have the meaning assigned thereto in Section
2.2.

     "AFFILIATE" means, with respect to a Person, any other Person (other than a
Subsidiary)  which  directly or indirectly  through one or more  intermediaries,
controls,  or is controlled by, or is under common control with such Person. The
term  "control"  means  (a) the power to vote ten  percent  (10%) or more of the
securities or other equity  interests of a Person having  ordinary voting power,
or (b) the possession,  directly or indirectly,  of any other power to direct or
cause the direction of the management and policies of a Person,  whether through
ownership of voting securities, by contract or otherwise.

     "AGENT"  means  Wachovia  Bank in its  capacity  as agent  for the  Lenders
hereunder, and any successor thereto appointed pursuant to Section 13.9.

     "AGENT'S  OFFICE" means the office of the Agent  specified in or determined
in accordance with the provisions of Section 14.1(c).

     "AGGREGATE   COMMITMENT"   means  the  aggregate  amount  of  the  Lenders'
respective Commitments  hereunder,  as such amount may be reduced at any time or
from time to time  pursuant to Section 3.5. The  Aggregate  Commitment as of the
Closing Date for purposes of this Agreement is $155,920,334.37,  which amount is
comprised of Commitments to convert Existing  Obligations into Term Loans in the
aggregate  amount of  $152,420,333.37  as of the Closing Date and Commitments to
participate in Letters of Credit in the aggregate amount of $6,090,000 as of the
Closing Date,  MINUS  Commitments to issue the Reliance  Letter of Credit in the
face amount of  $2,590,000,  whose  issuance the parties  hereto  acknowledge is
conditioned  upon the  repayment  of the Term  Loans in an  aggregate  principal
amount equal to the face amount of the Reliance Letter of Credit.

     "AGREEMENT"  means this Second Amended and Restated  Credit  Agreement,  as
further amended, modified or supplemented and in effect from time to time.

     "ANNUAL FINANCIAL  PROJECTIONS" has the meaning assigned thereto in Section
8.1(d).

                                       2
<PAGE>
     "ANNUALIZED  BASIS"  means for  purposes of  determining  the  Consolidated
EBITDA, the Consolidated  EBIRTA and Consolidated  Fixed Charges  calculation in
Sections 10.1 and 10.3: (a) for the fiscal  quarter  ending  September 30, 2002,
such amount for such fiscal  quarter  multiplied by four (4), (b) for the fiscal
quarter ending December 31, 2002,  such amount for such fiscal quarter  together
with the immediately preceding fiscal quarter multiplied by two (2), (c) for the
fiscal  quarter  ending  March 31,  2003,  such amount for such fiscal  quarter,
together with the immediately  preceding two (2) fiscal  quarters  multiplied by
four-thirds  (4/3),  and (d) for the fiscal quarter ending June 30, 2003 and for
each subsequently occurring fiscal quarter, such amount for such fiscal quarter,
together with the three (3) immediately  preceding  fiscal quarters on a rolling
four (4) fiscal quarter basis.

     "APPLICABLE  LAW"  means  all  applicable   provisions  of   constitutions,
statutes,  rules,  regulations,  guidelines,  codes, ordinances,  administrative
orders and orders of all Governmental  Authorities and all orders and decrees of
all courts and arbitrators.

     "APPLICABLE  MARGIN"  means,  (a) with  respect  to LIBOR  Rate  Loans (and
outstanding Reimbursement Obligations to bear interest at the same rate of LIBOR
Rate  Loans),  seven  percent  (7%) per annum and (b) with  respect to Base Rate
Loans (and  outstanding  Reimbursement  Obligations to bear interest at the same
rate of Base Rate  Loans),  the rate per annum  that when added to the Base Rate
applicable on the date any LIBOR Rate Loan is required to be converted to a Base
Rate Loan pursuant to Section 5.5(a) or Section  5.5(b),  will cause such sum to
equal the sum of LIBOR in effect  immediately before the date of such conversion
plus seven percent (7%) per annum.

     "APPLICATION"  means  the  letter  of credit  application  executed  by the
Borrower with respect to the CNA Letter of Credit,  the MedStar Letter of Credit
and/or the Reliance Letter of Credit.

     "ASSIGNMENT  AND  ACCEPTANCE"  shall have the meaning  assigned  thereto in
Section 14.9(b)(iii).

     "BASE RATE" means, at any time, the higher of (a) the Prime Rate or (b) the
Federal Funds Rate PLUS 1/2 of 1% per annum.  Each change in the Base Rate shall
take effect simultaneously with the corresponding change or changes in the Prime
Rate or the Federal Funds Rate.

     "BASE RATE LOAN" means any Loan bearing  interest at a rate determined with
reference  to the Base Rate as  provided  in Section  5.5(a) or  Section  5.5(b)
hereof.

     "BOARD  INFORMATION"  shall have the  meaning  assigned  thereto in Section
9.12.

     "BORROWER" means Rural/Metro Corporation, a corporation organized under the
laws of Delaware, and its successors.

     "BUSINESS DAY" means (a) for all purposes other than as set forth in clause
(b) below, any day other than a Saturday, Sunday or legal holiday on which banks
in New  York,  New York are open for the  conduct  of their  commercial  banking
business,  and (b) with respect to all notices and  determinations in connection
with,  and  payments of principal  and interest on, any Loan,  any day that is a
Business  Day  described in clause (a) and that is also a day for trading by and
between banks in U.S. Dollar deposits in the London interbank market.

                                       3
<PAGE>
     "BUSINESS PLAN" means the "Fiscal 2003 Business and Financial Plan," a copy
of which has been provided to the Agent and the Lenders on September 17, 2002.

     "CAPITAL ASSET" means,  with respect to the Borrower and its  Subsidiaries,
any asset that has been or will be  classified  and  accounted  for as a capital
asset on a Consolidated balance sheet of the Borrower and its Subsidiaries.

     "CAPITAL  EXPENDITURES"  means,  with  respect  to  the  Borrower  and  its
Subsidiaries  for any period,  the aggregate cost of all Capital Assets acquired
by the  Borrower  and its  Subsidiaries  during  such period  (excluding  assets
acquired  in  connection  with  a  Permitted  Acquisition),   as  determined  in
accordance with GAAP.

     "CAPITAL LEASE" means,  with respect to the Borrower and its  Subsidiaries,
any lease of any property that has been or will be classified  and accounted for
as a capital  lease on a  Consolidated  balance  sheet of the  Borrower  and its
Subsidiaries.

     "CERTIFICATE  OF   DESIGNATION"   means  the  Certificate  of  Designation,
Preferences  and  Rights  of Series B  Preferred  Stock in the form set forth in
ANNEX A.

     "CHANGE IN  CONTROL"  shall have the  meaning  assigned  thereto in Section
12.1(f).

     "CLAIMS" shall have the meaning assigned thereto in Section 2.1(h).

     "CLOSING DATE" means the date on which all of the conditions  precedent set
forth in Section  6.2 have been  satisfied  (or where not  satisfied,  waived in
writing by the Lenders and the Issuing Bank).

     "CMS" means the Centers for Medicare & Medicaid Services,  or any successor
agency.

     "CNA LETTER OF CREDIT" means Letter of Credit Number SM410463 issued by the
Issuing  Bank  in  favor  of  Continental  Casualty  Company  in the  amount  of
$1,500,000, as such letter of credit has been amended,  modified, and supplement
and in effect from time to time.

     "CODE"  means  the  Internal  Revenue  Code  of  1986,  and the  rules  and
regulations thereunder, each as amended or supplemented.

     "COMMITMENT"  means,  as the  context  may  apply,  as to any  Lender,  the
commitment  of  such  Lender,  as  applicable,  to (a)  convert  its  Commitment
Percentage of the Existing Obligations into a Term Loan on the Closing Date, (b)
make New Facility Loans in accordance with its Commitment  Percentage of the New
Facility Commitment,  and (c) participate in the Letters of Credit in accordance
with  its  Commitment  Percentage  of the L/C  Commitment,  in each  case in the
respective  maximum  amounts set forth on SCHEDULE 1 of this Agreement or in the
most  recent  Assignment  and  Acceptance,  if any,  executed  by such Lender in
accordance with Section 14.9.

     "COMMITMENT  PERCENTAGE"  means, as the context may apply, (a) with respect
to all  payments,  computations  and  other  matters  relating  to the Term Loan
Commitment or the Term Loan of any Lender,  the percentage  obtained by dividing
(i) the Term  Loan  Exposure  of such  Lender  by (ii) the  aggregate  Term Loan
Exposure  of  all  Term  Loan  Lenders,   (b)  with  respect  to  all  payments,
computations  and other matters  relating to the New Facility  Commitment or the

                                       4
<PAGE>
New  Facility  Loan of any New  Facility  Lender,  the  percentage  obtained  by
dividing (i) the New Facility  Exposure of such New Facility  Lender by (ii) the
aggregate New Facility  Exposures of all New Facility Lenders,  (c) with respect
to all payments,  computations  and other matters relating to the L/C Commitment
or the L/C participation of any Lender , the percentage obtained by dividing (i)
the L/C Commitment of such L/C Participant by (ii) the aggregate L/C Commitments
of all L/C  Participants,  and (d) for all other  purposes  with respect to each
Lender, the percentage obtained by dividing (i) the aggregate amount of the Term
Loan Exposure,  New Facility  Exposure and L/C Commitment of such Lender by (ii)
the aggregate  amount of the Term Loan Exposure,  New Facility  Exposure and L/C
Commitment of all Lenders.

     "CONSOLIDATED"  means, with reference to financial  statements or financial
statement items of the Borrower and its  Subsidiaries,  such statements or items
on  a  consolidated   basis  in  accordance   with   applicable   principles  of
consolidation under GAAP;  PROVIDED,  that when such term is used in the context
of the financial  covenants set forth in Article 10, the term shall be used only
with reference to the financial  statements or financial  statement items of the
Borrower and its Domestic  Subsidiaries  on a  consolidated  basis in accordance
with applicable principles of consolidation under GAAP.

     "CREDIT  FACILITY"  means  the  Term  Loan  Facility  and the New  Facility
established pursuant to Article 3 hereof.

     "CREDIT  PARTIES"  means the  collective  reference to the Borrower and the
Subsidiary Guarantors.

     "DEBT"  means,  with  respect to any Person at any date,  the sum,  without
duplication,  of the  following  (whether  or not  included as  indebtedness  or
liabilities  in accordance  with GAAP):  (a) all  liabilities,  obligations  and
indebtedness  for  borrowed  money  including  but not  limited  to  obligations
evidenced by bonds,  debentures,  notes or other  similar  instruments,  (b) all
obligations  to pay  the  deferred  purchase  price  of  property  or  services,
including, without limitation, all conditional sale obligations and seller notes
and earn-out  obligations (but only to the extent such earn-out  obligations are
matured and then due and payable either in lump sum or in  installments)  issued
or incurred in connection  with the  acquisition  of any other  Person,  (c) all
obligations  as lessee under  Capital  Leases,  (d) all Debt of any other Person
secured by a Lien on any asset of such Person,  (e) all obligations,  contingent
or otherwise,  relative to the face amount of letters of credit,  whether or not
drawn (including without limitation any Reimbursement Obligation),  and banker's
acceptances  in each case issued for the account of any such Person  (excluding,
for purposes of  determining  compliance  with Section 10.1,  the face amount of
letters of credit that are collateralized  with proceeds of New Facility Loans),
(f)  all  Guarantees  by  such  Person  of Debt  of any  other  Person,  (g) all
obligations to redeem, repurchase,  exchange, defease or otherwise make payments
in respect of capital stock or other  securities of such Person  (excluding  for
purposes  of  determining  compliance  with  Section  10.1  and 10.2 any of such
obligations  relating to the Preferred Stock) and (h) all net obligations of any
such Person  pursuant to Hedging  Agreements;  PROVIDED,  that,  for purposes of
determining  compliance  with Section  10.1,  the term "DEBT" shall include only
obligations  that are  required  to be  classified  as  indebtedness  (including
obligations  as lessee  under  Capital  Leases) on the  Borrower's  Consolidated
balance sheet in  accordance  with GAAP.  For the  avoidance of doubt,  the term
"DEBT" is intended to include performance bonds.

                                       5
<PAGE>
     "DEFAULT" means any of the events specified in Section 12.1, which with the
passage of time, the giving of notice or any other  condition,  would constitute
an Event of Default.

     "DEPOSITARY" means the Person who maintains the escrow of the proceeds from
loans made by the Tranche A New Facility Lender pursuant to Section 3.2(c).

     "DISCOUNTED  PRINCIPAL  AMOUNT" shall have the meaning  assigned thereto in
Section 3.1(b)(iii).

     "DOLLARS"  or "$"  means,  unless  otherwise  qualified,  dollars in lawful
currency of the United States.

     "DOMESTIC  SUBSIDIARY"  means any  direct  or  indirect  Subsidiary  of the
Borrower organized under the laws of the United States or any state thereof.

     "EARN-OUT  OBLIGATIONS" means any contingent payment obligation (other than
management  incentive programs or employment  agreements) incurred by any Credit
Party  pursuant to any  promissory  note or any other  agreement  or  agreements
between such Credit Party and any other  Person in  connection  with a Permitted
Acquisition.

     "EBIRTA" means,  for any period,  (a) Net Income for such period,  (b) PLUS
the sum of the following,  without  duplication,  to the extent  deducted in the
determination  of Net Income:  (i) income and  franchise  taxes,  (ii)  Interest
Expense,   (iii)  amortization  and  other  non-cash  charges  (including  stock
compensation expenses, impairment write-downs of goodwill,  amortization of debt
issuance or similar costs,  amortization or impairment write-downs of intangible
assets, but excluding write-downs of receivables and accruals of or reserves for
items for which cash expenditures  will be made in any future period),  (iv) Net
Rental and Operating Lease Expense, (v) non-cash expenses incurred in connection
with any employee stock  ownership plan of the Borrower,  (vi) asset  impairment
charges, and (vii) the cumulative effect of changes in accounting principle, and
(c) PLUS losses or minus gains  attributable to any fixed asset sales which have
been  included in arriving at Net Income for such  period.  The  calculation  of
EBIRTA  shall be  based  solely  upon the  operations  of the  Borrower  and its
Domestic Subsidiaries, determined on a consolidated basis.

     "EBITDA" means,  for any period,  (a) Net Income for such period,  (b) PLUS
the sum of the following,  without  duplication,  to the extent  deducted in the
determination  of Net Income:  (i) income and  franchise  taxes,  (ii)  Interest
Expense, (iii) amortization,  depreciation and other non-cash charges (including
stock compensation expenses, impairment write-downs of goodwill, amortization of
debt  issuance or similar  costs,  amortization  or  impairment  write-downs  of
intangible assets,  but excluding  write-downs of receivables and accruals of or
reserves  for items  for  which  cash  expenditures  will be made in any  future
period),  (iv) non-cash  expenses incurred in connection with any employee stock
ownership  plan of the Borrower,  (v) asset  impairment  charges,  and (vii) the
cumulative  effect of changes in  accounting  principle,  and (c) PLUS losses or
minus gains  attributable  to any fixed asset sales which have been  included in
arriving at Net Income for such period. The calculation of EBITDA shall be based
solely  upon the  operations  of the  Borrower  and its  Domestic  Subsidiaries,
determined on a consolidated basis.

     "ESCROW ACCOUNT" has the meaning assigned thereto in Section 3.2(c).

                                       6
<PAGE>
     "ELIGIBLE  ASSIGNEE"  means,  with respect to any assignment of the rights,
interest and obligations of a Lender hereunder,  a Person that is at the time of
such  assignment (a) a commercial  bank  organized  under the laws of the United
States or any state thereof or any country which is a member of the Organization
of Economic  Cooperation  and  Development,  having total capital and surplus in
excess  of  $100,000,000,  (b) a finance  company,  insurance  company  or other
financial institution which in the ordinary course of business extends credit of
the type extended  hereunder and that has total capital and surplus in excess of
$100,000,000,  (c) already a Lender  hereunder  (whether as an original party to
this Agreement or as the assignee of another Lender), (d) the successor (whether
by transfer of assets,  merger or otherwise) to all or substantially  all of the
commercial  lending  business of the assigning  Lender,  or (e) any other Person
that has been approved in writing as an Eligible  Assignee by the Borrower,  the
Issuing Bank and the Agent.

     "EMPLOYEE  BENEFIT PLAN" means any employee benefit plan within the meaning
of Section 3(3) of ERISA which (a) is  maintained  for employees of the Borrower
or any ERISA  Affiliate  or (b) has at any time within the  preceding  six years
been maintained for the employees of the Borrower or any current or former ERISA
Affiliate.

     "ENVIRONMENTAL  LAWS"  means any and all  federal,  state  and local  laws,
statutes,   ordinances,   rules,  regulations,   permits,  licenses,  approvals,
interpretations  and orders of courts or Governmental  Authorities,  relating to
the protection of human health or the  environment,  including,  but not limited
to, requirements pertaining to the manufacture,  processing,  distribution, use,
treatment, storage, disposal,  transportation,  handling, reporting,  licensing,
permitting,  investigation or remediation of Hazardous Materials.  Environmental
Laws include,  without  limitation,  the Comprehensive  Environmental  Response,
Compensation,  and  Liability  Act (42  U.S.C.ss.  9601 et Seq.),  the Hazardous
Material   Transportation   Act  (49  U.S.C.ss.   331  et  Seq.),  the  Resource
Conservation  and Recovery Act (42  U.S.C.ss.  6901 et Seq.),  the Federal Water
Pollution  Control  Act (33  U.S.C.ss.  1251 et  Seq.),  the  Clean  Air Act (42
U.S.C.ss.7401 et Seq.), the Toxic  Substances  Control Act (15  U.S.C.ss.2601 et
Seq.),   the  Safe  Drinking  Water  Act  (42  U.S.C.ss.   300,  et  Seq.),  the
Environmental  Protection Agency's  regulations  relating to underground storage
tanks (40 C.F.R.  Parts 280 and 281), and the rules and regulations  promulgated
under each of these statutes, each as amended or supplemented.

     "ERISA" means the Employee  Retirement Income Security Act of 1974, and the
rules and regulations thereunder, each as amended or supplemented.

     "ERISA  AFFILIATE"  means any Person who together with the Borrower is, was
or could have been  treated as a single  employer  within the meaning of Section
414(b), (c), (m) or (o) of the Code or Section 4001(b) of ERISA.

     "EVENT OF  DEFAULT"  means any of the events  specified  in  Section  12.1;
PROVIDED  that any  requirement  for passage of time,  giving of notice,  or any
other condition, has been satisfied.

     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

     "EXISTING  CREDIT  AGREEMENT"  has  the  meaning  assigned  thereto  in the
Recitals.

     "EXISTING LENDERS" means those certain lenders party to the Existing Credit
Agreement immediately prior to the Closing Date.

                                       7
<PAGE>
     "EXISTING  LOANS"  means the  Loans  (as  defined  in the  Existing  Credit
Agreement)  made by the Existing  Lenders  under the Existing  Credit  Agreement
which are outstanding on the Closing Date immediately before the satisfaction or
waiver of the conditions set forth in Section 6.2.

     "EXISTING OBLIGATIONS" has the meaning assigned thereto in Section 2.1(a).

     "EXTENSIONS  OF CREDIT" means,  with respect to all Lenders,  the aggregate
amount of all outstanding  Loans and L/C  Obligations,  and with respect to each
Lender,  the  aggregate  of  such  Lender's  Loans  and  respective   Commitment
Percentage of the L/C Obligations.

     "FEDERAL  FUNDS RATE" means,  for any day, a fluctuating  interest rate per
annum equal to the  weighted  average of the rates on  overnight  Federal  funds
transactions  with  members of the Federal  Reserve  System  arranged by Federal
funds  brokers,  as published at 11:00 a.m. (New York time) for such day (or, if
such day is not a Business  Day,  for the next  preceding  Business  Day) by the
Federal  Reserve Bank of New York,  or, if such rate is not so published for any
day which is a Business Day, the average of the  quotations for such day on such
transactions  received  by  the  Agent  from  three  Federal  funds  brokers  of
recognized standing selected by it.

     "FIXED  CHARGES" means,  with respect to the Borrower and its  Subsidiaries
for any  period,  the sum of (a)  Interest  Expense  PLUS  (b)  Net  Rental  and
Operating  Lease Expense PLUS (c)  amortization  payments  (scheduled or actual)
under any Capital Lease, all determined for such period on a Consolidated  basis
in accordance with GAAP.

     "FISCAL  YEAR" means the fiscal year of the Borrower  and its  Subsidiaries
ending on June 30.

     "FOREIGN  SUBSIDIARY"  means  any  direct  or  indirect  Subsidiary  of the
Borrower  organized  under  the laws of a  jurisdiction  outside  of the  United
States.

     "FUNDING  SOURCE  AGREEMENT"  shall have the  meaning  assigned  thereto in
Section 5.5(e).

     "GAAP" means generally accepted accounting principles, as recognized by the
American Institute of Certified Public Accountants and the Financial  Accounting
Standards Board,  consistently  applied and maintained on a consistent basis for
the Borrower and its Subsidiaries throughout the period indicated and consistent
with the prior financial practice of the Borrower.

     "GOVERNMENTAL  APPROVALS" means all  authorizations,  consents,  approvals,
licenses and exemptions of,  registrations and filings with, and reports to, all
Governmental Authorities.

     "GOVERNMENTAL  AUTHORITY"  means any nation,  province,  state or political
subdivision  thereof,  and any  government or any Person  exercising  executive,
legislative,   regulatory  or  administrative  functions  of  or  pertaining  to
government,  and any  corporation or other entity owned or  controlled,  through
stock or capital ownership or otherwise, by any of the foregoing.

     "GUARANTEE" means, as to any Person, any (a) any obligation,  contingent or
otherwise,  of such  Person  guaranteeing  or  having  the  economic  effect  of
guaranteeing  any Debt or other  obligation  payable or  performable  by another
Person (the "PRIMARY  OBLIGOR") in any manner,  whether  directly or indirectly,
and including any obligation of such Person, direct or indirect, (i) to purchase
or  pay (or advance or supply funds for the purchase or payment of) such Debt or

                                       8
<PAGE>
other obligation, (ii) to purchase or lease property, securities or services for
the purpose of assuring the obligee in respect of such Debt or other  obligation
of the  payment  or  performance  of such  Debt or  other  obligation,  (iii) to
maintain  working  capital,  equity  capital  or any other  financial  statement
condition or liquidity or level of income or cash flow of the primary obligor so
as to enable the primary obligor to pay such Debt or other  obligation,  or (iv)
entered  into for the  purpose of  assuring  in any other  manner the obligee in
respect of such Debt or other  obligation of the payment or performance  thereof
or to protect  such  obligee  against  loss in respect  thereof  (in whole or in
part),  or (b) any Lien on any assets of such Person  securing any Debt or other
obligation of any other Person,  whether or not such Debt or other obligation is
assumed by such  Person.  The amount of any  Guarantee  shall be deemed to be an
amount  equal to the  stated  or  determinable  amount  of the  related  primary
obligation,  or portion thereof,  in respect of which such Guarantee is made or,
if not stated or determinable,  the maximum reasonably  anticipated liability in
respect thereof as determined by the guaranteeing Person in good faith. The term
"GUARANTEE" as a verb has a corresponding  meaning.  For the avoidance of doubt,
the term "GUARANTEE" is not intended to include letters of credit or performance
bonds.

     "HAZARDOUS  MATERIALS"  means any  substances or materials (a) which are or
become  defined  as  hazardous   wastes,   hazardous   substances,   pollutants,
contaminants  or toxic  substances  under any  Environmental  Law, (b) which are
toxic, explosive, corrosive, flammable, infectious,  radioactive,  carcinogenic,
mutagenic or otherwise  harmful to human  health or the  environment  and are or
become  regulated  by any  Governmental  Authority,  (c) the  presence  of which
require  investigation or remediation under any Environmental Law or common law,
(d) the  discharge or emission or release of which  requires a permit or license
under  any  Environmental  Law or other  Governmental  Approval,  (e)  which are
materials consisting of underground or aboveground storage tanks, whether empty,
filled or partially  filled with any substance,  or (f) which  contain,  without
limitation,   asbestos,   polychlorinated   biphenyls,  urea  formaldehyde  foam
insulation, petroleum hydrocarbons, petroleum derived substances or waste, crude
oil, nuclear fuel, natural gas or synthetic gas.

     "HEDGING  AGREEMENT"  means any agreement  with respect to an interest rate
swap,  collar,  cap,  floor or a  forward  rate  agreement  or  other  agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Borrower,  and any  confirming  letter
executed  pursuant to such agreement,  all as amended,  modified or supplemented
from time to time with the prior approval of the Agent.

     "INTELLECTUAL  PROPERTY" shall have the meaning assigned thereto in Section
7.1(m).

     "INTERCOMPANY  SUBORDINATION  AGREEMENT"  means the  Amended  and  Restated
Intercompany  Subordination  Agreement of even date among the Credit Parties and
the Agent, for the benefit of itself and the Lenders,  substantially in the form
of EXHIBIT H attached hereto, as amended,  modified or supplemented from time to
time.

     "INTEREST EXPENSE" means, with respect to the Borrower and its Subsidiaries
for any  period,  the gross  interest  expense  (including  without  limitation,
interest expense attributable to Capital Leases and all net obligations pursuant
to Hedging  Agreements) of the Borrower and its Subsidiaries,  LESS amortization
of debt issuance or similar costs,  and LESS interest income of the Borrower and
its  Subsidiaries,  all determined  for such period on a  Consolidated  basis in
accordance with GAAP.

                                       9
<PAGE>
     "INTEREST  PERIOD"  shall  have the  meaning  assigned  thereto  in Section
5.1(b).

     "ISSUING BANK" means Wachovia Bank, in its capacity as issuer of any Letter
of  Credit  with  all  such  references  to  "Issuing  Bank"  in this  Agreement
applicable  only  so  long  as  any  Letter  of  Credit  is  outstanding  or any
Reimbursement  Obligation  owing to Wachovia Bank with respect  thereto  remains
unpaid.

     "L/C COMMITMENT"  means, as to any Lender, the commitment of such Lender to
participate  in the Letters of Credit  pursuant  to Section 4.1 in an  aggregate
amount (excluding fees and interest) set forth in Schedule 1.

     "L/C OBLIGATIONS"  means at any time, an amount equal to the sum of (a) the
undrawn  face  amount  of  all  outstanding   Letters  of  Credit  and  (b)  the
Reimbursement Obligations.

     "L/C PARTICIPANTS" means those Lenders having an L/C Commitment.

     "LATIN  AMERICAN  DIVESTITURE"  means the sale to local  management  of the
stock of the  Borrower's  Subsidiaries  listed  in  SCHEDULE  1.2 that have been
conducting  the  Argentine  and  Bolivian  operations  of the Company or own the
Subsidiaries that have been conducting such operations.

     "LENDER"  means each Person  executing this Agreement as a Lender set forth
on the signature pages hereto and each Person that hereafter  becomes a party to
this Agreement as a Lender pursuant to Section 14.9.

     "LENDING  OFFICE"  means,  with  respect to any Lender,  the office of such
Lender  maintaining  such  Lender's  Extensions of Credit or, in the case of any
Lender that is funding its Loans through a Funding Source Agreement,  the office
of the lender providing such funds to the Lender.

     "LETTERS OF CREDIT" means,  collectively,  the CNA Letter of Credit, and to
the extent issued pursuant to Section  4.1(b),  the MedStar Letter of Credit and
the Reliance Letter of Credit.

     "LIBOR" means the rate of interest per annum determined on the basis of the
rate for  deposits in Dollars in minimum  amounts of at least  $5,000,000  for a
period equal to the  applicable  Interest  Period which  appears on the Telerate
Page 3750 at approximately  11:00 a.m. (London time) two (2) Business Days prior
to  the  first  day  of the  applicable  Interest  Period  (rounded  upward,  if
necessary,  to the nearest  one-sixteenth of one percent  (1/16%)).  If, for any
reason,  such rate does not appear on Telerate Page 3750,  then "LIBOR" shall be
determined  by the  Agent  to be the  arithmetic  average  (rounded  upward,  if
necessary,  to the nearest one-sixteenth of one percent (1/16%)) of the rate per
annum at which deposits in Dollars are being offered by leading  reference banks
in the London interbank market to the Agent at approximately  11:00 a.m. (London
time) two (2) Business  Days prior to the first day of the  applicable  Interest
Period for a period equal to such Interest Period and in an amount substantially
equal to the amount of the applicable Loan.

     "LIBOR RATE LOAN" means any Loan bearing interest at a rate determined with
reference to LIBOR.

                                       10
<PAGE>
     "LIEN"  means,  with  respect to any asset,  any  mortgage,  lien,  pledge,
charge,  security  interest or  encumbrance of any kind in respect of such asset
For the purposes of this Agreement, a Person shall be deemed to own subject to a
Lien any asset  which it has  acquired  or holds  subject to the  interest  of a
vendor or lessor under any conditional  sale  agreement,  Capital Lease or other
title retention agreement relating to such asset.

     "LOAN" means any Term Loan and any New  Facility  Loan made to the Borrower
pursuant  to  Article  3  and  all  such  Term  Loans  and  New  Facility  Loans
collectively as the context requires.

     "LOAN DOCUMENTS" means,  collectively,  this Agreement, the Term Notes, the
New  Facility  Notes,  the  Subsidiary  Guaranty,   Intercompany   Subordination
Agreement,  any Hedging Agreement with a Lender, each Application and each other
document, instrument and agreement executed and delivered by any Credit Party in
connection with this Agreement,  all as amended,  modified or supplemented  from
time to time.

     "MATERIAL  ADVERSE  EFFECT"  means a  material  adverse  effect  on (a) the
assets, business,  operations,  prospects or financial condition of the Borrower
and its  Subsidiaries  taken as a whole, (b) the ability of the Borrower and its
Subsidiaries,  taken as a  whole,  to pay all  Obligations  due  under  the Loan
Documents,  or (c) the Agent's or any Lender's  rights and  remedies  under this
Agreement or the other Loan Documents.

     "MATERIAL  CONTRACT"  means  any  written  contract,   agreement  or  other
instrument  of  the  Borrower  or any of its  Subsidiaries  the  termination  or
revocation  of which or the  failure to comply with which  could  reasonably  be
expected to have a Material Adverse Effect.

     "MAXIMUM  RATE" shall mean the maximum  rate of  interest  provided  for in
Section 5.1(f).

     "MEDICAID  REGULATIONS"  means,  collectively,  (a)  all  federal  statutes
(whether  set  forth in  Title  XIX of the  Social  Security  Act or  elsewhere)
affecting the medical assistance program  established by Title XIX of the Social
Security  Act (42  U.S.C.  ss.ss.  1396 ET  SEQ.)  and any  statutes  succeeding
thereto,  (b) all  applicable  provisions  of all  federal  rules,  regulations,
manuals and orders of all Governmental Authorities promulgated pursuant to or in
connection  with the  statutes  described  in clause  (a) above and all  federal
administrative,   reimbursement   and  other   guidelines  of  all  Governmental
Authorities  having the force of law  promulgated  pursuant to or in  connection
with the  statutes  described  in clause (a) above,  (c) all state  statutes and
plans for  medical  assistance  enacted  in  connection  with the  statutes  and
provisions  described  in  clauses  (a) and (b)  above,  and (d) all  applicable
provisions  of all rules,  regulations,  manuals and orders of all  Governmental
Authorities promulgated pursuant to or in connection with the statutes described
in  clause  (c)  above and all  state  administrative,  reimbursement  and other
guidelines of all Governmental  Authorities  having the force of law promulgated
pursuant to or in connection with the statutes described in clause (c) above, in
each case as may be amended or supplemented.

     "MEDICARE REGULATIONS" means,  collectively,  all federal statutes (whether
set forth in Title XVIII of the Social Security Act or elsewhere)  affecting the
health insurance program for the aged and disabled established by Title XVIII of
the  Social  Security  Act (42  U.S.C.  ss.ss.  1395 ET SEQ.)  and any  statutes
succeeding  thereto;  together  with all  applicable  provisions  of all  rules,
regulations,  manuals  and orders and  administrative,  reimbursement  and other
guidelines  having  the force  of law of all Governmental Authorities (including

                                       11
<PAGE>
without  limitation,  Health and Human Services ("HHS"),  CMA, the Office of the
Inspector  General for HHS, or any Person  succeeding to the functions of any of
the  foregoing)  promulgated  pursuant  to or in  connection  with  any  of  the
foregoing having the force of law, as each may be amended or supplemented.

     "MEDSTAR LETTER OF CREDIT" shall mean a letter of credit that may be issued
by the  Issuing  Bank for the  benefit of MedStar  Area  Metropolitan  Ambulance
Authority in the amount of $2,000,000 pursuant to the terms of Section 4.1(b).

     "MONTHLY CASH FLOW PROJECTIONS"  shall have the meaning assigned thereto in
SECTION 8.1(E).

     "MULTIEMPLOYER  PLAN"  means a  "multiemployer  plan" as defined in Section
4001(a)(3)  of ERISA to which the Borrower or any ERISA  Affiliate  has made, or
has accrued an obligation to make, contributions within the preceding six years.

     "NET CONTRACT LOSS" attributable to any fiscal quarter, means, with respect
to each such  quarter,  the amount  determined  as of the end of such quarter by
subtracting the aggregate New Contract Contribution attributable to such quarter
from the Terminated Contract Contribution attributable to such quarter.

     "NET INCOME" means,  with respect to the Borrower and its  Subsidiaries for
any period,  the net income (or loss) of the Borrower and its  Subsidiaries  for
such  period  determined  on a  Consolidated  basis  in  accordance  with  GAAP;
PROVIDED, that there shall be excluded from net income (or loss): (a) the income
(or  loss) of any  Person  (other  than a  Subsidiary  of the  Borrower  or such
Subsidiary) in which the Borrower or such  Subsidiary has an ownership  interest
unless received by the Borrower or such Subsidiary in a cash  distribution,  (b)
the  income  (or  loss) of any  Person  accrued  prior  to the date it  became a
Subsidiary of the Borrower or such  Subsidiary or is merged into or consolidated
with such first  Person,  and (c) to the extent not  included in clauses (a) and
(b) above, any after-tax extraordinary gains and non-cash extraordinary losses.

     "NET  RENTAL  AND  OPERATING  LEASE  EXPENSE"  means,  with  respect to the
Borrower and its  Subsidiaries  for any period,  the gross rental and  operating
lease expense of the Borrower and its  Subsidiaries,  LESS certain rental income
of the Borrower  and its  Subsidiaries  described  on SCHEDULE  1.1 hereto,  all
determined for such period on a Consolidated basis in accordance with GAAP.

     "NET REVENUES" means, with respect to the Borrower and its Subsidiaries for
any period,  net revenues of the Borrower and its  Subsidiaries,  determined for
such period on a  Consolidated  basis in accordance  with GAAP and in accordance
with past reporting practices of the Borrower and its Subsidiaries.

     "NEW CONTRACT" means (i) a contract  entered into by the Borrower or any of
its  Subsidiaries  with a new customer;  or (ii) a contract  entered into by the
Borrower  or  any  of  its   Subsidiaries  as  an  expansion  of  a  contractual
relationship with an existing customer.

     "NEW CONTRACT CONTRIBUTION"  attributable to any fiscal quarter means, with
respect to each such quarter,  the aggregate  projected EBITDA for the following
twelve-month  period  reasonably  anticipated  to be  contributed  from  all New
Contracts  entered  into  by the  Borrower  or any  of its  Subsidiaries  with a
commencement  date for services that falls within such quarter based on the most

                                       12
<PAGE>
recent  projections  prepared by the Borrower in good faith for internal use and
on the basis of  reasonable  assumptions  consistent  with the terms of such New
Contracts as contemplated in Section 9.16.

     "NEW FACILITY"  means the credit facility  established  pursuant to Section
3.1(b).

     "NEW FACILITY COMMITMENT" means the credit facility established pursuant to
Section  3.1(b),  which  consists of  collectively,  the Tranche A New  Facility
Commitment and the Tranche B New Facility Commitment.

     "NEW FACILITY EXPOSURE", with respect to any New Facility Lender, means, as
of any date of  determination  the sum of such  Lender's  Tranche A New Facility
Exposure and Tranche B New Facility Exposure.

     "NEW  FACILITY  LENDERS"  means those Lenders  having either  Tranche A New
Facility Commitments or Tranche B New Facility Commitments.

     "NEW  FACILITY  LOAN"  shall have the meaning  assigned  thereto in Section
3.1(b)(i).

     "NEW FACILITY  NOTE(S)" shall have the meaning  assigned thereto in Section
3.1(b)(ii).

     "NEW LETTER OF CREDIT" means any letter of credit (the expiry date of which
shall not extend beyond the Termination Date) obtained by the Borrower after the
Closing Date, which is to be supported by cash collateral, provided from the
proceeds of New Facility Loans made by the Lenders under this Agreement.

     "NON-DISCLOSURE  AGREEMENT" means the Non-Disclosure  Agreement in the form
set forth in ANNEX B.

     "NON-SELLER FINANCING SUBORDINATED DEBT" means any Debt of any Credit Party
(other  than the  Seller  Financing)  which is or shall be  subject to terms and
conditions  (including  subordination  provisions)  satisfactory to the Required
Lenders.

     "NOTES" means (a) the separate  term notes made by the Borrower  payable to
the order of each of the Term Loan Lenders, substantially in the form of EXHIBIT
A-1 hereto,  evidencing the Term Loan Facility,  and (b) the separate notes made
by the  Borrower  payable  to the  order  to each of the New  Facility  Lenders,
substantially  in the form of EXHIBIT A-2 hereto,  evidencing  the New Facility,
and any  amendments,  modifications  and  supplements  thereto,  any substitutes
therefor, and any replacements,  restatements, renewals or extension thereof, in
whole or in part.

     "NOTICE OF ACCOUNT  DESIGNATION" shall have the meaning assigned thereto in
Section 6.2(e).

     "NOTICE OF BORROWING"  shall have the meaning  assigned  thereto in Section
3.2(a).

     "OBLIGATIONS"  means,  in each case,  whether now in existence or hereafter
arising: (a) the principal of and interest on (including interest accruing after
the filing of any  bankruptcy  or similar  petition,  whether or not a claim for
such  interest  is  allowed  in  such  applicable  bankruptcy  case  or  similar
proceeding)  all  Extensions  of Credit,  (b) all payment and other  obligations

                                       13
<PAGE>
owing by a Borrower to any Lender under any Hedging  Agreement,  (c) any amounts
due and payable  under the  Existing  Credit  Agreement  that are not  otherwise
included in the  Existing  Obligations,  and (d) all other  reasonable  fees and
expenses  (including  reasonable  attorney's  fees and  expenses),  commissions,
charges,   indebtedness,    loans,   liabilities,    financial   accommodations,
obligations,  covenants and duties which are owing by the Credit  Parties to the
Lenders,  the Issuing Bank or the Agent  pursuant to this  Agreement  (including
those due under Section 14.2) or any other Loan Document,  of every kind, nature
and description,  direct or indirect,  absolute or contingent,  due or to become
due,  contractual or tortious,  liquidated or  unliquidated,  and whether or not
evidenced by any note, and whether or not for the payment of money.

     "OFFICERS' COMPLIANCE  CERTIFICATE" shall have the meaning assigned thereto
in Section 8.2.

     "ORIGINAL  PRINCIPAL  AMOUNT"  shall have the meaning  assigned  thereto in
Section 3.1(b)(iii).

     "OTHER TAXES" shall have the meaning assigned thereto in Section 5.8(b).

     "PARENT SELLER FINANCING" means any unsecured (other than by the Letters of
Credit)  Debt  incurred  by  the  Borrower  in  connection  with  any  Permitted
Acquisition.

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

     "PENSION PLAN" means any Employee  Benefit Plan, other than a Multiemployer
Plan,  which is subject to the provisions of Title IV of ERISA or Section 412 of
the Code and which (a) is maintained  for employees of the Borrower or any ERISA
Affiliates or (b) has at any time within the preceding six years been maintained
for the  employees  of the  Borrower  or any of their  current  or former  ERISA
Affiliates.

     "PERMITTED  ACQUISITIONS"  means  each  acquisition  permitted  by  Section
11.4(f) or otherwise approved by the Required Lenders.

     "PERSON" means an individual, corporation, partnership, association, trust,
business trust, joint venture,  limited liability company,  joint stock company,
pool, syndicate, sole proprietorship,  unincorporated organization, Governmental
Authority  or any  other  form of entity or group  thereof  specifically  listed
herein.

     "PREFERRED STOCK" means, any capital stock of a Person, however designated,
which entitles the holder  thereof with a preference  with respect to dividends,
distributions  or liquidation  proceeds of such Person over the holders of other
capital stock issued by such Person.

     "PRIME RATE" means,  at any time,  the rate of interest per annum  publicly
announced  from time to time by Wachovia Bank as its prime rate.  Each change in
the Prime Rate shall be  effective as of the opening of business on the day such
change in the Prime Rate occurs.  The parties hereto  acknowledge  that the rate
announced  publicly by Wachovia  Bank as its Prime Rate is an index or base rate
and shall not  necessarily  be its lowest rate charged to its customers or other
banks.

     "REGISTER" shall have the meaning assigned thereto in Section 14.9(c).

                                       14
<PAGE>
     "REGISTRATION  RIGHTS  AGREEMENT" means the  Registration  Rights Agreement
between the Borrower and each of the Lenders in form and substance  satisfactory
to the Agent as set forth in ANNEX C.

     "REIMBURSEMENT  DATE"  shall have the meaning  assigned  thereto in Section
4.3.

     "REIMBURSEMENT  OBLIGATIONS"  shall have the  meaning  assigned  thereto in
Section 4.3.

     "RELATED  TRANSACTIONS"  means the  conversion of the Existing  Obligations
into Term Loans and any borrowings under the Credit Facility on the Closing Date
and the payment of all fees,  costs and expenses  associated  with the amendment
and restatement of the Existing Credit Agreement  pursuant to this Agreement and
the execution and delivery of all related agreements and instruments.

     "RELEASING  PARTY"  shall  have the  meaning  assigned  thereto  in Section
2.3(a).

     "RELIANCE LETTER OF CREDIT" shall mean a letter of credit that may be
issued by the Issuing Bank for the benefit of Reliance Insurance Company in the
amount of $2,590,000 pursuant to the terms of Section 4.1(b).

     "REQUIRED  LENDERS"  means, at any date, any combination of Lenders holding
at  least  fifty-one  percent  (51%)  of all  Extensions  of  Credit  or,  if no
Extensions  of Credit  are at the time  outstanding,  Lenders  whose  Commitment
Percentages aggregate at least fifty-one percent (51%).

     "RESERVE  REQUIREMENT"  means, for any Lender,  the actual daily arithmetic
reserve  requirement  imposed on such  Lender by the Board of  Governors  of the
Federal  Reserve System (or any successor)  under  Regulation D on  Eurocurrency
liabilities  (as  defined in  Regulation  D) of such  Lender for the  applicable
Interest Period as of the first day of such Interest Period,  but subject to any
changes in such  reserve  requirement  becoming  effective  during the  Interest
Period.

     "SEC" shall have the meaning assigned thereto in Section 8.4(d).

     "SELLER   FINANCING"  means  the  collective   reference  to  the  Earn-Out
Obligations, the Subordinated Seller Financing and the Parent Seller Financing.

     "SENIOR NOTE INDENTURE" means the Note Indenture dated as of March 16, 1998
among the Borrower,  the  Subsidiary  Guarantors  and The First National Bank of
Chicago,  as Trustee,  pursuant to which the Senior Notes have been  issued,  as
such agreement has been amended, modified,  supplemented and in effect from time
to time.

     "SENIOR NOTES" means the 7-7/8% fixed rate senior unsecured notes issued by
the Borrower pursuant to the terms of the Senior Note Indenture.

     "SERIES B PREFERRED STOCK" means, collectively,  (a) the Preferred Stock of
the Borrower,  designated as the Series B-1 Voting  Preferred  Stock,  par value
$.01 per share,  (b) the Preferred Stock of the Borrower,  designated the Series
B-2 Non-Voting  Preferred  Stock, par value $.01 per share and (c) the Preferred
Stock of the Borrower, designated the Series B-3 Preferred Stock, par value $.01

                                       15
<PAGE>
per share,  which Preferred  Stock shall be distributed to the Lenders,  or to a
designee of any Lender, on the Closing Date in accordance with ANNEX D.

     "SOLVENT"  means, as to the Borrower and its Subsidiaries on a Consolidated
basis, on a particular date, that the Borrower and its  Subsidiaries  taken as a
whole (a) have capital  sufficient to carry on their businesses and transactions
in which they  engage and are able to pay their  debts as they  mature,  (b) own
property and assets  having a present  fair  saleable  value on a going  concern
basis  greater  than the  amount  required  to pay  their  probable  liabilities
(including contingencies),  and (c) do not believe that they will incur debts or
liabilities  beyond  their  ability  to pay such  debts or  liabilities  as they
mature.  In determining the amount of contingent or unliquidated  liabilities at
any time, such liabilities will be computed at the amount which, in light of all
the facts and  circumstances  existing at such time,  represents the amount that
can reasonably be expected to become an actual or matured liability.

     "SUBORDINATED  DEBT" means the  collective  reference  to the  Subordinated
Seller  Financing,   the  Earn-Out  Obligations  and  the  Non-Seller  Financing
Subordinated Debt.

     "SUBORDINATED  SELLER  FINANCING"  means  any  Debt  (other  than  Earn-Out
Obligations)  incurred by the Borrower or any Subsidiary in connection  with any
Permitted Acquisition, which is subject to the terms and conditions set forth in
EXHIBIT J hereto.

     "SUBSIDIARY"  means, as to any Person,  any other Person of which more than
fifty  percent  (50%)  of the  outstanding  capital  stock  or  other  ownership
interests  having  ordinary  voting  power to elect a  majority  of the board of
directors  or  other  managers  of  such  Person  is at the  time,  directly  or
indirectly,  owned by or the  management is otherwise  controlled by such Person
(irrespective  of  whether,  at the  time,  capital  stock  or  other  ownership
interests  shall have or might have voting  power by reason of the  happening of
any  contingency).  Unless  otherwise  qualified,  references to "Subsidiary" or
"Subsidiaries" herein shall refer to those of the Borrower.

     "SUBSIDIARY  GUARANTORS" mean all direct and indirect Wholly-Owned Domestic
Subsidiaries  of the Borrower  incorporated  or  organized in the United  States
existing on the Closing Date (excluding Coronado Health Services, Inc.) and each
additional  Wholly-Owned  Domestic  Subsidiary of the Borrower  incorporated  or
organized  in the  United  States  required  to  become a  Subsidiary  Guarantor
pursuant to Section 9.11.

     "SUBSIDIARY  GUARANTY" means the Amended and Restated  Subsidiary  Guaranty
Agreement of even date by the Subsidiary  Guarantors in favor of the Agent,  for
the  ratable  benefit of itself and the  Lenders,  substantially  in the form of
EXHIBIT F hereto, as amended, modified or supplemented from time to time.

     "TANGIBLE  NET WORTH"  means  stockholder's  equity of the Borrower and its
Subsidiaries on a Consolidated  basis in accordance with GAAP less (i) the total
book value of all assets  classified  as intangible  assets in  accordance  with
GAAP, including such items as goodwill,  trademarks, trade names, service marks,
brand names,  copyrights,  patents and licenses,  and rights with respect to the
foregoing,  and (ii) the total book value of  capitalized  debt issuance  costs.
Notwithstanding  the  foregoing,  the  calculation  of  Tangible  Net  Worth for
purposes of Article 10 shall exclude the non-cash effects of the issuance of the
Preferred Stock and the non-cash effects of the Latin American Divestiture.

                                       16
<PAGE>
     "TAXES" shall have the meaning assigned thereto in Section 5.8(a).

     "TERM LOAN" shall have the meaning assigned thereto in Section 3.1(a).

     "TERM LOAN COMMITMENT"  means, as to a Term Loan Lender,  the commitment of
such Term Loan Lender to convert its PRO RATA share of Existing Obligations into
Term Loans as set forth on Schedule 1 of this Agreement.

     "TERM LOAN EXPOSURE",  with respect to any Lender, means, as of any date of
determination  (i) prior to the termination of the Term Loan  Commitments,  that
Lender's Term Loan  Commitment,  and (ii) after the termination of the Term Loan
Commitments,  the aggregate  outstanding  principal  amount of the Term Loans of
that  Lender  (including  Term  Loans  acquired  by any  Lender  pursuant  to an
Assignment and  Acceptance,  if any,  executed by such Lender in accordance with
Section 14.9).

     "TERM LOAN  FACILITY"  means the credit  facility  established  pursuant to
Section 3.1(a).

     "TERM LOAN LENDERS"  means those Lenders having Term Loan  Commitments  or,
following  termination  of the Term Loan  Commitments,  those  Lenders that have
outstanding Term Loans.

     "TERM NOTE" and "TERM NOTES" shall have the meaning assigned thereto in
Section 3.1(a).

     "TERMINATED  CONTRACT  CONTRIBUTION"  attributable  to any  fiscal  quarter
means, with respect to each such quarter,  the aggregate EBITDA contribution for
the preceding twelve-month period from all contracts between the Borrower or any
of its  Subsidiaries  and any of their  customers that have a cessation date for
services during such quarter.

     "TERMINATION  DATE" means the earliest of the dates  referred to in Section
3.6.

     "TERMINATION  EVENT" means:  (a) a "Reportable  Event" described in Section
4043 of ERISA (other than a reportable  event not subject to the  provision  for
30-day notice to the PBGC under regulations promulgated under such section), (b)
the withdrawal of the Borrower or any ERISA Affiliate from a Pension Plan during
a plan year in which it was a  "substantial  employer"  as  defined  in  Section
4001(a)(2) of ERISA,  (c) the  termination  of a Pension  Plan,  the filing of a
notice of intent to terminate a Pension Plan or the  treatment of a Pension Plan
amendment as a termination  under Section 4041 of ERISA,  (d) the institution of
proceedings to terminate,  or the  appointment of a trustee with respect to, any
Pension  Plan  by the  PBGC,  (e) any  other  event  or  condition  which  would
constitute grounds under Section 4042(a) of ERISA for the termination of, or the
appointment  of a trustee to  administer,  any Pension Plan,  (f) the partial or
complete  withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan,  (g) the  imposition  of a Lien  pursuant  to  Section  412 of the Code or
Section  302  of  ERISA,  (h)  any  event  or  condition  which  results  in the
reorganization or insolvency of a Multiemployer Plan under Sections 4241 or 4245
of ERISA,  or (i) any event or condition  which results in the  termination of a
Multiemployer  Plan under Section 4041A of ERISA or the  institution  by PBGC of
proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA.

                                       17
<PAGE>
     "TOTAL DEBT LEVERAGE  RATIO" means the ratio  determined in accordance with
Section 10.1.

     "TRANCHE  A NEW  FACILITY  EXPOSURE",  with  respect  to any  Tranche A New
Facility  Lender,  means,  as of any  date of  determination,  (i)  prior to the
termination of the Tranche A New Facility Commitments,  that Lender's Commitment
Percentage of the aggregate  Tranche A New Facility  Commitment,  and (ii) after
the  termination  of the  Tranche  A New  Facility  Commitments,  the  aggregate
outstanding  principal  amount of the New  Facility  Loans of that Tranche A New
Facility Lender made pursuant to the Tranche A New Facility Commitment.

     "TRANCHE A NEW FACILITY  LENDER" means Special Value Absolute  Return Fund,
LLC and its successors and assigns.

     "TRANCHE B NEW FACILITY COMMITMENT" shall have the meaning assigned thereto
in Section 3.1(b)(i).

     TRANCHE  B NEW  FACILITY  EXPOSURE",  with  respect  to any  Tranche  B New
Facility  Lender,  means,  as of any  date of  determination,  (i)  prior to the
termination of the Tranche B New Facility Commitments,  that Lender's Commitment
Percentage of the aggregate  Tranche B New Facility  Commitment,  and (ii) after
the  termination  of the  Tranche  B New  Facility  Commitments,  the  aggregate
outstanding  principal  amount of the New  Facility  Loans of that Tranche B New
Facility Lender made pursuant to the Tranche B New Facility Commitment.

     "TRANCHE B NEW FACILITY LENDER" means each of the Lenders holding Tranche B
New Facility Commitments.

     "UNIFORM  CUSTOMS" means the Uniform  Customs and Practice for  Documentary
Credits (1994 Revision),  International Chamber of Commerce Publication No. 500,
or any subsequent  revision or version thereof currently in effect and in use by
the Issuing Bank.

     "WACHOVIA BANK" means Wachovia Bank National Association (f/k/a First Union
National Bank), a national banking association and its successors.

     "WAIVER AGREEMENT" has the meaning assigned thereto in the Recitals.

     "WHOLLY-OWNED" means, with respect to a Subsidiary, a Subsidiary all of the
shares of capital stock or other ownership  interests of which are,  directly or
indirectly,  owned  or  controlled  by  the  Borrower  or  one  or  more  of its
Wholly-Owned Subsidiaries.

     Section 1.2 GENERAL.  All terms of an  accounting  nature not  specifically
defined herein shall have the meaning assigned thereto by GAAP. Unless otherwise
specified,  a reference in this Agreement to a particular  section,  subsection,
Schedule, Annex or Exhibit is a reference to that section, subsection, Schedule,
Annex or  Exhibit  of this  Agreement.  Wherever  from the  context  it  appears
appropriate, each term stated in either the singular or plural shall include the
singular and plural,  and pronouns  stated in the masculine,  feminine or neuter
gender shall include the masculine,  the feminine and the neuter.  Any reference
herein to "New York time" shall refer to the applicable time of day in New York,
New York.

                                       18
<PAGE>
     Section 1.3 ACCOUNTING MATTERS. All financial and accounting  calculations,
measurements and  computations  made for any purpose relating to this Agreement,
including,  without limitation, all computations utilized by the Borrower or any
Subsidiary  thereof to determine  compliance with any covenant contained herein,
shall, except as otherwise  expressly  contemplated hereby or unless there is an
express  written  direction  by the  Agent  to  the  contrary  agreed  to by the
Borrower,  be performed in  accordance  with GAAP.  In the event that changes in
GAAP (as in effect on the  Closing  Date)  shall be  mandated  by the  Financial
Accounting  Standards  Board,  or any  similar  accounting  body  of  comparable
standing,   or  shall  be  recommended  by  the  Borrower's   certified   public
accountants,  to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof,  such changes shall be followed in
defining such accounting terms only from and after the date the Borrower and the
Lenders  shall have entered  into an  amendment of this  Agreement to the extent
necessary to reflect any such changes in the financial covenants and other terms
and conditions of this  Agreement,  which  amendment  shall not be  unreasonably
withheld.

     Section 1.4 OTHER DEFINITIONS AND PROVISIONS.

          (a) USE OF CAPITALIZED  TERMS.  Unless otherwise defined therein,  all
capitalized terms defined in this Agreement shall have the defined meanings when
used  in  this  Agreement,  the  Notes  and  the  other  Loan  Documents  or any
certificate,  report  or  other  document  made or  delivered  pursuant  to this
Agreement.

          (b)  MISCELLANEOUS.  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.

                                    ARTICLE 2
                           ACKNOWLEDGMENTS AND WAIVERS

     Section 2.1  ACKNOWLEDGMENTS  BY BORROWER AND THE OTHER CREDIT PARTIES.  To
induce the Lenders,  the Issuing  Bank and the Agent to execute this  Agreement,
the  Borrower  on  behalf  of  itself  and  the  other  Credit   Parties  hereby
acknowledges, stipulates and agrees as follows:

          (a) The aggregate  principal amount of the Existing Loans PLUS accrued
and unpaid Deferred Interest (as defined in the Waiver  Agreement)  thereon PLUS
accrued and unpaid Reimbursement  Obligations (as defined in the Existing Credit
Agreement) together with accrued and unpaid interest thereon PLUS unpaid fees in
respect of the Existing  Loans PLUS accrued and unpaid  default rate interest on
the Reimbursement Obligations (as defined in the Existing Credit Agreement) PLUS
other fees,  charges and other amounts due and payable under the Existing Credit
Agreement  and/or the Waiver Agreement which are not paid in accordance with the
applicable terms thereof on the Closing Date immediately before the satisfaction
or waiver of conditions set forth in Section 6.2 is set forth on SCHEDULE 2.1(A)
(collectively, the "EXISTING OBLIGATIONS").

          (b) This Agreement renews,  restructures,  and modifies,  but does not
satisfy,  the  "Obligations"  heretofore  outstanding  under the Existing Credit
Agreement, and to the extent such "Obligations" are being renewed, restructured,
and  modified  as Term Loans  under this  Agreement,  such  "Obligations"  shall

                                       19
<PAGE>
constitute  a part of (but  not all of)  the  Obligations  (as  defined  in this
Agreement).

          (c) The "Loan  Documents"  listed on Schedule  2.1(c) were executed in
connection with the Existing Credit Agreement and shall remain in full force and
effect and constitute  Loan Documents  under this Agreement  except as expressly
superseded by any Loan  Documents  executed from and after the Closing Date. All
references  in such Loan  Documents  listed on Schedule  2.1(c) to the  Existing
Credit  Agreement  shall after the Closing Date, mean and be a reference to this
Agreement,  as amended,  modified,  supplemented,  amended and  restated  and in
effect from time to time.

          (d) The Existing  Obligations and Existing Credit  Agreement shall not
be modified in accordance  with the terms set forth herein unless all conditions
precedent  set forth  herein  have been  satisfied,  as  determined  in the sole
discretion  of  the  Agent,  the  Issuing  Bank  and  the  Lenders.   After  the
satisfaction  (or waiver by each of the Lenders and the Issuing Bank) of each of
the conditions  precedent to the effectiveness of this Agreement as set forth in
Article 6 (which  satisfaction  or waiver shall be  evidenced  by execution  and
delivery  by the Agent,  the Issuing  Bank and the Lenders of their  counterpart
signatures  to this  Agreement),  no amount  shall be due and payable  under the
Existing Credit Agreement and the repayment of all Existing Obligations shall be
governed by the terms of this Agreement; PROVIDED, that nothing in the foregoing
shall affect the survival of any indemnities in favor of the Agent,  the Issuing
Bank  or any of the  Lenders  under  the  Existing  Credit  Agreement  and  Loan
Documents executed in connection therewith.

          (e) The execution of this  Agreement  shall not be deemed or construed
as a  commitment  on the part of the  Lenders,  the Issuing Bank or the Agent to
provide any future financing,  loan extension,  forbearance or any other type of
financial  accommodation  to the  Borrower  not  expressly  set  forth  in  this
Agreement.

          (f) Any  unused  "Commitments"  (as  defined  in the  Existing  Credit
Agreement) or  obligations  of the Existing  Lenders to provide any financing or
financial  accommodations  under the Existing Credit Agreement is terminated and
the Borrower shall have no further right to additional advances or extensions of
credit under the Existing Credit Agreement.

          (g) Neither the Issuing Bank, the Agent nor any Lender has at any time
directed or  participated in any aspect of the management of the Credit Parties,
or any of their  respective  Affiliates or the conduct of the  businesses of the
Credit Parties, or any of their respective  Affiliates,  and the Credit Parties,
and any of their  respective  Affiliates,  have  made  all of  their  respective
business decisions independently of the Agent or any Lender. Notwithstanding any
other provision of this Agreement,  or any other contract or instrument  between
the Credit Parties, or any of their respective Affiliates,  on the one hand, and
the Issuing Bank, the Agent and the Lenders,  or any of them, on the other hand:
(i) the relationship  between the Issuing Bank, the Agent or any Lender,  on the
one hand, and each of the Credit Parties, or any of their respective Affiliates,
on the  other  hand,  shall be  limited  to the  relationship  of a lender  to a
borrower in a commercial  loan  transaction;  (ii) neither the Issuing Bank, the
Agent nor any  Lender is or shall be  construed  as a partner,  joint  venturer,

                                       20
<PAGE>
alter-ego,   manager,   controlling   person  or  other  business  associate  or
participant  of any  kind of the  Credit  Parties,  or any of  their  respective
Affiliates  (or any other  Person),  and neither the Issuing Bank, the Agent nor
any Lender  intends to assume any such status at any time; and (iii) neither the
Issuing  Bank,  the Agent nor any Lender shall be deemed  responsible  for (or a
participant in) any acts,  omissions or decisions of the Credit Parties,  or any
of their respective  Affiliates,  or any other Lender or, in the case of Lenders
or Issuing Bank, the Agent.

          (h) The Credit Parties have no claims, demands,  damages, suits, cross
complaints,  counterclaims,   conditions,  causes  of  action,  debts,  offsets,
disgorgements or assertions of any kind or nature  whatsoever,  whether known or
unknown,  and  whenever  or however  arising  that can be  asserted to reduce or
eliminate  all or any  part of their  respective  liability  to  repay  Existing
Obligations,  or to seek any affirmative relief or damages of any kind or nature
from the Agent, the Issuing Bank or the Lenders, or any of them, that arises out
of or relates  to any Prior  Event  (the  "CLAIMS"),  and to the extent any such
Claims exist that arise out of or relate to any Prior Event,  they are fully and
forever  released as provided for in Section 2.3 below.  As used herein the term
"PRIOR EVENT" means any transaction,  event,  circumstances,  action, failure to
act or occurrence of any sort or type, whether known or unknown, which occurred,
existed, was taken,  permitted or begun prior to the execution of this Agreement
or occurred, existed, was taken, permitted or begun in accordance with, pursuant
to or by virtue of any terms of this Agreement,  the other Loan  Documents,  the
transactions  referred to herein and/or  therein,  or oral or written  agreement
relating to any of the foregoing,  including without  limitation any approval or
acceptance given or denied. To the extent any such Claims exist, they are fully,
forever and irrevocably released as provided in Section 2.3.

     Section 2.2  ACKNOWLEDGMENT OF EVENTS OF DEFAULT BY THE BORROWER AND WAIVER
THEREOF BY THE LENDERS.

          (a) The Borrower and the other Credit Parties  acknowledge,  stipulate
and agree that the  Defaults  and Events of Default  under the  Existing  Credit
Agreement  as set  forth  on  SCHEDULE  2.2  have  occurred  and are  continuing
(collectively, the "ACKNOWLEDGED DEFAULTS").

          (b) The  Acknowledged  Defaults  constitute  "Defaults" and "Events of
Default"  under  the  Existing  Credit  Agreement  that  have  occurred  and are
continuing  as of the  date of this  Agreement  and  because  such  Acknowledged
Defaults  are  continuing,  neither  the Agent nor any  Existing  Lender has any
obligation  to  make  any  further   "Loans"  or  extend  any  other   financial
accommodations under the Existing Credit Agreement.

          (c) As of the  date of  this  Agreement,  nothing  has  occurred  that
constitutes  or otherwise  can be construed  or  interpreted  as a waiver of, or
otherwise to limit in any respect,  any rights and remedies of the Issuing Bank,
the Agent, the Existing  Lenders,  or any of them,  arising as the result of the
Acknowledged  Defaults  under the  Existing  Credit  Agreement,  the other  Loan
Documents or Applicable Law.

          (d) The Borrower and the other Credit  Parties have requested that the
Agent and Existing  Lenders  waive the exercise of their  respective  rights and
remedies  under the Existing  Credit  Agreement and the other Loan  Documents in
respect of the Acknowledged Defaults.  Effective as of the Closing Date, each of
the  Existing  Lenders  and  the  Agent  shall  have   irrevocably   waived  the
Acknowledged  Defaults,  and shall have  irrevocably  waived the exercise of any

                                       21
<PAGE>
rights  or  remedies  arising  solely  by the  occurrence  of  the  Acknowledged
Defaults.

          (e)  Nothing   contained  in  this  Agreement  (or  otherwise)   shall
constitute or be construed to be a waiver or obligation to forbear in respect of
any Default or Event of Default that is not an Acknowledged Default or which may
hereafter  occur,  whether  of  identical  nature to the  Acknowledged  Defaults
(including, without limitation, any Event of Default in respect of the financial
covenants  set forth in  Article 10 for any period  after the  Closing  Date) or
otherwise.

     Section 2.3 RELEASE OF CLAIMS.

          (a) Each of the Credit  Parties  on behalf of  itself,  and any Person
claiming by,  through,  or under any of the Credit  Parties,  (each a "RELEASING
PARTY" and  collectively  the "RELEASING  PARTIES")  hereby  releases,  remises,
waives and forever discharges the Agent, the Issuing Bank, the Lenders,  and all
of the Agent's,  the Issuing  Bank's or the Lenders'  subsidiaries,  Affiliates,
directors,  officers, members, partners, employees, agents, attorneys, financial
advisors, representatives,  successors and assigns, from any and all Claims that
arise out of, or relate to any Prior Event.  This Section 2.3 shall  survive the
termination of this Agreement or any other Loan Document.

          (b) Each  Releasing  Party has been advised by counsel with respect to
the release contained in SECTION 2.3(a). Each Releasing Party hereby affirms its
intent  to waive  all  known  and  unknown  Claims  and to waive  any  statutory
protection available in any applicable jurisdiction with respect thereto.

                                    ARTICLE 3
                                CREDIT FACILITIES

     Section 3.1 LOANS.

          (a) TERM LOANS. Subject to the terms and conditions of this Agreement,
each Term Loan Lender severally  agrees to convert its Commitment  Percentage of
the Existing Obligations (other than Existing Obligations that are repaid on the
Closing  Date) into a Term Loan on the Closing  Date to Borrower in an aggregate
principal  amount of the Term Loan  Commitment of such Lender (the "TERM LOAN").
The Term Loan made by each Term Loan Lender  shall be  evidenced  by  promissory
notes,  dated as of the Closing Date,  substantially in the form of EXHIBIT A-1,
and shall renew and replace,  but not satisfy,  the Existing Obligations (each a
"TERM NOTE" and, collectively, the "TERM NOTES"), and Borrower shall execute and
deliver  such Term  Notes to the  Agent.  The Term  Notes  shall  represent  the
obligation  of  Borrower  to pay the amount of the Term  Loans of the  Borrower,
together with interest  thereon as prescribed in Section 5.1. The Borrower shall
not request,  and shall not be entitled to receive,  any new or additional  Term
Loans  notwithstanding  any payments,  prepayments,  or  reductions  made by the
Credit Parties on account of the Term Loans from time to time.

          (b) NEW FACILITY LOANS.

               (i) If and to the  extent  elected  by the  Borrower  at its sole
option pursuant to this Section 3.1(b),  and subject to the terms and conditions
of this Agreement,  each New Facility Lender  severally agrees to make new loans

                                       22
<PAGE>
to the  Borrower,  the  proceeds  of which  loans  shall be used  solely for the
purpose  of  providing  cash  collateral  to enable the  Borrower  to obtain New
Letters of Credit in accordance with the permitted use of proceeds provision set
forth in Section 3.7 (each,  a "NEW FACILITY  LOAN" and  collectively,  the "NEW
FACILITY  Loans")  from  time to time  from the  Closing  Date  through  but not
including the Termination Date;  PROVIDED,  that (a) the aggregate amount of all
New Facility Loans made by the New Facility  Lenders (after giving effect to the
amount requested but prior to determining the Original  Principal Amount ) shall
not exceed  $10,000,000 (the "NEW FACILITY  COMMITMENT") and PROVIDED,  FURTHER,
that each New Facility  Lender shall not be obligated to make New Facility Loans
(after  giving  effect to the  amount  requested  but prior to  determining  the
Original Principal Amount ) in excess of its respective Commitment Percentage of
the New Facility  Commitment.  The New Facility Commitment shall be comprised of
two separate  tranches:  (A) one tranche  which shall not exceed an aggregate of
$3,438,991.29 to be funded, at the Borrower's  election,  on the Closing Date in
accordance  with this  Section  3.1(b) and Section  3.2(c)  (the  "TRANCHE A NEW
FACILITY  COMMITMENT") and (B) one tranche which shall not exceed  $6,561,008.71
to be funded from time to time,  if the  Tranche A New  Facility  Commitment  is
funded  in whole or in part,  at the  Borrower's  election  in  accordance  with
Section 3.2(a) and Section 3.2(b) (the "TRANCHE B NEW FACILITY COMMITMENT"). The
Borrower  agrees to notify the Agent and the  Tranche A New  Facility  Lender at
least two (2) Business Days prior to the scheduled  Closing Date of its election
whether  or not to utilize  all or any  portion  of the  Tranche A New  Facility
Commitment and of the aggregate amount of the Tranche B New Facility Commitment,
if any,  that the Borrower  desires the New Facility  Lenders to make  available
from time to time on and after the Closing Date until the Termination  Date. Any
portion of the New Facility  Commitment that the Borrower does not elect be made
available by the New Facility  Lenders shall be  permanently  cancelled on a pro
rata basis among the aggregate  Tranche A New Facility  Commitment and Tranche B
New Facility  Commitment  and be deemed  terminated  effective as of the Closing
Date. If the Borrower fails to provide notice of its election under this Section
3.1(b)(i),  the  Borrower  shall be deemed to have  elected  that the entire New
Facility  Commitment be deemed  permanently  cancelled and reduced to zero as of
the Closing Date.

               (ii) If the Borrower elects to have the New Facility Lenders make
available any part of the New Facility  Commitment pursuant to Section 3.1(b)(i)
above, the Borrower shall execute and deliver to the Agent separate and distinct
promissory notes  substantially in the form of EXHIBIT A-2 (each a "NEW FACILITY
NOTE" and, collectively the "NEW FACILITY NOTES") to each New Facility Lender to
evidence the Borrower's  obligation to pay the Original Principal Amount of such
New Facility  Lender's New Facility  Loans made to the  Borrower,  each of which
shall be dated the Closing Date in the principal amount determined in accordance
with Section 3.1(b)(iii).  Each New Facility Note shall represent the obligation
of the  Borrower to pay the Original  Principal  Amount with respect to each New
Facility Loan made by each New Facility  Lender to the Borrower as prescribed in
Section  3.1(b)(iii),  together with  interest  thereon as prescribed in Section
5.1. The principal  amount of any New Facility Loan that is prepaid or repaid by
the Borrower may not be reborrowed.

               (iii) The principal amount of the respective New Facility Note to
be delivered to each New Facility Lender on the Closing Date shall be determined
by dividing the portion  elected by the  Borrower of each New Facility  Lender's
Commitment by 0.725.  The  principal  amount of each New Facility Loan made by a
New Facility  Lender shall be determined by dividing the amount  advanced to the

                                       23
<PAGE>
Borrower  as a New  Facility  Loan by such New  Facility  Lender  by 0.725  (the
"ORIGINAL PRINCIPAL AMOUNT");  PROVIDED,  HOWEVER, the Original Principal Amount
for each such New Facility Loan shall be reduced to the  applicable  "Discounted
Principal Amount" set forth below in the event that the Borrower repays such New
Facility Loan as follows:

New Facility Loan Repaid within:                     Discounted Principal Amount
--------------------------------                     ---------------------------

The  period   commencing  on  the  date  that  the               N/A
Borrower  receives  the proceeds of a New Facility
Loan and ending on (but  including) the date which
is 6 months from the date of the New Facility Loan

The period  commencing on (but excluding) the date               N/A
which is 6 months from the date that the  Borrower
receives the  proceeds of a New Facility  Loan and
ending  on (but  including)  the date  which is 12
months from the date of the New Facility Loan

The period  commencing on (but excluding) the date               N/A
which is 12  months  from  the  date the  Borrower
receives the  proceeds of a New Facility  Loan and
ending  on (but  including)  the date  which is 18
months from the date of the New Facility Loan

The period  after the date which is 18 months from               N/A
the date the  Borrower  receives the proceeds of a
New Facility Loan

     Section 3.2 PROCEDURE FOR ADVANCE OF NEW FACILITY LOANS.

          (a)  REQUESTS  FOR  BORROWING.  The  Borrower  shall  give  the  Agent
irrevocable  prior written  notice (or  telephonic  notice  confirmed by written
notice) in the form attached  hereto as EXHIBIT B (a "NOTICE OF BORROWING")  not
later than 11:00 a.m.  (New York time) at least three  Business Days before each
New Facility Loan (except in the case of the New Facility  Loans,  if any, to be
made by the Tranche A New Facility Lender pursuant to Section 3.2(c) below),  of
a proposed borrowing specifying (A) the date of such borrowing, which shall be a
Business  Day, (B) the amount of such  borrowing  which shall be in an aggregate
principal  amount  of  $1,000,000  or a whole  multiple  of  $250,000  in excess
thereof,  and (C) the duration of the Interest Period applicable  thereto.  Each
Notice of  Borrowing  delivered by the  Borrower  under this  Section  3.2(a) in
respect of New Facility Loans under the Tranche B New Facility  Commitment shall
be accompanied  by a signed  counterpart of a joint letter of instruction to the
Depositary  to request  the  Depositary  to  transfer  proceeds  from the Escrow
Account in an amount equal to (x) the amount of New Facility Loans  requested in
by Notice of Borrowing  to be made under the Tranche B New  Facility  Commitment
multiplied by (y) the ratio of the Tranche A New Facility  Commitment divided by
the Tranche B New Facility  Commitments.  Notices received after 11:00 a.m. (New

                                       24
<PAGE>
York time) shall be deemed  received on the next  Business  Day. The Agent shall
promptly notify the New Facility Lenders of each Notice of Borrowing.

          (b) DISBURSEMENT OF LOANS. Not later than 2:00 p.m. (New York time) on
the  proposed  borrowing  date,  each  Tranche B New  Facility  Lender will make
available to the Agent,  for the account of the  Borrower,  at the office of the
Agent in funds  immediately  available to the Agent, such Tranche B New Facility
Lender's Commitment Percentage of the Tranche B New Facility Loans to be made on
such borrowing  date.  Promptly after the Agent's receipt of such funds and upon
fulfillment of the applicable  conditions set forth in Article 6, the Agent will
(and each New Facility Lender hereby  irrevocably  authorizes the Agent to) make
such funds  available to the Borrower by  crediting  such  proceeds to a deposit
account of the Borrower  maintained  with the Agent or by wire  transfer to such
account as may be agreed upon by the  Borrower  and the Agent from time to time.
Subject to Section 5.4 hereof,  the Agent shall not be obligated to disburse the
proceeds of any Tranche B New Facility Loan  requested  pursuant to this Section
3.2 until each  Tranche B New Facility  Lender shall have made  available to the
Agent its respective Commitment Percentage of such Tranche B New Facility Loan.

          (c) If the  Borrower  elects  to  have  all or a  portion  of the  New
Facility Commitment made available to it by the New Facility Lenders pursuant to
Section  3.1(b)(i),  the Borrower shall issue a Notice of Borrowing to the Agent
at least two Business  Days prior to the  scheduled  Closing  Date  requesting a
borrowing  on the  Closing  Date of New  Facility  Loans from the  Tranche A New
Facility  Lender  in an amount  equal to the  Tranche  A New  Facility  Lender's
Tranche A New Facility  Commitment  elected by the Borrower to be made available
by the Tranche A New Facility Lenders pursuant to Section 3.1(b)(i).  Subject to
satisfaction or waiver of the applicable  conditions set forth in Article 6, the
Tranche A New Facility Lender will make available to the Agent,  for the account
of the Borrower,  at the office of the Agent,  such portion of the Tranche A New
Facility  Commitment  requested  by the  Borrower and such total amount shall be
deemed to be a New  Facility  Loan made as of the Closing  Date by the Tranche A
New Facility Lender. Subject to Section 3.3(b)(iv),  the proceeds of all Tranche
A New Facility  Loans made by the Tranche A New  Facility  Lender on the Closing
Date to the extent not pledged as cash  collateral to the issuer of a New Letter
of Credit  obtained  by the  Borrower  on the  Closing  Date  shall be held in a
segregated  escrow  account  maintained by the Borrower at the  Depositary  (the
"ESCROW  ACCOUNT").  Proceeds  held in the  Escrow  Account  shall be subject to
release on a PRO RATA  basis (in  proportion  to the ratio of the  Tranche A New
Facility Commitment to the Tranche B New Facility  Commitment) with the proceeds
of New Facility  Loans made by the Tranche B New Facility  Lenders to be pledged
as cash  collateral to issuers of New Letters of Credit obtained by the Borrower
from  time to  time in  accordance  with  Section  6.5(b)  only  upon a  written
instruction of both the Agent and the Borrower to the Depositary provided on the
same date that the  Borrower  issues a Notice of  Borrowing to the Agent for New
Facility  Loans from the  Tranche B New  Facility  Lenders  pursuant  to Section
3.2(a).

     Section 3.3 REPAYMENT OF LOANS.

          (a)  REPAYMENT  ON  TERMINATION  DATE.  The  Borrower  shall repay the
outstanding principal amount of all Loans in full, together with all accrued but
unpaid interest thereon, on the Termination Date.

                                       25
<PAGE>
          (b) MANDATORY REPAYMENT.

               (i)  If at any  time  the  outstanding  principal  amount  of all
Extensions of Credit exceeds the Aggregate Commitment,  the Borrower shall repay
the Extensions of Credit  immediately by making FIRST, a payment of principal of
the New Facility Loans to the Agent for the account of the New Facility  Lenders
on a pro rata, PARI PASSU basis with all New Facility  Lenders based on each New
Facility Lender's Commitment Percentage of the used New Facility Commitment (and
not  based on the  outstanding  amount  of New  Facility  Loans)  until  all New
Facility  Loans  made  under the  Tranche  B New  Facility  Commitments  and the
proportionate amount of New Facility Loans made under the Tranche A New Facility
Commitments  have been paid in full,  SECOND,  a payment of principal of the New
Facility  Loans to the  Agent for the  account  of the  Tranche  A New  Facility
Lenders,  pro rata in  accordance  with  such  Tranche A New  Facility  Lender's
Tranche A New Facility Commitment  Percentage,  THIRD, a payment of principal of
the Term  Loans to the  Agent for the  account  of the Term  Loan  Lenders,  and
FOURTH, a payment of the outstanding  Reimbursement Obligations to the Agent for
the  account  of the L/C  Participants,  in an  aggregate  amount  equal to such
excess,  in case of Term  Loans and  Reimbursement  Obligations  on a PARI PASSU
basis  in  accordance  with  each  Lender's  or  L/C  Participant's   respective
Commitment  Percentages.  Each such  repayment  shall be  accompanied by accrued
interest on the amount  repaid and any amount  required  to be paid  pursuant to
Section 5.6 hereof.

               (ii) The  Aggregate  Commitment  shall be  reduced  and the Loans
repaid by an  amount  equal to one  hundred  percent  (100%)  of the gross  cash
proceeds,  net of all  reasonable  cost of sale and taxes  paid or  payable as a
result  thereof  by the  Borrower  and its  Subsidiaries  and net of such  other
liabilities,  costs and expenses as are  reasonably  acceptable to the Agent and
the  Lenders,  from  the sale or  other  disposition  of any  assets  or  equity
ownership  interests by the Borrower or any of its  Subsidiaries  in  accordance
with this Agreement; PROVIDED, that the Borrower shall not be obligated to repay
the Loans  pursuant  to this  Section  3.3(b)  unless and to the extent such net
proceeds  are  greater  than  $250,000  in the  aggregate  per  fiscal  quarter.
Repayment of any of the Loans in connection  with the reduction of the Aggregate
Commitment pursuant to this clause (ii) shall be applied to the repayment of the
Extensions  of Credit in the manner  and in the order set forth in  subparagraph
(i) directly above.

               (iii) The New  Facility  Commitment  shall be reduced and the New
Facility  Loans repaid by an amount equal to one hundred  percent  (100%) of the
cash proceeds used to collateralize  any New Letter of Credit that is terminated
or cancelled without being drawn upon by the beneficiary  thereof. Any reduction
of the New  Facility  Commitment  shall be applied pro rata to the Tranche A New
Facility  Commitment  and the  Tranche  B New  Facility  Commitment  ratably  in
proportion to the amounts thereof. Repayment of any of the New Facility Loans in
connection  with the  reduction  of the  Aggregate  Commitment  pursuant to this
clause (iii) shall be applied first to the  repayment of the New Facility  Loans
the  proceeds  of which  were  used to cash  collateralize  such  terminated  or
cancelled New Letter of Credit on a PRO RATA basis in  accordance  with each New
Facility  Lender's  respective   Commitment   Percentage  of  the  New  Facility
Commitment (and not based on the outstanding amount of New Facility Loans) until
all New Facility Loans made under the Tranche B New Facility Commitments and the
proportionate amount of New Facility Loans made under the Tranche A New Facility
Commitments  have been paid in full,  SECOND,  to the repayment of the remaining

                                       26
<PAGE>
New Facility Loans made under the Tranche A New Facility  Commitments,  pro rata
in accordance with such Tranche A New Facility  Lender's  Tranche A New Facility
Commitment  Percentage.  Any amounts  remaining after payment in full of the New
Facility  Loans  the  proceeds  of which  were used to cash  collateralize  such
terminated or cancelled New Letter of Credit shall be applied to repay the other
outstanding  New Facility Loans on a PRO RATA basis in accordance  with each New
Facility  Lender's  respective   Commitment   Percentage  of  the  New  Facility
Commitment.

               (iv) Upon the occurrence of an Event of Default,  the proceeds of
any New  Facility  Loans  funded  by the  Tranche A New  Facility  Lender on the
Closing Date  pursuant to Section  3.2(c)  which have not been  released as cash
collateral  to the issuer of a New Letter of Credit and on deposit in the Escrow
Account  shall be applied to repay the  outstanding  New Facility  Loans made by
such New Facility Lender in an amount equal to one hundred percent (100%) of the
cash proceeds  remaining in the segregated account maintained at the Depositary;
PROVIDED,  if other Tranche B New Facility Lenders have made New Facility Loans,
to the  Borrower,  then the  prepayment  shall be  applied  pro rata to each New
Facility Lender in accordance with its respective  Commitment  Percentage of the
aggregate New Facility Commitment.  Upon receipt of a written notice from any of
the Lenders of the  occurrence of an Event of Default,  the Agent shall promptly
deliver a written  instruction  to the  Depositary to instruct the Depositary to
release all of the proceeds in the Escrow Account to the Agent,  for the account
of the New Facility Lenders, to be applied to the outstanding New Facility Loans
in accordance with this Section 3.3(b)(iv).

               (v) Upon the  release  of any cash  collateral  held by  Reliance
Insurance Company from the proceeds of the $2,590,000  drawdown made by Reliance
Insurance  Company under Standby  Letter of Credit Number  S057242 issued by the
Issuing Bank under the Existing  Letter of Credit to the Borrower,  the proceeds
of such cash collateral  shall be first applied to repay the Term Loans,  second
to repay  any  outstanding  Reimbursement  Obligations,  and last to pay any New
Facility Loans (if any).

          (c) OPTIONAL REPAYMENTS. The Borrower may at any time and from time to
time repay the Loans, in whole or in part, upon irrevocable  notice to the Agent
no later  than 11:00  a.m.,  at least  three (3)  Business  Days'  prior to such
repayment,  in the form attached  hereto as EXHIBIT C (a "NOTICE OF PREPAYMENT")
specifying  the date and amount of repayment.  Upon receipt of such notice,  the
Agent shall promptly notify each Lender. If any such notice is given, the amount
specified  in such notice shall be due and payable on the date set forth in such
notice.  Partial  repayments  shall be in an aggregate amount of $1,000,000 or a
whole  multiple of  $500,000 in excess  thereof.  Each such  repayment  shall be
accompanied by any amount required to be paid pursuant to Section 5.6 hereof.

          (d)  LIMITATION ON REPAYMENT OF LOANS.  The Borrower may not repay any
Loan on any day other  than on the last day of the  Interest  Period  applicable
thereto unless such  repayment is accompanied by any amount  required to be paid
pursuant to Section 5.6 hereof.

          (e) NO  REBORROWINGS.  No payments  made by the  Borrower or any other
Credit Party pursuant to Section 3.3 may be reborrowed by the Borrower,  and the
Aggregate Commitment shall be permanently reduced by the corresponding amount of
each such payment.

                                       27
<PAGE>
     Section 3.4 NOTES.  Each Lender's  Loans and the obligation of the Borrower
to repay such Loans shall be evidenced by Notes executed by the Borrower payable
to the order of such Lender  representing the Borrower's  obligation to pay such
Lender's  Commitment or, if less, the aggregate  unpaid  principal amount of all
Loans made by such  Lender to the  Borrower  hereunder,  plus  interest  on such
principal  amounts and all other fees,  charges and other  amounts due  thereon.
Each Term Note and each New  Facility  Note  shall be dated the date  hereof and
each Note shall bear  interest  on the unpaid  principal  amount  thereof at the
applicable interest rate per annum specified in Section 5.1.

     Section  3.5  PERMANENT  REDUCTION  OF  AGGREGATE  COMMITMENT  AND  THE NEW
FACILITY LOANS.

          (a) VOLUNTARY REDUCTION. The Borrower shall have the right at any time
and from time to time, upon at least five (5) Business Days prior written notice
to the Agent, to permanently  reduce,  in whole at any time or in part from time
to time,  without premium or penalty,  the Aggregate  Commitment in an aggregate
principal  amount not less than $1,000,000 or any integral  multiple of $500,000
in excess thereof.

          (b) PAYMENTS.  Each  permanent  reduction  permitted  pursuant to this
Section  3.5  shall be  accompanied  by a  payment  of  principal  of the  Loans
sufficient to reduce the Extensions of Credit to the Aggregate Commitment, as so
reduced,  and by  payment  of  accrued  interest  on the  amount of such  repaid
principal.   Any  reduction  of  the  Aggregate  Commitment  to  zero  shall  be
accompanied by payment of all  outstanding  Obligations  and  termination of the
Aggregate  Commitment  and  Credit  Facility.  Amounts  on  deposit  in the cash
collateral  account shall be applied in accordance with Section 12.2(b).  If the
reduction of the Aggregate  Commitment  requires the repayment of any Loan, such
reduction may be made only on the last day of the then current  Interest  Period
applicable  thereto unless such repayment is accompanied by any amount  required
to be paid pursuant to Section 5.6 hereof.

     Section 3.6  TERMINATION  OF CREDIT  FACILITY.  The Credit  Facility  shall
terminate on the  earliest of (a)  December 31, 2004,  (b) the date of permanent
reduction of the Aggregate  Commitment in whole  pursuant to Section 3.5, or (c)
the date of  termination  by the  Agent on  behalf of the  Lenders  pursuant  to
Section  12.2(a).  The  termination of the Credit  Facility shall not affect the
survival of any of provision of this Agreement, the Existing Credit Agreement or
the  other  Loan  Documents  which by its  terms is  intended  to  survive  such
termination.

     Section  3.7 USE OF  PROCEEDS.  The Term  Loans  constitute  a renewal  and
restructure  of the Existing  Obligations as set forth on Schedule  2.1(a).  The
Borrower  shall use the proceeds of the New Facility  Loans for the sole purpose
of providing cash  collateral to issuers of New Letters of Credit to be obtained
by the  Borrower in the  ordinary  course of  business of the Credit  Parties to
support  contractual  obligations  as evidenced by Borrower in  accordance  with
Section 6.5(b).

                                    ARTICLE 4
                                LETTERS OF CREDIT

     Section 4.1 LENDERS' OBLIGATIONS IN RESPECT OF LETTERS OF CREDIT.

                                       28
<PAGE>
          (a) LETTERS OF CREDIT. Subject to the terms and conditions hereof, the
Issuing Bank, in reliance on the agreements of the L/C Participants set forth in
Section  4.3(a),  agrees to (i)  extend  the  expiry  date for the CNA Letter of
Credit to December  31,  2003,  (ii) issue the MedStar  Letter of Credit for the
account of the  Borrower  on a Business  Day during the period  from the Closing
Date through but not including  December 31, 2002,  and (iii) issue the Reliance
Letter of Credit for the account of the  Borrower  on a Business  Day during the
period from the Closing Date through but not  including  June 30, 2003,  in each
case, in the form reasonably  approved by the Issuing Bank;  PROVIDED,  that the
Issuing Bank shall have no  obligation to issue such Letters of Credit if, after
giving  effect to such  issuance,  (A) the face  amount of the Letters of Credit
plus the principal amount of any unreimbursed  drawings  thereunder would exceed
$6,090,000.00  or (B) the total  Extensions  of Credit  then  outstanding  would
exceed the Aggregate Commitment.

          (b)  PROCEDURE FOR ISSUANCE OF LETTERS OF CREDIT.  The Borrower  shall
submit an Application  with respect to the extension of the CNA Letter of Credit
and/or the  issuance  of each of the MedStar  Letter of Credit and the  Reliance
Letter of Credit,  as applicable,  to the Issuing Bank at least two (2) Business
Days prior to the date of  extension  or  issuance  at its  address  for notices
specified  herein  in form  and  substance  satisfactory  to the  Issuing  Bank,
together  with  such  other   certificates,   documents  and  other  papers  and
information  as the Issuing Bank may request.  Upon receipt of the  Application,
the Issuing Bank shall 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 issue an amendment, extension
or  replacement  of the CNA Letter of Credit and/or issue the MedStar  Letter of
Credit or Reliance Letter of Credit  requested  thereby.  The Issuing Bank shall
furnish to the Borrower and each L/C Participant a copy of such Letter of Credit
and  the  amount  of each  Lender's  L/C  Participation  therein,  all  promptly
following  the  issuance  of such  Letter  of  Credit.  To the  extent  that any
provision  of any  Application  related to any Letter of Credit is  inconsistent
with the  provisions  of this Article 4, the  provisions of this Article 4 shall
apply;  PROVIDED,  HOWEVER,  that, in the event there is no such  conflict,  the
terms of the  Application  shall  remain in full force and  effect.  The parties
agree that notwithstanding any other term of this Agreement, each of the Letters
of Credit shall contain provisions  allowing for the automatic  extension of its
expiration  date,  absent  notice from the Issuing  Bank,  and the Issuing  Bank
shall,  so long as it has not received  written  notice of the  occurrence  of a
Default or Event of Default that is  outstanding,  allow such extension  unless,
not later  than  fifteen  (15)  Business  Days  prior to the last day upon which
notice of  termination  may be given under such Letter of Credit,  the  Required
Lenders provide  written  instruction to the Issuing Bank to send such a notice;
PROVIDED,  that in no event  shall the  Issuing  Bank be  required to extend the
expiration of any Letter of Credit beyond the Termination Date.

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<PAGE>
     Section 4.2 L/C PARTICIPATIONS.

          (a) The Issuing Bank hereby  grants to each L/C  Participant,  and, to
induce  the  Issuing  Bank to issue the  Letters of Credit  hereunder,  each L/C
Participant hereby accepts and purchases from the Issuing Bank, on the terms and
conditions  hereinafter  stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's  Commitment  Percentage in
the Issuing  Bank's  obligations  and rights under each Letter of Credit and the
amount of each draft paid by the  Issuing  Bank  thereunder.  For the benefit of
Borrower  and  the  Issuing  Bank,  each  L/C  Participant  unconditionally  and
irrevocably  agrees  with the  Issuing  Bank that,  if a draft is paid under any
Letter of Credit, such L/C Participant shall pay to the Issuing Bank when due at
the Issuing Bank's address for notices  specified herein an amount equal to such
L/C  Participant's  Commitment  Percentage  of the  amount of the  Reimbursement
Obligations that arise with respect to each such draft.

          (b) As soon as practicable  after the  presentation of any draft under
any Letter of Credit,  the Issuing Bank shall notify each L/C Participant of the
amount  and  the due  date of its  Commitment  Percentage  of the  Reimbursement
Obligations  arising with respect to such draft, and such L/C Participant  shall
pay to the Issuing Bank the amount so specified on the later to occur of (i) the
date such notice is received or (ii) the date the Issuing Bank makes  payment on
account of such draft.  With respect to payment to the Issuing Bank described in
this Section  4.2(b),  notice received (A) prior to 2:00 p.m. (New York time) on
any Business Day shall be deemed to have been  received  that  Business Day, and
(B) after 2:00 p.m.  (New York time) on any Business Day shall be deemed to have
been received on the following  Business Day. Each L/C Participant  acknowledges
and agrees  that,  notwithstanding  any notices the Issuing Bank may send to the
Borrower  in the  ordinary  course on account of a draw made under any Letter of
Credit,  this Agreement  anticipates  and allows the Issuing Bank to immediately
seek payment from each L/C Participant for its respective  Commitment Percentage
of all Reimbursement  Obligations arising on account of each such draw, prior to
notice to or payment by the Borrower of such Reimbursement Obligations.

          (c)  Whenever,  at any time after the  Issuing  Bank has made  payment
under  any  Letter of  Credit  and has  received  from any L/C  Participant  its
Commitment  Percentage of such payment in accordance  with this Section 4.2, the
Issuing  Bank  receives  any payment  related to such Letter of Credit  (whether
directly from the Borrower or otherwise),  or any payment of interest on account
thereof,  the Issuing Bank will  distribute to such L/C Participant its PRO RATA
share thereof; PROVIDED, that in the event that any such payment received by the
Issuing  Bank shall be required to be  returned  by the Issuing  Bank,  such L/C
Participant  shall  return to the Issuing  Bank the portion  thereof  previously
distributed by the Issuing Bank to it.

     Section  4.3  REIMBURSEMENT  OBLIGATION  OF THE  BORROWER.  SUBJECT  TO ITS
OBLIGATION TO MAKE EARLIER PAYMENT PURSUANT TO THE PENULTIMATE  SENTENCE OF THis
Section 4.3, the Borrower  agrees to reimburse  the Issuing  Bank, no later than
the  Termination  Date,  for the full  amount of a draft  paid  under any of the
Letters of Credit and for any taxes,  reasonable  out-of-pocket fees, charges or
other costs or expenses  incurred by the Issuing  Bank in  connection  with such
payment,  together  with a drawing  fee equal to the greater of (a) 0.25% of the
amount  of  each  draft  so  paid  or  (b)  Three  Hundred   Dollars   ($300.00)
(collectively, the "Reimbursement Obligations"). Each such payment shall be made
to the Issuing Bank at its address for notices  specified  herein in Dollars and

                                       30
<PAGE>
in  immediately  available  funds.  Interest  shall  be  payable  on any and all
Reimbursement  Obligations  remaining  unpaid by the Borrower from the date such
amounts are paid to the  beneficiary  of the Letters of Credit until  payment in
full to the Issuing Bank at the same interest rate applicable to the Term Loans.
The  Issuing  Bank shall  notify  the  Borrower  by  facsimile  promptly  of the
presentment  for payment of any draft in respect of any Letter of Credit made by
any beneficiary thereof,  together with notice of the date such payment shall be
made;  provided,  that the  failure of the Issuing  Bank to provide  such notice
shall not limit or affect in any manner any of the  Borrower's or any of the L/C
Participants'  obligations  set forth herein.  In the event any L/C  Participant
fails  to  timely  honor  its  obligation  under  Section  4.2 to  purchase  its
Commitment Percentage of any Reimbursement  Obligation,  then, no later than the
third  Business Day after such failure and upon written  notice  provided by the
Issuing Bank to the Borrower of such failure,  Borrower shall pay to the Issuing
Bank such amount,  together with  interest  thereon at the rate provided in this
Section 4.3.  Nothing in the foregoing shall limit or affect any rights that the
Borrower or the Issuing Bank may have against the defaulting L/C Participants.

     Section 4.4 OBLIGATIONS ABSOLUTE. Except as described below, the Borrower's
obligations under this Article 4 (including without limitation the Reimbursement
Obligations) shall be absolute and unconditional under any and all circumstances
and  irrespective  of any set-off,  counterclaim or defense to payment which the
Borrower may have or have had against any L/C Participant, the Issuing Bank, the
Agent or any  beneficiary  of any of the Letters of Credit.  The  Borrower  also
agrees with the Issuing Bank that the Issuing Bank shall not be responsible for,
and the Reimbursement Obligations of the Borrower under Section 4.3 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 (absent the gross negligence or willful misconduct
of the Issuing  Bank),  or any  dispute  between or among the  Borrower  and any
beneficiary  of any of the  Letters of Credit or any other party to which any of
such Letters of Credit may be transferred or any claims whatsoever of a Borrower
against any  beneficiary of such Letters of Credit or any such  transferee.  The
Issuing Bank shall not be liable for any error, omission,  interruption or delay
in  transmission,  dispatch  or  delivery  of the  message  or  advice,  however
transmitted,  in connection with any of the Letters of Credit, except for errors
or  omissions   caused  by  the  Issuing  Bank's  gross  negligence  or  willful
misconduct.  The Borrower agrees that any action taken or omitted by the Issuing
Bank under or in  connection  with any of the  Letters 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
Customs and, to the extent not inconsistent  therewith,  the Uniform  Commercial
Code as in effect in North Carolina,  shall be binding on the Borrower and shall
not  result  in  any  liability  of  the  Issuing  Bank  to  the  Borrower.  The
responsibility  of the Issuing Bank to the Borrower in connection with any draft
presented for payment  under any of the Letters of Credit shall,  in addition to
any payment  obligation  expressly  provided  for in such  Letter of Credit,  be
limited to determining that the documents (including each draft) delivered under
such Letter of Credit in connection with such presentment are in conformity with
such Letter of Credit.

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<PAGE>
     Section 4.5 FEES AND OTHER CHARGES.

          (a) The  Borrower  shall pay to the Agent,  for the account of the L/C
Participants,  a letter  of credit  fee with  respect  to (i) the CNA  Letter of
Credit and the MedStar Letter of Credit in an amount equal to the product of (A)
the  fraction  that is  determined  by dividing  (1) the number of days that the
Letter of Credit is to be  outstanding by (2) 360, TIMES (B) 1.75% TIMES (C) the
face amount of such Letter of Credit and (ii) the  Reliance  Letter of Credit in
an  amount  equal to the  product  of (A) the  fraction  that is  determined  by
dividing  (1) the number of days that the Letter of Credit is to be  outstanding
by (2) 360,  TIMES (B) the  Applicable  Margin with  respect to LIBOR Rate Loans
TIMES (C) the face amount of such  Letter of Credit.  Such fees shall be payable
quarterly in arrears on the last  Business Day of each  calendar  quarter and on
the Termination Date. The Agent shall,  promptly  following its receipt thereof,
distribute to the L/C  Participants  all fees received by the Agent  pursuant to
this paragraph (a) in accordance with their respective Commitment Percentages.

          (b) The  Borrower  shall pay to the Issuing Bank for its own account a
letter of credit fee with respect to each Letter of Credit in an amount equal to
the product of (i) the fraction that is determined by dividing (A) the number of
days that such Letter of Credit is to be outstanding by (B) 360, (ii) 0.125% and
(iii)  the face  amount  of such  Letter of  Credit.  Such fee shall be  payable
quarterly in arrears on the last  Business Day of each  calendar  quarter and on
the Termination Date.

                                    ARTICLE 5
                             GENERAL LOAN PROVISIONS

     Section 5.1 INTEREST.

          (a)  INTEREST  RATE.  The  principal  balance  of  any  Loan  and  the
Reimbursement  Obligations  shall bear  interest  at LIBOR  PLUS the  Applicable
Margin;  PROVIDED  that  if at  any  time  any  of the  Loans  (and  outstanding
Reimbursement  Obligations  that bear  interest  at the same rate of LIBOR  Rate
Loans)  must be  converted  to a Base Rate Loan  pursuant  to Section  5.5(a) or
Section 5.5(b), such converted Loan (and outstanding  Reimbursement  Obligations
that bear  interest at the same rate of LIBOR Rate Loans) shall bear interest at
the Base Rate plus the Applicable Margin.

          (b)  INTEREST   PERIOD.   In   connection   with  each  Loan  and  the
Reimbursement  Obligations,  the  Borrower  shall be deemed to have  selected an
interest  period of one month (each an "INTEREST  PERIOD") to be  applicable  to
such Loan and the  Reimbursement  Obligations at all times until the Termination
Date; PROVIDED that:

               (i) each Interest  Period shall  commence on (x) the Closing Date
with  respect to any Term Loan,  (y) the date of advance with respect to any New
Facility  Loan,  (z) the  applicable  Reimbursement  Date  with  respect  to the
Reimbursement  Obligations and, in the case of immediately  successive  Interest
Periods, each successive Interest Period shall commence on the date on which the
next preceding Interest Period expires;

               (ii) if any Interest Period would otherwise  expire on a day that
is not a Business Day, such Interest  Period shall expire on the next succeeding
Business Day; PROVIDED,  that if any Interest Period would otherwise expire on a

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<PAGE>
day that is not a Business  Day but is a day of the month after which no further
Business Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;

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

               (iv) no Interest Period shall extend beyond the Termination  Date
and no Interest  Period shall be selected which would result in the repayment of
any Loan prior to the end of an Interest Period.

          (c) DEFAULT RATE. Upon the occurrence and during the continuance of an
Event  of  Default,   the  outstanding   principal   amount  of  all  Loans  and
Reimbursement  Obligations  and, to the extent  permitted  by law,  any interest
payments  thereon  not paid  when due and  other  amounts  then due and  payable
hereunder, shall bear interest at a rate per annum two percent (2%) in excess of
the rate  then  applicable  to such  Loans and such  Reimbursement  Obligations.
Interest shall continue to accrue on the Notes and the Reimbursement Obligations
after the filing by or against a Borrower of any petition  seeking any relief in
bankruptcy or under any act or law  pertaining  to insolvency or debtor  relief,
whether state, federal or foreign.

          (d) INTEREST  PAYMENT AND  COMPUTATION.  Interest on each Loan and the
Reimbursement  Obligations  shall be  payable  on the last day of each  Interest
Period applicable thereto. All accrued and unpaid interest shall be paid in full
on the Termination  Date,  together with any amounts payable pursuant to Section
5.6. All other interest rates, fees and commissions  provided hereunder shall be
computed on the basis of a 360-day year and  assessed  for the actual  number of
days elapsed.

          (e) AGREED  INTEREST  RATE.  The  Borrower  agrees to pay an effective
contracted for rate of interest equal to the rate of interest resulting from all
interest  payable as  provided  herein,  plus any  additional  rate of  interest
resulting from the  Additional  Sums.  For the purposes of this  provision,  the
"ADDITIONAL SUMS" shall consist of all fees, charges, goods, things in action or
other  sums or things  of value  (other  than the  interest  resulting  from the
interest  provided herein) paid or payable by the Borrower,  whether pursuant to
this Agreement,  the Notes or any other Loan Document,  that may be deemed to be
interest for the purpose of any Applicable Law that may limit the maximum amount
of  interest  to be charged  with  respect  to the  Extensions  of  Credit.  The
Additional Sums shall be deemed to be additional  interest only for the purposes
of any such Applicable Law.

          (f) MAXIMUM  RATE. In no  contingency  or event  whatsoever  shall the
aggregate  of all amounts  deemed  interest  hereunder or under any of the Notes
exceed the highest rate  permissible  under any  Applicable Law which a court of
competent jurisdiction shall, in a final determination,  deem applicable hereto.
In the event that such a court  determines that the Lenders have contracted for,
charged or received interest hereunder in excess of the highest applicable rate,
the rate in effect hereunder shall  automatically be reduced to the maximum rate
permitted by Applicable Law and the Lenders shall at the Agent's option promptly
refund to the Borrower any interest received by Lenders in excess of the maximum

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<PAGE>
lawful  rate  or  shall  apply  such  excess  to the  principal  balance  of the
Obligations.  It is the intent  hereof that the  Borrower not pay or contract to
pay,  and that neither the Agent nor any Lender  charge,  receive or contract to
receive, directly or indirectly in any manner whatsoever,  interest in excess of
the maximum  non-usurious rate that may be paid by the Borrower under Applicable
Law.

     Section 5.2 COMMITMENTS AND AGENCY FEES.

          (a) In order to compensate  the Agent for its  obligations  hereunder,
the  Borrower  agrees to pay to the Agent for its own account the fees set forth
in a separate letter agreement between the Agent and the Borrower dated February
3, 1998 and  commencing on March 16, 2003,  the Borrower  shall pay the Agent an
annual agency fee of $100,000,  payable annually in advance  commencing on March
16, 2003 and each anniversary thereof until the Termination Date. The agency fee
shall be deemed fully earned when paid.

          (b)  Commencing  on the Closing  Date,  the Borrower  shall pay to the
Agent,  for the account of the New  Facility  Lenders that have not fully funded
their  respective  Commitment  Percentage  of New Facility  Loans on the Closing
Date, a non-refundable commitment fee on the average daily unused portion of the
New Facility Commitment, at a rate per annum of two percent (2%). The commitment
fee shall be payable  monthly in arrears on the last  Business Day of each month
during the term of this  Agreement.  Such commitment fee shall be distributed by
the  Agent to such New  Facility  Lenders  PRO RATA in  accordance  with the New
Facility Lenders' respective New Facility Commitment Percentages.

     Section 5.3 MANNER OF PAYMENT.  Each  payment by the Borrower on account of
the  principal  of or  interest  on the  Loans  or of any fee or  other  amounts
(including without limitation the Reimbursement Obligations and interest accrued
thereon)  payable  to the  Lenders,  the  Issuing  Bank or the Agent  under this
Agreement or any Note shall be made not later than 2:00 p.m.  (New York time) on
the date specified for payment under this Agreement to the Agent for the account
of the Lenders,  proportionately in accordance with their Commitment  Percentage
(except in the case of (a)  payments  made with respect to the  commitment  fees
pursuant to Section  5.2(b),  (b) payments of interest  made with respect to New
Facility  Loans,  which  shall  be made  pro rata in  accordance  with  each New
Facility Lender's  outstanding New Facility Loans, (c) mandatory  prepayments of
principal of New Facility Loans,  which shall be made in accordance with Section
3.3(b),  and (d) payments made by the Borrower to the Issuing Bank in respect of
the Reimbursement  Obligations  pursuant to Section 4.3), at the Agent's Office,
in  Dollars,  in  immediately  available  funds  and shall be made  without  any
set-off,  counterclaim or deduction whatsoever.  Any payment received after such
time but before 5:00 p.m.  (New York time) on such day shall be deemed a payment
on such date for the purposes of Section 12.1,  but for all other purposes shall
be deemed to have been made on the next  succeeding  Business  Day.  Any payment
received  after 5:00 p.m.  (New York time)  shall be deemed to have been made on
the next  succeeding  Business Day for all  purposes.  Upon receipt by the Agent
from the Borrower of each such payment, the Agent shall promptly credit each New
Facility  Lender's account with its pro rata share of such payment in accordance
with such New Facility  Lender's  Commitment  Percentage  (except in the case of
payments made with respect to New Facility  Loans,  which shall be made pro rata
in accordance with each New Facility Lender's outstanding New Facility Loans and
except  in the case of  payment  made by the  Borrower  to the  Issuing  Bank in

                                       34
<PAGE>
respect of the Reimbursement  Obligations on the Reimbursement  Date pursuant to
Section  4.3)) and shall wire  advice of the  amount of such  credit to each New
Facility Lender. Each payment to the Agent of Agent's fees or expenses or to the
Issuing Bank of its fees and expenses and each L/C Participant of any fees owing
thereto shall be made in like manner, but for the account of the Agent,  Issuing
Bank or L/C Participant, as the case may be. If any payment under this Agreement
or any Note  shall be  specified  to be made upon a day which is not a  Business
Day,  it shall be made on the next  succeeding  day which is a Business  Day and
such  extension of time shall in such case be included in computing any interest
if payable along with such payment; provided, that if such extension would cause
payment of interest on or principal of any Loan to be made in the next  calendar
month, such payment shall be made on the next preceding Business Day.

     Section  5.4 NATURE OF  OBLIGATIONS  OF  LENDERS  REGARDING  EXTENSIONS  OF
CREDIT;  ASSUMPTION  BY THE AGENT.  The  obligations  of the Lenders  under this
Agreement  to make the  Loans and the L/C  Participants  to  participate  in the
Letters of Credit are several and are not joint or joint and several. Unless the
Agent shall have  received  notice from a Lender  prior to a proposed  borrowing
date that such Lender will not make available to the Agent such Lender's ratable
portion  of the  amount to be  borrowed  on such date  (which  notice  shall not
release  such Lender of its  obligations  hereunder),  the Agent may assume that
such  Lender  has made  such  portion  available  to the  Agent on the  proposed
borrowing date in accordance with Section 3.2(b), and the Agent may, in reliance
upon  such   assumption,   make  available  to  the  Borrower  on  such  date  a
corresponding  amount.  If such amount is made  available to the Agent on a date
after  such  borrowing  date,  such  Lender  shall pay to the Agent on demand an
amount,  until  paid,  equal to the  product of (a) the amount of such  Lender's
Commitment  Percentage of such  borrowing,  times (b) the daily average  Federal
Funds Rate during such period as determined  by the Agent,  times (c) a fraction
the numerator of which is the number of days that elapse from and including such
borrowing date to the date on which such Lender's Commitment  Percentage of such
borrowing  shall  have  become  immediately  available  to  the  Agent  and  the
denominator  of which is 360. If such  Lender's  Commitment  Percentage  of such
borrowing  is not made  available  to the Agent by such Lender  within three (3)
Business  Days of such  borrowing  date,  the Agent shall be entitled to recover
such amount made  available by the Agent with  interest  thereon at the rate per
annum applicable to such Loan, on demand, from the Borrower. The Agent shall use
reasonable  efforts to provide the Borrower with notice of such Lender's failure
to make its  Commitment  Percentage  available  to the  Agent  prior to any such
demand;  provided,  that the Agent shall incur no  liability  whatsoever  to the
Borrower  in the event it fails to do so. The  failure of any Lender to make its
Commitment  Percentage of any Loan  available  shall not relieve it or any other
Lender of its obligation, if any, hereunder to make its Commitment Percentage of
such Loan available on such  borrowing  date, but no Lender shall be responsible
for the failure of any other Lender to make its  Commitment  Percentage  of such
Loan available on the borrowing date.

     Section 5.5 CHANGED CIRCUMSTANCES.

          (a) CIRCUMSTANCES AFFECTING LIBOR RATE AVAILABILITY.  If, with respect
to any Interest Period,  the Agent or the Required  Lenders (after  consultation
with the Agent) shall determine that, by reason of  circumstances  affecting the
foreign exchange and interbank markets generally, the deposits in eurodollars in
the  applicable  amounts are not being  offered  (through  Telerate Page 3750 or
otherwise) to the Agent or the Required Lenders for such Interest  Period,  then

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<PAGE>
the Agent shall forthwith give notice thereof to the Borrower. Thereafter, until
the Agent notifies the Borrower that such  circumstances  no longer exist (which
notification  shall be given  promptly,  but in any event  within  ten (10) days
after the Agent  obtains  actual  knowledge  that such  circumstances  no longer
exist), the obligation of the Lenders to make Loans, shall be suspended, and the
Borrower shall elect to either (i) repay in full (or cause to be repaid in full)
the then outstanding  principal amount of each such Loan,  together with accrued
interest thereon, on the last day of the then current Interest Period applicable
to such Loan or (i) to convert  the then  outstanding  principal  amount of such
affected Loans and the  Reimbursement  Obligations to a Base Rate Loan as of the
last day of such  Interest  Period  until such  circumstances  no longer  exist,
whereupon  such affected Loans shall convert to LIBOR Rate Loans as of the first
date on which such circumstances no longer exist.

          (b) LAWS AFFECTING LIBOR RATE AVAILABILITY. If, after the date hereof,
the  introduction  of, or any change in, any Applicable Law or any change in the
interpretation or administration thereof by any Governmental Authority,  central
bank or comparable  agency  charged with the  interpretation  or  administration
thereof,  or  compliance  by any  Lender  (or any of  their  respective  Lending
Offices) with any directive of any such Governmental Authority,  central bank or
comparable  agency,  shall make it unlawful or impossible for any of the Lenders
(or any of their respective Lending Offices) to honor its obligations  hereunder
to make or maintain any Loan,  such Lender shall promptly give notice thereof to
the Agent and the Agent shall promptly give notice to the Borrower and the other
Lenders.   Thereafter,   until  the  Agent   notifies  the  Borrower  that  such
circumstances no longer exist (which  notification shall be given promptly,  but
in any event within ten (10) days after the Agent obtains actual  knowledge that
such  circumstances  no longer  exist),  the  obligations of the Lenders to make
Loans, shall be suspended,  and the Borrower shall repay in full (or cause to be
repaid  in full)  the then  outstanding  principal  amount  of each  such  Loan,
together  with  accrued  interest  thereon,  on the last day of the then current
Interest  Period  applicable  to  such  Loan or  convert  the  then  outstanding
principal amount of such Loans and Reimbursement Obligations to a Base Rate Loan
as of the last day of such Interest Period.

          (c) INCREASED COSTS.  If, after the date hereof,  the introduction of,
or any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration  thereof,  or compliance by any of the
Lenders or the Issuing Bank (or any of their  respective  Lending  Offices) with
any directive of such Governmental Authority, central bank or comparable agency:

               (i) shall  subject any of the Lenders or the Issuing Bank (or any
of their  respective  Lending  Offices)  to any tax,  duty or other  charge with
respect to any Loan or Letter of Credit or shall change the basis of taxation of
payments to any of the Lenders (or any of their  respective  Lending Offices) or
the Issuing  Bank of the  principal  of or interest on any Loan or the amount of
any  Reimbursement  Obligation  in respect of any Letter of Credit  (except  for
changes in the rate of tax on the  overall  net income of any of the Lenders (or
any of their respective Lending Offices) or the Issuing Bank; or

               (ii)  shall  impose,   modify  or  deem  applicable  any  reserve
(including,  without  limitation,  any imposed by the Board of  Governors of the
Federal  Reserve  System  other  than any  change in the  Reserve  Requirements)

                                       36
<PAGE>
special deposit,  insurance or similar  requirement  against assets of, deposits
with or for the  account  of, or credit  extended  by any of the  Lenders or the
Issuing Bank (or any of their respective  Lending Offices) with respect to Loans
or  participation in the Letters of Credit or shall impose on any of the Lenders
(or any of their respective  Lending Offices) or the Issuing Bank or the foreign
exchange  and  interbank  markets  any  other  condition  affecting  any Loan or
participation  in Letter of Credit or to the  Issuing  Bank in  maintaining  any
Letter of Credit;  and the result of any of the  foregoing  is to  increase  the
costs to any of the  Lenders  of the  Issuing  Bank of  maintaining  any Loan or
participating  in any  Letter of Credit or to reduce  the yield or amount of any
sum received or  receivable by any of the Lenders or the Issuing Bank under this
Agreement, an Application or Letter of Credit or under the Notes in respect of a
Loan, then such Lender or the Issuing Bank shall promptly notify the Agent,  and
the  Agent  shall  promptly   notify  the  Borrower  of  such  fact  and  demand
compensation  therefor  and,  within  fifteen (15) days after such notice by the
Agent,  the Borrower  shall pay to such Lender or Issuing  Bank such  additional
amount or amounts as will compensate such Lender,  Lenders,  or Issuing Bank for
such increased cost or reduction. The Agent will promptly notify the Borrower of
any  event of which it has  knowledge  which  will  entitle  such  Lender of the
Issuing Bank to compensation pursuant to this Section 5.5(c); PROVIDED, that the
Agent shall incur no liability  whatsoever  to the Lenders,  the Issuing Bank or
the Borrower in the event it fails to do so. The Agent shall supply the Borrower
with a  certificate  setting  forth the basis for  determining  such  additional
amount or amounts necessary to compensate such Lender, Lenders or Issuing Bank.

          (d) In the event that any Lender  shall  determine at any time that by
reason of Regulation D of the Board of Governors of the Federal  Reserve  System
(or any  successor  regulation),  such Lender is  required  to maintain  Reserve
Requirements  during any  period  that it has any Loans  outstanding,  then such
Lender  shall  promptly  notify the  Borrower by written  notice (or  telephonic
notice  promptly  confirmed  in  writing)   specifying  the  additional  amounts
reasonably  determined  by the Lender to be  required to  indemnify  such Lender
against the cost of maintaining such Reserve  Requirements  (such written notice
to provide a  computation  of such  additional  amounts) and the Borrower  shall
directly  pay to such  Lender  such  specified  amounts as  additional  interest
hereunder.

          (e) If any Lender is funding its Loans or other  Extensions  of Credit
hereunder through a credit  agreement,  line of credit or other loan arrangement
(each a, "FUNDING SOURCE AGREEMENT") which contains  provisions similar to those
set forth in Sections 5.5(a),  5.5(b), 5.5(c), 5.5(d) or 5.7, and such Lender is
required by the terms of such  Funding  Source  Agreement  to pay to one or more
lenders under such Funding Source Agreement  increased  amounts similar to those
payable under Sections 5.5(a),  5.5(b), 5.5(c), 5.5(d) or 5.7, then the Borrower
shall promptly pay to such Lender, upon receipt of a written statement from such
Lender,  setting forth in reasonable detail the basis of the calculation of such
compensation or  reimbursement  (which statement shall be conclusive and binding
upon all parties  hereto  absent  manifest  error),  such  additional  amount or
amounts as may be necessary to compensate such Lender for the increased  amounts
payable  under such Funding  Source  Agreement,  as such  increased  amounts are
reasonably  apportioned  by such Lender to the Loans made by such  Lender.  Such
Lender may assume for purposes of apportioning  such increased  amounts that the

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Loans made  hereunder by such Lender were funded  entirely by  borrowings  under
such Funding Source Agreement.

     Section 5.6 INDEMNITY.  The Borrower hereby indemnifies each of the Lenders
against any loss or expense actually  incurred by such Lender in connection with
such  Lender's  obtaining,  liquidating  or  employing  deposits  or other funds
acquired  to effect,  fund or  maintain  the Loans (a) as a  consequence  of any
failure by the Borrower to make any payment when due of any amount due hereunder
in connection with a Loan, (b) due to any failure of the Borrower to borrow on a
date  specified  therefor in a Notice of  Borrowing or (c) due to any payment or
prepayment of any Loan on a date other than the last day of the Interest  Period
therefor.  Each  Lender's  calculations  of any such  loss or  expense  shall be
furnished to the Borrower.

     Section 5.7 CAPITAL  REQUIREMENTS.  If,  after the date of this  Agreement,
either (a) the introduction of, or any change in, or in the  interpretation  of,
any  Applicable  Law or (b)  compliance  with any  guideline or request from any
central bank or comparable agency or other  Governmental  Authority  (whether or
not having the force of law),  has the effect of reducing  the rate of return on
the capital of, or has affected the amount of capital  required to be maintained
by, any Lender or any corporation  controlling  such Lender as a consequence of,
or with reference to its Commitment  and other  commitments of this type,  below
the rate which the Lender or such other  corporation could have achieved but for
such  introduction,  change or  compliance,  then within fifteen (15) days after
written  demand by any such Lender,  the Borrower  shall pay to such Lender from
time to time as  specified  by such  Lender  additional  amounts  sufficient  to
compensate such Lender or other corporation for such reduction. A certificate as
to such amounts shall be submitted to the Borrower and the Agent by such Lender.

     Section 5.8 TAXES.

          (a)  PAYMENTS  FREE AND CLEAR.  Any and all  payments by the  Borrower
hereunder  or under  the  Notes  shall be made  free  and  clear of and  without
deduction for any and all present or future taxes, levies, imposts,  deductions,
charges or withholding,  and all liabilities with respect thereto excluding,  in
the case of each  Lender and the Agent,  income  and  franchise  taxes (all such
non-excluded  taxes,  levies,  imposts,  deductions,  charges,  withholdings and
liabilities being hereinafter referred to as "TAXES").  If the Borrower shall be
required  by law to  deduct  any Taxes  from or in  respect  of any sum  payable
hereunder  or under any Note to any  Lender or the  Agent,  (A) the sum  payable
shall be  increased  as may be  necessary  so that  after  making  all  required
deductions  (including  deductions  applicable to additional  sums payable under
this  Section  5.8) such  Lender or the Agent (as the case may be)  receives  an
amount equal to the amount such party would have received had no such deductions
been made, (B) the Borrower shall make such  deductions,  (C) the Borrower shall
pay the full amount deducted to the relevant taxing authority or other authority
in accordance  with  Applicable  Law, and (D) the Borrower  shall deliver to the
Agent  evidence  of such  payment  to the  relevant  taxing  authority  or other
authority in the manner provided in Section 5.8(d).

          (b) STAMP AND OTHER  TAXES.  In addition,  the Borrower  shall pay any
present or future stamp,  registration,  recordation or documentary taxes or any
other  similar  fees or charges or excise or property  taxes (other than income,
franchise, excise and property taxes to which the Agent or any Lender would have
been subject in the absence of this  Agreement and the provision for security in

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connection with the execution of this Agreement), levies of the United States or
any  state  or  political   subdivision   thereof  or  any  applicable   foreign
jurisdiction  which arise from any payment made hereunder or from the execution,
delivery or registration  of, or otherwise with respect to, this Agreement,  the
Loans,  the other Loan  Documents,  or the  perfection of any rights or security
interest in respect thereto (hereinafter referred to as "OTHER TAXES").

          (c) INDEMNITY.  The Borrower shall indemnify each Lender and the Agent
for the full amount of Taxes and Other Taxes (including, without limitation, any
Taxes and Other Taxes imposed by any  jurisdiction on amounts payable under this
Section  5.8)  paid by such  Lender  or the  Agent  (as the case may be) and any
liability (including  penalties,  interest and expenses) arising or with respect
thereto; PROVIDED, that this indemnification shall not apply to any Taxes, Other
Taxes or related  liability  arising as the  result of the gross  negligence  or
willful  misconduct  of any Lender.  Such  indemnification  shall be made within
thirty  (30) days  from the date  such  Lender or the Agent (as the case may be)
makes written demand therefor.

          (d) EVIDENCE OF PAYMENT. Within thirty (30) days after the date of any
payment of Taxes or Other Taxes, the Borrower shall furnish to the Agent, at its
address  referred to in Section  14.1,  the  original  or a certified  copy of a
receipt  evidencing  payment  thereof or other  evidence  of payment  reasonably
satisfactory to the Agent.

          (e) DELIVERY OF TAX FORMS.  Each Lender  organized under the laws of a
jurisdiction  other than the United States or any state thereof shall deliver to
the Borrower, with a copy to the Agent, on the Closing Date or concurrently with
the delivery of the relevant Assignment and Acceptance,  as applicable,  (i) two
United States  Internal  Revenue Service Forms 4224 or Forms 1001, as applicable
(or successor  forms)  properly  completed and certifying in each case that such
Lender is entitled to a complete  exemption from withholding or deduction for or
on account of any United States federal income taxes,  (ii) an Internal  Revenue
Service Form W-8 or W-9 or  successor  applicable  form,  as the case may be, to
establish an exemption from United States backup withholding taxes and (iii) any
similar form required by state law. Each such Lender  further  agrees to deliver
to the Borrower,  with a copy to the Agent,  a Form 1001 or 4224 and Form W-8 or
W-9, or successor  applicable forms or manner of certification,  as the case may
be, on or before  the date that any such form  expires or  becomes  obsolete  or
after the  occurrence  of any event  requiring  a change in the most recent form
previously  delivered by it to the  Borrower,  certifying  in the case of a Form
1001 or 4224 that  such  Lender is  entitled  to  receive  payments  under  this
Agreement  without  deduction or withholding of any United States federal income
taxes (unless in any such case an event (including without limitation any change
in treaty,  law or regulation)  has occurred prior to the date on which any such
delivery would  otherwise be required which renders such forms  inapplicable  or
the exemption to which such forms relate  unavailable  and such Lender  notifies
the Borrower and the Agent that it is not entitled to receive  payments  without
deduction or withholding of United States federal income taxes) and, in the case
of a Form W-8 or W-9,  establishing  an  exemption  from  United  States  backup
withholding tax.

          (f) SURVIVAL. Without prejudice to the survival of any other agreement
of the  Borrower  hereunder,  the  agreements  and  obligations  of the Borrower
contained  in  this  Section  5.8  shall  survive  the  payment  in  full of the
Obligations and the termination of the Commitments.

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<PAGE>
     Section 5.9 CHANGE IN LENDING  OFFICE.  Each Lender  agrees that,  upon the
occurrence  of any event giving rise to the operation of Sections 5.5, 5.6, 5.7,
or 5.8 with  respect to such  Lender,  it will use its best efforts to designate
another  lending  office as its  Lending  Office for any Loans  affected by such
event with the intent of avoiding  the  consequence  of the event giving rise to
the operation of any such Section;  provided,  that such  designation is made on
such terms that such Lender and its Lending Office suffer no material  economic,
legal or regulatory disadvantage as a consequence thereof.

                                    ARTICLE 6
           CLOSING; CONDITIONS OF CLOSING, BORROWING AND ACQUISITIONS

     Section  6.1  CLOSING.  The  closing  shall  take  place at the  offices of
Milbank,  Tweed,  Hadley & McCloy LLP at 10:00 a.m. on September  30, 2002 or on
such other date and at such other place as the  parties  hereto  shall  mutually
agree.

     Section 6.2  CONDITIONS TO CLOSING AND INITIAL  EXTENSIONS  OF CREDIT.  The
obligation of the Lenders and the Issuing Bank to close the Related Transactions
and to provide the Credit Facility on the terms and conditions of this Agreement
and the  effectiveness  of this  Agreement are subject to the  satisfaction  (or
waiver by each of the  Lenders and the  Issuing  Bank) of each of the  following
conditions:

          (a) EXECUTED LOAN DOCUMENTS. The following Loan Documents, in form and
substance  reasonably  satisfactory  to the  Agent,  the  Issuing  Bank and each
Lender:

               (i)  this Agreement;

               (ii) the Term Notes;

              (iii) the New Facility Notes;

               (iv) the Subsidiary Guaranty Agreement;

               (v)  the Intercompany Subordination Agreement; and

               (vi) the  Application  for the  extension  of the CNA  Letter  of
Credit,  the issuance of the MedStar Letter of Credit and/or the issuance of the
Reliance  Letter of Credit,  if such extension or issuances are  contemplated on
the Closing Date; shall have been duly authorized, executed and delivered by the
applicable  Credit Parties,  shall be in full force and effect and no Default or
Event of Default  shall exist  thereunder,  and such Credit  Parties  shall have
delivered original counterparts thereof to the Agent.

          (b) CLOSING CERTIFICATES AND OPINIONS; ETC.

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<PAGE>
               (i) CERTIFICATE OF THE BORROWER.  The Agent shall have received a
certificate  from the chief executive  officer and chief  restructuring  officer
(and/or such other  officers  acceptable to the Agent) of the Borrower,  in form
and substance satisfactory to the Agent, certifying that all representations and
warranties  of the  Borrower  contained  in this  Agreement  and the other  Loan
Documents are true and correct in all material respects; that no Credit Party is
in violation of any of the covenants  contained in this  Agreement and the other
Loan Documents;  that, after giving effect to the  transactions  contemplated by
this  Agreement,  no Default or Event of Default has occurred and is continuing;
and that the Credit Parties have satisfied each of the closing conditions.

               (ii) CLOSING  CERTIFICATE  OF EACH CREDIT PARTY.  The Agent shall
have  received a  certificate  of the  secretary or assistant  secretary of each
Credit Party certifying, as applicable,  that (A) attached thereto is a true and
correct copy of the articles of  incorporation  and bylaws of the Borrower  with
all amendments thereto as in effect on the Closing Date; (B) attached thereto is
a true and complete copy of  resolutions  duly adopted by the Board of Directors
of each Credit Party or the general  partner or member of such Credit Party,  as
applicable, authorizing the transactions contemplated herein, and the execution,
delivery and performance of this Agreement and the Loan Documents to which it is
a party;  and (C) as to the incumbency and  genuineness of the signature of each
officer of such  Credit  Party or the  general  partner or member of such Credit
Party, as applicable  executing any Loan Documents to which such Credit Party is
a party.

               (iii)  OPINIONS  OF  COUNSEL.   The  Agent  shall  have  received
favorable  opinions of counsel to the  Borrower  and the  Subsidiary  Guarantors
addressed  to the  Agent and  Lenders  with  respect  to the  Borrower,  certain
Subsidiary Guarantors,  the Loan Documents and such other matters as the Lenders
shall reasonably request,  substantially in form and substance acceptable to the
Issuing Bank and the Lenders.

               (iv) TAX FORMS.  The Agent and the Borrower  shall have  received
originals of the forms required by Section 5.8(e) hereof.

          (c) CONSENTS; NO ADVERSE CHANGE.

               (i)  GOVERNMENTAL  AND  THIRD  PARTY  APPROVALS.   All  necessary
approvals,  authorizations  and  consents of any Person and of all  Governmental
Authorities  and courts  having  jurisdiction  with respect to the  transactions
contemplated  by this Agreement and the Loan Documents  shall have been obtained
and remain in full force and effect.

               (ii) PERMITS AND LICENSES.  All permits and  licenses,  including
permits and licenses required under Applicable Laws, necessary to the conduct of
business by the Credit Parties shall have been obtained and remain in full force
and effect.

               (iii) NO INJUNCTION,  ETC. No action, proceeding,  investigation,
regulation or legislation  shall have been  instituted,  nor to the knowledge of
the  Borrower,  threatened  or proposed  before any  Governmental  Authority  to
enjoin,  restrain,  or prohibit, or to obtain substantial damages in respect of,
or which is  related  to or  arises  out of this  Agreement  or the  other  Loan

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<PAGE>
Documents  or  the  consummation  of the  transactions  contemplated  hereby  or
thereby.

               (iv) NO MATERIAL ADVERSE CHANGE. Since June 30, 2002, there shall
not have  occurred  any event,  condition  or state of facts that is  reasonably
likely to have a Material Adverse Effect.

               (v) NO EVENT OF  DEFAULT.  No Default  or Event of Default  shall
have occurred and be continuing.

          (d) FINANCIAL MATTERS.

               (i)  FINANCIAL  STATEMENTS.  The Agent and each Lender shall have
received recent annual and interim  Consolidated  financial statements and other
financial  information with respect to the Borrower  prepared in accordance with
GAAP. Without limitation of the foregoing,  the Agent and each Lender shall have
received (1) draft audited  financial  statements for the Fiscal Year ended June
30, 2002, (2) the draft audit opinion of PricewaterhouseCoopers LLP, and (3) the
unaudited financial statements for the two month period ending August 31, 2002.

               (ii) FINANCIAL CONDITION CERTIFICATE. The chief financial officer
and chief executive  officer of the Borrower shall have delivered to the Agent a
certificate  on behalf of the  Borrower  stating  that:  (A) the payables of the
Borrower and each of its Subsidiaries  are generally  current and are being paid
in accordance with customary trade  practices  (subject to normal  disputes) and
the  Borrower  and its  Subsidiaries,  taken as a  whole,  are  Solvent  and (B)
attached  thereto  is a  pro  forma  balance  sheet  of  the  Borrower  and  its
Subsidiaries  as of a date  that is not more than 45 days  prior to the  Closing
Date setting forth on a pro forma basis the financial  condition of the Borrower
and its Subsidiaries on a Consolidated basis as of that date and reflecting on a
pro forma basis the effect of the  transactions  contemplated  herein (as if the
Closing Date were the date of the pro forma calculation), including all material
fees and  expenses in  connection  herewith,  with a  statement  from such chief
financial  officer on behalf of the Borrower and each of its  Subsidiaries  that
the projections and assumptions  expressed  therein were reasonably based on the
information  available  to the  Borrower  and its  Subsidiaries  at the  time so
furnished.

               (iii)  PROJECTIONS.  The  Agent  shall  have  received  projected
quarterly  financial  statements  of the Borrower and its  Subsidiaries  for the
Fiscal Years 2003,  2004 and 2005,  substantially  in a form  acceptable  to the
Issuing  Bank  and  the  Lenders,  such  projections  to  be  accompanied  by  a
certificate of the chief financial  officer and chief  executive  officer of the
Borrower to the effect that such projections,  in the reasonable judgment of the
Borrower,  are  (A)  based  on  estimates  and  assumptions,  all of  which  are
reasonable in light of the conditions which existed at the time such projections
were  made,  (B) have  been  prepared  on the  basis of the  assumptions  stated
therein,  and reflect,  as of the time so furnished  and the Closing  Date,  the
reasonable  estimate of the Borrower of the results of the  operations and other
information projected therein, and (C) are consistent with the Business Plan.

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<PAGE>
               (iv) RETAINER.  The Borrower shall have caused a cash retainer in
the aggregate  amount of $50,000 to be held by Milbank,  Tweed,  Hadley & McCloy
LLP.

               (v)  PAYMENT  AT  CLOSING.  There  shall  have  been  paid by the
Borrower to the Agent,  the Issuing  Bank and the Lenders (A) the fees set forth
or referenced in Section 5.2 and any other accrued and unpaid  interest,  letter
of credit fees and any other fees,  charges or expenses  due under the  Existing
Credit  Agreement and/or the Waiver  Agreement,  which accrued during the period
from  September 1, 2002 to the Closing  Date,  which will not be converted  into
Term Loans, (B) all reasonable out-of-pocket expenses incurred by the Agent, the
Issuing  Bank  and  any of the  Lenders  in  connection  with  the  preparation,
negotiation and  documentation  of this Agreement and the Related  Transactions,
(C) all  reasonable  fees and  expenses of Milbank,  Tweed,  Hadley & McCloy LLP
incurred in connection  with the  preparation,  negotiation,  documentation  and
execution  of this  Agreement  and the Related  Transactions  for which  written
statements  have been  delivered to the  Borrower,  and to any other Person such
amount as may be due thereto in connection  with the  transactions  contemplated
hereby,  including  all taxes,  fees and other  charges in  connection  with the
execution,  delivery,  recording,  filing  and  registration  of any of the Loan
Documents.

               (vi) CREDIT RATING.  The Agent shall have received  evidence that
the  Borrower  has a credit  rating of "CCC" or higher  from  Standard  & Poor's
Services,  a  division  of The  McGraw-Hill  Companies,  or "B3" or higher  from
Moody's Investors Service, Inc.

               (vii)  CERTIFICATE  OF  DESIGNATION.  The Borrower  shall provide
evidence  satisfactory to the Agent that the Certificate of Designation has been
filed with the Secretary of State of the State of Delaware.

               (viii)  ISSUANCE  OF  PREFERRED  STOCK.  The  Lenders  shall have
received the Preferred  Stock to be issued by the Borrower to each Lender or its
nominee in accordance with the percentages set forth in ANNEX D.

               (ix) REGISTRATION RIGHTS AGREEMENT.  The Borrower and each of the
Lenders shall have entered into the Registration Rights Agreement.

          (e) NOTICE OF BORROWING AND ACCOUNT DESIGNATION.  The Agent shall have
received a Notice of Borrowing  contemplated  under Section  3.2(c) at least two
Business Days prior to the Closing Date.  The Agent shall have received  written
instructions  from the  Borrower  to the  Agent  directing  the  payment  of any
proceeds  of any Loans  made  under  this  Agreement  that are to be paid on the
Closing  Date.  The  Borrower  shall also have  delivered  to the Agent a notice
specifying the account or accounts in the form of EXHIBIT K hereto (a "NOTICE OF
ACCOUNT  DESIGNATION")  to which the  proceeds of any Loans made on or after the
Closing Date are to be  disbursed;  PROVIDED,  HOWEVER,  that the proceeds  with
respect to any New Facility Loans shall be disbursed in accordance  with Section
9.13.

          (f) DOCUMENTATION RELATING TO LATIN AMERICAN DIVESTITURE. The Borrower
shall have  delivered  copies of the draft  documentation  relating to the Latin
American  Divestiture,  together with evidence  satisfactory  to the Agent,  the
Issuing Bank and the Lenders that such divestiture  shall not result in any cash
or tax losses to the Borrower and that the documentation  shall provide that the

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Borrower and all of its  Subsidiaries  shall be fully  released and  indemnified
from all known and  unknown  liabilities  (whether  existing  or  arising in the
future)  in  connection  with  the  Latin  American  operations  of  Rural/Metro
International and its Subsidiaries and Affiliates.

          (g) MISCELLANEOUS.

               (i) PROCEEDINGS  AND DOCUMENTS.  All opinions,  certificates  and
other  instruments  and all  proceedings  in  connection  with the  transactions
contemplated  by this  Agreement  shall be reasonably  satisfactory  in form and
substance to the Lenders.  The Lenders shall have  received  copies of all other
instruments  and other evidence as the Lenders may reasonably  request,  in form
and  substance  reasonably  satisfactory  to the  Lenders,  with  respect to the
transactions  contemplated  by this  Agreement  and the taking of all actions in
connection therewith.

               (ii) DUE DILIGENCE AND OTHER  DOCUMENTS.  The Borrower shall have
delivered to the Agent and the Issuing Bank such other  documents,  certificates
and opinions as the Agent and the Issuing Bank reasonably requests.

     Section  6.3  CONDITIONS  TO ALL  PERMITTED  ACQUISITIONS.  Each  Permitted
Acquisition  shall be subject to the satisfaction on the applicable  acquisition
date of the following conditions precedent:

          (a) COMPLIANCE WITH SECTION 11.4(F).  The Borrower shall have complied
with  the  provisions  of  Section  11.4(f)  in form  and  substance  reasonably
satisfactory to the Required Lenders.

          (b)  SUBORDINATED  SELLER  FINANCING  AND  EARN-OUT  OBLIGATIONS.  All
Subordinated  Seller Financing and Earn-Out  Obligations in connection with such
Permitted Acquisition shall comply with the terms and conditions of EXHIBIT J.

          (c)  REPRESENTATIONS  AND WARRANTIES.  Each of the representations and
warranties  set forth in Article 7 shall be true and correct with respect to the
acquired Person as if made on such date.

     Section 6.4  CONDITIONS TO MAJOR  PERMITTED  ACQUISITIONS.  Each  Permitted
Acquisition  (a) of a Domestic  Subsidiary or assets  located  within the United
States with a fair market value of all  consideration  paid in  connection  with
such  Permitted  Acquisition  exceeding  $10,000,000  (of  which  no  more  than
$2,500,000  of  such  consideration  shall  be paid  in  cash  and no more  than
$7,500,000 of such consideration  shall be in the form of assumed Debt that must
be  subordinated to the  Obligations)  or (b) of a Foreign  Subsidiary or assets
located  in  Canada  with a fair  market  value  of all  consideration  paid  in
connection with such Permitted  Acquisition  exceeding $750,000 (c) of a Foreign
Subsidiary or assets located  outside of the United States or Canada with a fair
market  value  of all  consideration  paid in  connection  with  such  Permitted
Acquisition  exceeding  $250,000,  shall  be,  in  each  case,  subject  to  the
satisfaction,  on or  before  ten (10)  Business  Days  prior to the  applicable
acquisition date, of the following conditions precedent:

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               (i)  DESCRIPTION.  The Agent shall have received a description of
the Person to be acquired and a description of the acquisition.

               (ii)  FINANCIAL   STATEMENTS.   The  Agent  shall  have  received
financial  statements  and other  financial  information  for each Person  being
acquired in such Permitted  Acquisition  for the most recent two (2) year period
(or such shorter period for which such Person has been in existence).

               (iii) PROJECTED INCOME STATEMENTS.  The Agent shall have received
projected  statements  of income for the  acquired  Person for the two (2) years
immediately following the acquisition.

               (iv) PRO-FORMA  COMPLIANCE.  The Borrower shall have demonstrated
PRO FORMA  compliance with each covenant  contained in Article 10 and Article 11
hereof for the four (4) fiscal quarters ending immediately after the acquisition
based on the preparation requirements of SEC Regulation S-X, Rule 11-02.

     Section 6.5 CONDITIONS TO ALL EXTENSIONS OF CREDIT.

          (a) The  obligations  of the Lenders to make any New Facility Loan and
of the Issuing  Bank to extend the expiry  date of the CNA Letter of Credit,  to
issue the MedStar  Letter of Credit and to issue the  Reliance  Letter of Credit
is, in each  case,  subject  to the  satisfaction  of the  following  conditions
precedent on the relevant borrowing date (where applicable):

               (i)   CONTINUATION  OF   REPRESENTATIONS   AND  WARRANTIES.   The
representations and warranties made by the Borrower contained in Article 7 shall
be true and correct in all material  respects on and as of such  borrowing  date
with  the  same  effect  as if  made  on and as of  such  date,  except  for any
deviations from such  representations and warranties expressly permitted by this
Agreement  and except for any  waivers of such  representations  and  warranties
granted by the Required Lenders in writing.

               (ii) NO EXISTING  DEFAULT.  No Default or Event of Default  shall
have occurred and be continuing  hereunder on the borrowing date with respect to
such New Facility Loan after giving effect to the New Facility  Loans to be made
on such date.

               (iii) [INTENTIONALLY OMITTED]

               (iv) DELIVERY OF APPLICATIONS. In the case of the issuance of the
MedStar  Letter of Credit or the  Reliance  Letter of Credit,  the Issuing  Bank
shall  have  received  copies  of  the  respective  Application  and  all  other
documentation  contemplated under Section 4.1(c) in accordance with the required
timeframe therefor.

               (v)  DELIVERY  OF  RELEASE.  In the case of the  issuance  of the
MedStar Letter of Credit, the Issuing Bank shall have received a general release
of all claims  associated  such Letter of Credit  (including  the Issuing Bank's
decision  to  dishonor a proposed  drawdown  made  thereunder),  executed by the
Borrower and the beneficiary  under such Letter of Credit in favor of the Agent,
the  Issuing  Bank and the  Lenders in form and  substance  satisfactory  to the
Agent, the Issuing Bank and the Required Lenders.

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<PAGE>
               (vi) PREPAYMENT OF TERM LOANS. In the case of the issuance of the
Reliance  Letter of  Credit,  the  Borrower  shall have made or will be making a
concurrent  repayment of the Term Loans in the aggregate  principal amount equal
to the face amount of the  Reliance  Letter of Credit to be issued from the cash
collateral  to be released by Reliance  Insurance  Company in exchange  for such
Letter of Credit in accordance with Section 3.3(b)(v).

          (b) In addition to the  conditions  set forth in Section 6.5(a) above,
the  obligations of the Lenders to make any New Facility Loan to the Borrower is
conditioned upon the Borrower providing  evidence  satisfactory to the Agent and
the  Lenders  of the  amount of the  associated  New  Letter  of Credit  and the
underlying  certificates,  documents and other papers and information  regarding
the transaction that such New Letter of Credit supports.

                                    ARTICLE 7
                 REPRESENTATIONS AND WARRANTIES OF THE BORROWER

     Section  7.1  REPRESENTATIONS  AND  WARRANTIES.  To induce the  Agent,  the
Issuing Bank and each Lender to enter into this  Agreement  and to make any Loan
and to issue or  participate in any Letters of Credit,  the Borrower  represents
and warrants to the Agent and the Lenders that:

          (a) ORGANIZATION;  POWER; QUALIFICATION.  Each of the Borrower and its
Subsidiaries is duly organized,  validly existing and in good standing under the
laws of the jurisdiction of its  incorporation  or formation,  has the power and
authority  to own its  respective  properties  and to  carry  on its  respective
businesses  as now being  conducted and is duly  qualified and  authorized to do
business  in  each  jurisdiction  in  which  the  character  of  its  respective
properties   or  the  nature  of  its   respective   businesses   requires  such
qualification and authorization, except where the failure to be so qualified and
authorized  could not reasonably be expected to have a Material  Adverse Effect.
The  jurisdictions  in which the Borrower and its Subsidiaries are organized and
qualified  to do  business  as of the  Closing  Date are  described  on SCHEDULE
7.1(A).

          (b) SUBSIDIARIES AND OWNERSHIP.  Each Subsidiary of the Borrower as of
the Closing Date is listed on SCHEDULE  7.1(B).  Such SCHEDULE 7.1(B)  indicates
every Subsidiary that is a Subsidiary Guarantor.  All outstanding shares of such
Subsidiaries have been duly authorized and validly issued and are fully paid and
non-assessable.  The  shareholders of all Subsidiaries of the Borrower as of the
Closing  Date and the number of shares  owned by each are  described on SCHEDULE
7.1(B).  There  are  no  outstanding  stock  purchase  warrants,  subscriptions,
options,  securities,  instruments  or  other  rights  of  any  type  or  nature
whatsoever,  which are convertible  into,  exchangeable for or otherwise provide
for or permit the issuance of capital stock of the Borrower or its  Subsidiaries
as of the Closing Date, except as described on SCHEDULE 7.1(B).

          (c)  AUTHORIZATION OF AGREEMENT,  NOTES, LOAN DOCUMENTS AND BORROWING.
Each of the Borrower and its Subsidiaries has the right, power and authority and
has taken all necessary  corporate and other action to authorize the  execution,
delivery and performance of this Agreement, the Notes and each of the other Loan
Documents to which it is a party in accordance with their  respective  terms. As
of the Closing  Date and as of the date of each  Extension  of Credit made after
the Closing Date, this Agreement, the Notes and each of the other Loan Documents
to which each of the  Borrower  and its  Subsidiaries  is a party have been duly
executed and delivered by the duly authorized  officers of the Borrower and each

                                       46
<PAGE>
of its  Subsidiaries  party  thereto  and,  on and after  such  date,  each such
document constitutes the legal, valid and binding obligation of the Borrower and
each of its Subsidiaries party thereto, enforceable in accordance with its terms
except as such enforcement may be limited by applicable bankruptcy,  insolvency,
reorganization  or other similar laws relating to or limiting  creditors' rights
generally or by general equity principles.

          (d) COMPLIANCE OF AGREEMENT,  NOTES, LOAN DOCUMENTS AND BORROWING WITH
LAWS,  ETC.  The  execution,  delivery and  performance  by the Borrower and its
Subsidiaries  of the Loan  Documents  to which each such Person is a party,  the
borrowings hereunder and the transactions contemplated hereby and thereby do not
and will not, by the  passage of time,  the giving of notice or  otherwise,  (i)
require any Governmental  Approval or violate any Applicable Law relating to the
Borrower  or any of its  Subsidiaries  except  those  approvals  which have been
obtained,  (ii)  conflict  with,  result in a breach of or  constitute a default
under  (A)  the  articles  of  incorporation,  bylaws  or  other  organizational
documents of the Borrower or any of its Subsidiaries or any Material Contract to
which  the  Borrower  or any of its  Subsidiaries  is a party or by which any of
their  respective  properties  may be  bound  or (B) any  Governmental  Approval
relating  to the  Borrower  or any of its  Subsidiaries  or (iii)  result  in or
require  the  creation  or  imposition  of any Lien upon or with  respect to any
property  now  owned  or  hereafter  acquired  by  the  Borrower  or  any of its
Subsidiaries other than Liens arising under the Loan Documents.

          (e) COMPLIANCE WITH LAW; GOVERNMENTAL APPROVALS.  Each of the Borrower
and its Subsidiaries (i) have all material  Governmental  Approvals  required by
any  Applicable  Law for them to conduct their  respective  businesses,  each of
which is in full force and effect,  is final and not subject to review on appeal
and is not the subject of any pending or, to the  knowledge  of the  Borrower or
any of its Subsidiaries, threatened proceeding, (ii) are in compliance with each
Governmental  Approval  applicable  to them and in  compliance  with  all  other
Applicable Laws relating to them or any of their respective  properties,  except
in each case  where the  failure  to so comply,  either  individually  or in the
aggregate,  could not  reasonably be expected to have a Material  Adverse Effect
and (iii) are eligible to  participate as suppliers  under Medicare  Regulations
and  Medicaid  Regulations,  except  where the failure to be eligible  could not
reasonably be expected to have a Material Adverse Effect.

          (f)  MEDICARE   PARTICIPATION/ACCREDITATION.   The  Borrower  and  its
Domestic  Subsidiaries  are  qualified to  participate  as  suppliers  under the
Medicare  Regulations and Medicaid  Regulations  (together with their respective
intermediaries  or carriers,  the "GOVERNMENT  REIMBURSEMENT  PROGRAMS") and are
entitled to reimbursement  under the Medicare  program for services  rendered to
qualified Medicare  beneficiaries,  and comply in all material respects with the
conditions of participation in all Government Reimbursement Programs in which it
participates  or has  participated.  There is no pending or, to Borrower's  best
knowledge after due inquiry,  threatened  proceeding or  investigation by any of
the  Government   Reimbursement   Programs  in  which  it  participates  or  has
participated  with  respect  to (i)  the  Borrower's  or  any  of  its  Domestic
Subsidiaries'   qualification   or  right  to   participate  in  any  Government
Reimbursement  Program in which it  participates or has  participated,  (ii) the
compliance or non-compliance by the Borrower or any of its Domestic Subsidiaries
with the terms or provisions of any Government  Reimbursement  Program, or (iii)
the right of the  Borrower  or any of its  Domestic  Subsidiaries  to receive or
retain   amounts   received  or  due  or  to  become  due  from  any  Government
Reimbursement  Program  in  which it  participates  or has  participated,  which

                                       47
<PAGE>
proceeding  or  investigation,  together  with all other  such  proceedings  and
investigations,  could  reasonably  be expected  to (x) have a Material  Adverse
Effect or (y) result in Consolidated Net Revenues for any (including any future)
four  fiscal  quarter  period  of the  Borrower  constituting  less  than 95% of
Consolidated  Net Revenues for the  immediately  preceding  four fiscal  quarter
period of the Borrower.

          (g) FRAUD AND ABUSE. Neither the Borrower nor any of its Subsidiaries,
nor any of their respective officers or directors has, on behalf of the Borrower
or any of its Subsidiaries, knowingly or willfully violated the federal Medicare
and Medicaid statutes,  42 U.S.C.  ss.1320a-7b,  or the regulations  promulgated
pursuant to such statutes or related state or local statutes or regulations,  in
any case in any material  respect,  including but not limited to the  following:
(i) knowingly and  willfully  making or causing to be made a false  statement or
representation  of a  material  fact  in any  applications  for any  benefit  or
payment;  (ii)  knowingly and  willfully  making or causing to be made any false
statement or representation of a material fact for use in determining  rights to
any benefit or payment; (iii) failing to disclose knowledge by a claimant of the
occurrence of any event  affecting the initial or continued right to any benefit
or payment on its own behalf or on behalf of another, with intent to secure such
benefit or payment  fraudulently;  (iv)  knowingly and  willfully  soliciting or
receiving any remuneration (including any kickback,  bribe or rebate),  directly
or indirectly,  overtly or covertly,  in cash or in kind or offering to pay such
remuneration  (A) in return  for  referring  an  individual  to a Person for the
furnishing  or  arranging  for the  furnishing  of any item or service for which
payment  may be  made  in  whole  or in  part by  Medicare,  Medicaid  or  other
applicable  third-party  payers,  or (B) in return  for  purchasing,  leasing or
ordering or arranging for or recommending the purchasing, leasing or ordering of
any good, facility, service or item for which payment may be made in whole or in
part by Medicare,  Medicaid or other applicable third-party payers. With respect
to this  clause  (g),  knowledge  of an  individual  director  or officer of the
Borrower or a Subsidiary of any of the events described in this clause (g) shall
not be imputed to the  Borrower or such  Subsidiary  unless such  knowledge  was
obtained or learned by the director or officer in his or her  official  capacity
as a director or officer of the Borrower or such Subsidiary.

          (h) TAX RETURNS AND  PAYMENTS.  Each of the  Borrower and its Domestic
Subsidiaries have duly filed or caused to be filed all federal, state, local and
other tax returns required by Applicable Law to be filed, and have paid, or made
adequate  provision  for the payment  of, all  federal,  state,  local and other
taxes,  assessments  and  governmental  charges  or  levies  upon them and their
respective  property,  income,  profits  and assets  which are due and  payable,
except (i) any such taxes for the current year not yet due and payable, (ii) any
such  taxes,  assessments,  governmental  charges  or  levies  which  are  being
contested in good faith by appropriate  proceedings so long as adequate reserves
are maintained  with respect  thereto in accordance with GAAP and (iii) any such
tax returns, the failure to file, or any such taxes,  assessments,  governmental
charges or levies,  the failure to pay, could not reasonably be expected to have
a Material  Adverse  Effect.  No  Governmental  Authority  has filed any Lien or
asserted any claim against any the Borrower or its Subsidiaries  with respect to
material  unpaid taxes which has not been discharged or resolved or is not being
contested in good faith. The charges,  accruals and reserves on the books of the
Borrower and its Domestic  Subsidiaries in respect of federal,  state, local and
other taxes for all Fiscal Years and portions  thereof since the organization of
the Borrower and its Subsidiaries are in the judgment of the Borrower  adequate,
and  the  Borrower  does  not  anticipate  any  additional   material  taxes  or

                                       48
<PAGE>
assessments for any of such years.  Neither Borrower nor any Domestic Subsidiary
is directly or contingently liable for the taxes of any Foreign Subsidiary.

          (i)  ENVIRONMENTAL  MATTERS.  Except for the  matters  existing on the
Closing Date and set forth on SCHEDULE  7.1(I),  (i) the properties owned in fee
by the Borrower or any of its Subsidiaries and, to the knowledge of the Borrower
and its  Subsidiaries,  those  properties  leased by the  Borrower or any of its
Subsidiaries are in compliance with all applicable  Environmental  Laws,  except
where the  failure  to so comply  could not  reasonably  be  expected  to have a
Material Adverse Effect,  (ii) there is no contamination at, under or about such
properties  or such  operations  which  could  reasonably  be expected to have a
Material  Adverse Effect and (iii) except for matters that have  previously been
remedied,  neither the  Borrower  nor any of its  Subsidiaries  has received any
written  notice  of  material  violation,  alleged  violation,   non-compliance,
liability or potential liability regarding  environmental  matters or compliance
with  Environmental Laws with regard to any of such properties or the operations
conducted in  connection  therewith,  nor does the Borrower or its  Subsidiaries
have knowledge that any such notice will be received or is being threatened.

          (j) ERISA.

               (i) As of the Closing  Date,  neither the  Borrower nor any ERISA
Affiliate maintains or contributes to, or has any obligation under, any Employee
Benefit Plans other than those identified on SCHEDULE 7.1(J).

               (ii) The Borrower and each ERISA  Affiliate is in compliance with
all  applicable   provisions  of  ERISA  and  the   regulations   and  published
interpretations  thereunder  with respect to all Employee  Benefit  Plans except
where failure to so comply is not reasonably  likely to have a Material  Adverse
Effect and except for any required  amendments for which the remedial  amendment
period  as  defined  in  Section  401(b) of the Code has not yet  expired.  Each
Employee  Benefit Plan that is intended to be qualified  under Section 401(a) of
the Code has been determined by the Internal  Revenue Service to be so qualified
or an  application  for  determination  has been  filed  within  the  applicable
remedial  amendment  period,  and  each  trust  related  to such  plan  has been
determined to be exempt under Section 501(a) of the Code or an  application  for
determination has been filed within the applicable remedial amendment period. No
material  liability  has been  incurred by the  Borrower or any ERISA  Affiliate
which  remains  unsatisfied  for any  taxes or  penalties  with  respect  to any
Employee Benefit Plan or any Multiemployer Plan.

               (iii)  No  Pension  Plan  has  been   terminated,   nor  has  any
accumulated  funding  deficiency  (as  defined in Section  412 of the Code) been
incurred  (without  regard to any waiver granted under Section 412 of the Code),
nor has any funding  waiver from the Internal  Revenue  Service been received or
requested  with respect to any Pension  Plan,  nor has the Borrower or any ERISA
Affiliate  failed to make any  contributions or to pay any amounts due and owing
as required by Section 412 of the Code, Section 302 of ERISA or the terms of any
Pension Plan prior to the due dates of such  contributions  under Section 412 of
the Code or Section  302 of ERISA,  nor has there been any event  requiring  any
disclosure  under Section  4041(c)(3)(C) or 4063(a) of ERISA with respect to any
Pension Plan.

                                       49
<PAGE>
               (iv)  Neither  the  Borrower  nor any ERISA  Affiliate  has:  (A)
engaged in a nonexempt  prohibited  transaction  described in Section 406 of the
ERISA or Section 4975 of the Code,  (B) incurred any liability to the PBGC which
remains  outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid or (C) failed to make a required  contribution
or payment to a Multiemployer Plan.

               (v) No Termination  Event has occurred or is reasonably  expected
to occur which in either case is  reasonably  likely to have a Material  Adverse
Effect.

               (vi) No material proceeding, claim (excluding routine participant
claims for  benefits),  lawsuit  and/or  investigation  is  existing  or, to the
knowledge of the Borrower,  threatened  concerning or involving any (A) employee
welfare benefit plan (as defined in Section 3(1) of ERISA) currently  maintained
or  contributed to by the Borrower or any ERISA  Affiliate,  (B) Pension Plan or
(C) Multiemployer Plan.

          (k) MARGIN STOCK.  Neither the Borrower nor any of its Subsidiaries is
engaged  principally  or as one of its  activities  in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each
such term is defined or used in  Regulation  U of the Board of  Governors of the
Federal Reserve System).  No part of the proceeds of any of the Loans or Letters
of  Credit  will be used for  purchasing  or  carrying  margin  stock or for any
purpose which violates,  or which would be inconsistent  with, the provisions of
Regulations U or X of such Board of Governors.

          (l)  GOVERNMENT  REGULATION.  Neither  the  Borrower  nor  any  of its
Subsidiaries  is  an  "investment  company"  or a  company  "controlled"  by  an
"investment  company"  (as each such term is defined  or used in the  Investment
Company  Act of 1940,  as  amended)  and  neither  the  Borrower  nor any of its
Subsidiaries  is, or will be,  subject to  regulation  under the Public  Utility
Holding Company Act of 1935, each as amended,  or any other Applicable Law which
materially   limits  its  ability  to  incur  or  consummate  the   transactions
contemplated hereby.

          (m)  INTELLECTUAL  PROPERTY.  As of the Closing Date,  SCHEDULE 7.1(M)
hereto sets forth a complete and accurate list of all patents,  patent rights or
licenses, patent applications,  trademarks, trademark rights, trade names, trade
name  rights  and  copyrights  (collectively,  "INTELLECTUAL  PROPERTY")  owned,
licensed or otherwise  lawfully used by the Borrower or any of its Subsidiaries,
the loss of which or failure to maintain could  reasonably be expected to have a
Material  Adverse  Effect.  Except as set  forth on  SCHEDULE  7.1(M)  and other
matters that could not reasonably be expected to have a Material Adverse Effect,
the Borrower and its Subsidiaries  own, license or otherwise  possess the lawful
right to use the Intellectual  Property and all other similar  intangible assets
which are  necessary or required to conduct their  respective  businesses as now
and  presently  planned  to be  conducted  without  conflict  with the rights of
others. No event has occurred which permits, or after notice or lapse of time or
both would  permit,  the  revocation  or  termination  of any such rights to the
Intellectual  Property or other material  intangible assets, the result of which
could individually or in the aggregate reasonably be expected to have a Material
Adverse Effect.

          (n)  MATERIAL  CONTRACTS.  SCHEDULE  7.1(N) sets forth a complete  and
accurate list of all Material  Contracts of the Borrower and its Subsidiaries in
effect as of the Closing Date.  Except as set forth on SCHEDULE  7.1(N),  on the

                                       50
<PAGE>
Closing Date each such  Material  Contract  is, and after  giving  effect to the
consummation of the transactions  contemplated by the Loan Documents will be, in
full  force and effect in  accordance  with the terms  thereof  and there are no
material  defaults  by the  Borrower  or any of its  Subsidiaries  or,  to their
knowledge, by any other party under any such Material Contract.

          (o) EMPLOYEE MATTERS. Each of the Borrower and its Subsidiaries are in
compliance  in all material  respects with all  Applicable  Laws with respect to
their employees including,  without limitation,  fair labor standards laws, wage
and hour laws, workers compensation laws, federal and state withholding,  social
security and payroll laws and similar  laws except for any  Applicable  Laws the
failure to comply with which could not reasonably be expected to have a Material
Adverse Effect. Each of the Borrower and its Subsidiaries have paid all material
federal,  state  and  local  withholding,  social  security,  payroll  and other
employment related taxes which are due and payable.

          (p) RELATIONS.  There exists no actual or, to the knowledge of each of
the Borrower  and its  Subsidiaries,  threatened  termination,  cancellation  or
limitation  of,  or  any  adverse   modification  or  change  in,  the  business
relationship  of the  Borrower  and its  Subsidiaries  taken as a whole with any
customer  or any  group of  customers  whose  purchases  individually  or in the
aggregate  are material to the  business of the  Borrower  and its  Subsidiaries
taken as a whole.

          (q)  FINANCIAL  STATEMENTS.  Subject to the  following  sentence,  all
balance sheets,  statements of income,  retained earnings,  stockholders' equity
and cash flows (which  information is subject to GAAP),  and all other financial
information  of the  Borrower  and its  Subsidiaries  which have been  delivered
pursuant  to  Articles  5 and 7 of the  Existing  Credit  Agreement,  the Waiver
Agreement,  or Article 6 and Article 8 of this Agreement,  have been prepared in
accordance with GAAP  consistently  applied  throughout the periods involved and
present fairly the matters reflected  therein subject,  in the case of unaudited
statements,  to changes  resulting from normal  year-end audit  adjustments  and
items that would be disclosed in  footnotes  to the audited  statements.  In the
case of PRO FORMA statements provided by the Borrower and its Subsidiaries,  all
such pro forma statements are based upon reasonable estimates in accordance with
Section 6.2(d)(ii) and all projections  included with the information  described
in the first sentence have been prepared on the basis of reasonable  assumptions
in accordance with Section  6.2(d)(iii).  As of the Closing Date,  except as set
forth on SCHEDULE 7.1(Q),  neither the Borrower nor any of its Subsidiaries have
any  contingent  liability or liability for taxes,  long-term  leases or unusual
forward  or  long-term  commitments  which are not  reflected  in the  financial
statements  described  above or in the notes  thereto  and could  reasonably  be
expected to have a Material Adverse Effect.

          (r) NO MATERIAL  ADVERSE  CHANGE.  Except for matters  existing on the
Closing Date and set forth on SCHEDULE  7.1(R),  since June 30,  2002,  no event
which has had or could  reasonably be expected to have a Material Adverse Effect
has occurred.

          (s)  SOLVENCY.  As of the Closing Date and after giving effect to each
Extension of Credit made hereunder and to the Related Transactions, the Borrower
and its Subsidiaries, taken as a whole, will be Solvent.

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<PAGE>
          (t) TITLES TO PROPERTIES.  Except for matters that  individually or in
the  aggregate  could not  reasonably  be  expected  to have a Material  Adverse
Effect, each of the Borrower and its Subsidiaries have good and marketable title
to, or valid and subsisting  leasehold  interests in, the real property owned or
leased,  as the case may be, by them and  valid and legal  title to all of their
personal property, including, but not limited to, the real and personal property
reflected on the  financial  statements  referred to in Section  7.1(q),  except
property  which  has  been  disposed  of by the  Borrower  or  its  Subsidiaries
subsequent to such date which  dispositions  have been in the ordinary course of
business or as otherwise expressly permitted hereunder.

          (u) LIENS.  Except for matters  existing  on the Closing  Date and set
forth on SCHEDULE  7.1(U) (as delivered  pursuant to Section 9.15),  none of the
properties  and assets owned by the Borrower or its  Subsidiaries  is subject to
any Lien other than the Liens  described in Section  11.3 hereof.  Except as set
forth on SCHEDULE  7.1(U) (as delivered  pursuant to Section 9.15), no financing
statement  under  the  Uniform  Commercial  Code of any  state  which  names the
Borrower or any of its Subsidiaries as debtor and which has not been terminated,
has been filed in any state or other  jurisdiction  and neither the Borrower nor
any of its Subsidiaries has signed any such financing  statement or any security
agreement  authorizing  any secured party  thereunder to file any such financing
statement, except to perfect the Liens permitted by Section 11.3.

          (v) DEBT AND  GUARANTEES.  SCHEDULE  7.1(V) sets forth a complete  and
accurate  listing  as of the  Closing  Date of all Debt  (other  than Debt in an
aggregate amount not to exceed $500,000). The Borrower and its Subsidiaries have
performed and are in compliance  with all of the material  terms of all Debt and
Guarantees,  and no material  default or event of default  (beyond the period of
grace, if any,  provided in the instrument or agreement under which such Debt or
Guarantee  was created) on the part of the Borrower or its  Subsidiaries  exists
with respect to any such Debt or Guarantee.

          (w)  LITIGATION.  Except for the matters  existing on the Closing Date
and set forth on  SCHEDULE  7.1(W),  there  are no  material  actions,  suits or
proceedings  pending  or,  to the  knowledge  of  each of the  Borrower  and its
Subsidiaries,  threatened  against or in any other way relating  adversely to or
affecting  the Borrower or any of its  Subsidiaries  or any of their  respective
properties in any court or before any arbitrator of any kind or before or by any
Governmental  Authority  which  (i)  individually  or  in  the  aggregate  could
reasonably  be expected  to have a Material  Adverse  Effect or (ii)  purport to
affect or pertain to this  Agreement  or any other Loan  Document  or any of the
transactions contemplated hereby.

          (x) ABSENCE OF  DEFAULTS.  Except for  Acknowledged  Defaults,  (i) no
other  Defaults or Event of Default  under the  Existing  Credit  Agreement  has
occurred as of the Closing Date and (ii) no event has occurred or is  continuing
which  constitutes a Default or an Event of Default under this Agreement.  Other
than matters that could not  reasonably  be expected to have a Material  Adverse
Effect,  either  individually  or in the aggregate,  no event has occurred which
constitutes  a default  or event of default by the  Borrower  or any  Subsidiary
thereof  under  any  judgment,  decree  or order to which  the  Borrower  or its
Subsidiaries  is a party or by which the Borrower or its  Subsidiaries or any of
their respective  properties may be bound or which would require the Borrower or

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its Subsidiaries to make any payment  thereunder prior to the scheduled maturity
date therefor.

          (y) ACCURACY AND  COMPLETENESS  OF INFORMATION.  No report,  financial
statement,  certificate  or other  written  information  furnished  pursuant  to
Articles 5 and 7 of the Existing Credit Agreement, the Waiver Agreement, or this
Agreement or to be furnished by or on behalf of any Credit Party to the Agent or
any Lender  pursuant to the terms of this Agreement or any of the Loan Documents
contains  or  will  contain  any  untrue  statement  of a fact  material  to the
creditworthiness  of the Borrower or its  Subsidiaries  or omits or will omit to
state a  material  fact  necessary  in order to make  the  statements  contained
therein not misleading.  The Borrower is not aware of any facts which it has not
disclosed in writing to the Agent which could  reasonably  be expected to have a
Material Adverse Effect.

          (z)  BUSINESS  PLAN.  The  Business  Plan  reflects the sole and final
business plan of the Borrower and has been approved and adopted by resolution of
the Board of Directors of the Borrower.

          (aa) LATIN AMERICAN DIVESTITURE. The contractual arrangements relating
to the  Latin  American  Divestiture  will  provide  that the  Borrower  and its
Subsidiaries  shall be fully  released and  indemnified by the assignees of such
Latin American assets from all known and unknown liabilities associated with the
Latin  American  operations  conducted  by  Rural/Metro  International  and  its
Subsidiaries  after the closing of the Latin American  Divestiture.  None of the
officers or directors  of the  Borrower or of any of its  Domestic  Subsidiaries
will be  receiving  any  direct or  indirect  payments,  commissions  or fees in
connection  with the Latin  American  Divestiture.  The  aggregate  compensation
payable to all officers and directors of Foreign Subsidiaries in connection with
the Latin American Divestiture is less than $100,000.

          (bb)  SERIES  B  PREFERRED   STOCK  AND  COMMON  STOCK  ISSUABLE  UPON
CONVERSION.  The Series B Preferred Stock is duly authorized and, when issued in
compliance  with the  provisions of this  Agreement,  will be validly issued and
outstanding,  fully  paid and  nonassessable.  Upon  conversion  of the Series B
Preferred  Stock into the common  stock of the Borrower in  accordance  with the
Certificate of Designation,  such common stock will be duly authorized,  validly
issued, fully paid and nonassessable.

          (cc) REGISTRATION RIGHTS AGREEMENT.  The execution and delivery by the
Borrower  of the  Registration  Rights  Agreement  and  the  performance  by the
Borrower of its obligations  thereunder have been duly and validly authorized by
the Board of Directors of the Borrower. The Registration Rights Agreement,  when
duly and validly  executed and  delivered  by the  Borrower,  will  constitute a
legal,  valid and binding  obligation of the Borrower,  enforceable  against the
Borrower in accordance with its terms.

          (dd) OUTSTANDING COMMON STOCK AND OPTIONS.  As of the date hereof, the
number of  outstanding  shares of common stock of the Borrower is 15,990,903 and
the number of options with an exercise price below $6.70 is 3,048,471.

          (ee)   REGISTRATION   EXEMPTION.   Assuming   the   accuracy   of  the
representations  and warranties of the Lenders  contained in Section 14.22,  the
offer and sale of the Series B Preferred  Stock is exempt from the  registration
requirements of the Securities Act of 1933, as amended.

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<PAGE>
     Section  7.2  SURVIVAL  OF   REPRESENTATIONS   AND  WARRANTIES,   ETC.  All
representations  and  warranties  made under this  Agreement  shall  survive the
Closing Date and be made or deemed to be made at and as of each  borrowing  date
and shall not be waived by the  execution  and delivery of this  Agreement,  any
investigation made by or on behalf of the Lenders or any borrowing hereunder.

                                    ARTICLE 8
                        FINANCIAL INFORMATION AND NOTICES

     Until all the  Obligations  have been finally  paid and  satisfied in full,
unless  consent  has been  obtained  in the manner  set forth in  Section  14.10
hereof, the Borrower will furnish or cause to be furnished to the Agent and each
of the Lenders at their respective addresses set forth in Section 14.1:

     Section 8.1 FINANCIAL STATEMENTS.

          (a) MONTHLY  FINANCIAL  STATEMENTS.  As soon as practicable and in any
event  within  twenty (20) days after the end of each month of any given  fiscal
quarter of the Borrower,  other than the third month  thereof,  (i) an unaudited
Consolidated  balance sheet of the Borrower and its Subsidiaries as of the close
of such fiscal month, (ii) unaudited Consolidated statements of income, retained
earnings  and cash flows of the Borrower  and its  Subsidiaries  for such fiscal
month and that portion of the Fiscal Year then ended,  all in reasonable  detail
setting forth in comparative form the  corresponding  budgeted figures set forth
in the  Business  Plan for the  portion  of the  Fiscal  Year then ended and the
corresponding  figures  for the  preceding  Fiscal  Year for the  portion of the
Fiscal Year then ended and  prepared by the  Borrower in  accordance  with GAAP,
subject to year end adjustments and, if applicable, containing disclosure of the
effect on the  financial  position or results of operations of any change in the
application  of  accounting  principles  and  practices  during the period which
present fairly in all material respects the financial  condition of the Borrower
and its  Subsidiaries as of their respective dates and the results of operations
of the  Borrower and its  Subsidiaries  for the  respective  periods then ended,
subject to normal year end adjustments;

          (b) QUARTERLY FINANCIAL STATEMENTS.  As soon as practicable and in any
event within  forty-five  (45) days after the end of each fiscal  quarter of the
Borrower,   other  than  the  fourth  fiscal  quarter   thereof,   an  unaudited
Consolidated  balance sheet of the Borrower and its Subsidiaries as of the close
of such fiscal quarter and unaudited Consolidated statements of income, retained
earnings and cash flows and  consolidating  statements of income of the Borrower
and its  Subsidiaries  for the fiscal quarter then ended and that portion of the
Fiscal Year then ended,  all in reasonable  detail  setting forth in comparative
form the corresponding  budgeted figures for the portion of the Fiscal Year then
ended  and the  corresponding  figures  for the  preceding  Fiscal  Year for the
portion of the Fiscal Year then ended and prepared by the Borrower in accordance
with GAAP,  subject  to year end  adjustments  and,  if  applicable,  containing
disclosure of the effect on the  financial  position or results of operations of
any change in the application of accounting  principles and practices during the
period, and certified by the chief financial officer and chief executive officer

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of the  Borrower  to  present  fairly in all  material  respects  the  financial
condition of the Borrower and its  Subsidiaries as of their respective dates and
the  results  of  operations  of the  Borrower  and  its  Subsidiaries  for  the
respective periods then ended, subject to normal year end adjustments;

          (c) ANNUAL  FINANCIAL  STATEMENTS.  As soon as practicable  and in any
event  within  ninety  (90) days after the end of each  Fiscal  Year,  except as
required to be delivered  under Section 9.14,  an audited  Consolidated  balance
sheet of the Borrower and its  Subsidiaries  as of the close of such Fiscal Year
and audited Consolidated  statements of income, retained earnings and cash flows
and unaudited consolidating statements of income for the Fiscal Year then ended,
including  the  notes  thereto,  all  in  reasonable  detail  setting  forth  in
comparative  form  corresponding  budgeted figures for the portion of the Fiscal
Year then ended and the corresponding  figures for the preceding Fiscal Year and
(i) in the case of the  consolidating  statements  prepared  by the  Borrower in
accordance  with GAAP,  containing  disclosure  of the  effect on the  financial
position or results of operations of any change in the application of accounting
principles and practices during the period, and certified by the chief financial
officer  and chief  executive  officer of the  Borrower  to  present  fairly the
financial  condition of the Borrower and its Subsidiaries as of their respective
dates and the results of operations of the Borrower and its Subsidiaries for the
respective  periods  then  ended  and  (ii)  in the  case  of  the  Consolidated
statements,  audited  by  PricewaterhouseCoopers  LLP or such  other  nationally
recognized,  independent  certified  public  accounting  firm  selected  by  the
Borrower in accordance  with GAAP and,  accompanied  by a report thereon by such
certified public accountants,  which report shall be unqualified,  shall express
no doubts about the ability of the Borrower and its  Subsidiaries to continue as
a going concern,  and shall state that such  Consolidated  financial  statements
fairly present, in all material respects, the Consolidated financial position of
the Borrower and its  Subsidiaries  as at the dates indicated and the results of
their  operations  and their cash flows for the periods  indicated in conformity
with GAAP applied on a basis  consistent  with prior years  (except as otherwise
disclosed  in such  financial  statements)  and  that  the  examination  by such
accountants in connection with such Consolidated  financial  statements has been
made in accordance with generally accepted auditing standards.

          (d) UPDATE TO ANNUAL FINANCIAL PROJECTIONS. As soon as practicable and
in any event at least  twenty  (20) days after to the  beginning  of each Fiscal
Year, a copy of the required  modifications  to the Business  Plan to update the
annual  financial   projections  contained  therein  (as  updated,  the  "ANNUAL
FINANCIAL PROJECTIONS"), approved by the Board of Directors of the Borrower, for
the ensuing Fiscal Year,  and a report  containing  management's  discussion and
analysis of the Annual Financial Projections,  accompanied by a certificate from
the chief financial  officer and chief executive  officer of the Borrower to the
effect that such projections are based on reasonable  estimates and assumptions,
all of which are reasonable in light of current  conditions,  have been prepared
on the basis of the assumptions stated therein,  and reflect,  as of the time so
furnished,  the reasonable  estimate of the Borrower and its Subsidiaries of the
projected results of operations and other information projected therein;

          (e) MONTHLY CASH FLOW PROJECTIONS. By the date of commencement of each
fiscal quarter of the Borrower, the Borrower's forecasted Consolidated cash flow
statements  for each month  during such  fiscal  quarter  including  appropriate
supporting details and a statement of underlying  assumptions (the "MONTHLY CASH
FLOW  PROJECTIONS").  To the extent that such Monthly Cash Flow  Projections are

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<PAGE>
not materially  consistent with the Annual Financial  Projections,  the Borrower
shall  include  reasonable  detail of the relevant  material  deviations  in the
Monthly Cash Flow Projections;

          (f) RECONCILIATION TO MONTHLY CASH FLOW PROJECTIONS. No later than the
last day of each month  during each fiscal  quarter of the  Borrower,  a written
report  comparing  the actual  Consolidated  cash flow of the  Borrower  and its
Domestic  Subsidiaries  for the calendar  month recently ended to the Borrower's
and its Domestic  Subsidiaries'  projected Consolidated cash flow for such month
as set for in the Monthly Cash Flow  Projections,  which written report shall be
in the form and substance satisfactory to Required Lenders;

          (g) ACCOUNTS  PAYABLE AND ACCOUNTS  RECEIVABLE  REPORT.  No later than
fifteen (15) days after the last day of each fiscal month,  a written  report of
accounts receivable and accounts payable for the fiscal month then ending; and

          (h)  CONSOLIDATED  FINANCIAL  STATEMENTS  FOR  THE  BORROWER  AND  ITS
DOMESTIC   SUBSIDIARIES.   Concurrently  with  the  delivery  of  the  financial
statements  and  projections  described in clauses (a), (b), (c) and (d) of this
Section  8.1, the  Borrower  shall  deliver the same  financial  statements  and
projections with respect to the Borrower and all of its Domestic Subsidiaries on
a consolidated  basis in accordance  with the same standards and  accompanied by
the same certifications required pursuant to such clauses.

     Section  8.2  OFFICERS'  COMPLIANCE  CERTIFICATE.  At each  time  financial
statements are delivered  pursuant to Sections  8.1(b) and (c), a certificate of
the chief financial officer and chief executive officer of the Borrower,  in the
form of EXHIBIT D attached hereto (an "OFFICERS' COMPLIANCE CERTIFICATE"):

          (a) stating that such officers have reviewed the financial  statements
of the Borrower and its  Subsidiaries  as of the end of such fiscal  quarter and
such statements fairly present in all material respects the financial  condition
of the Borrower and its  Subsidiaries  as of the dates indicated and the results
of their operations and cash flows for the periods indicated; and

          (b) stating that no Default or Event of Default exists, or, if such is
not the case,  specifying such Default or Event of Default and its nature,  when
it occurred,  whether it is  continuing  and the steps being taken by the Credit
Parties with respect to such Default or Event of Default;

          (c)  setting  forth  as  at  the  end  of  such  fiscal   quarter  the
calculations  required  to  establish  (i) whether or not the  Borrower  and its
Subsidiaries  were in  compliance  with the  financial  covenants  set  forth in
Article 10 hereof and (ii) whether or not the Borrower and its Subsidiaries were
in compliance with the investment and acquisition  covenant set forth in Section
11.4  hereof  (calculated  pursuant  to the  calculation  worksheet  attached as
SCHEDULE 1 to EXHIBIT D);

          (d) attaching a Consolidated  aging of the accounts  receivable of the
Borrower  and  its  Subsidiaries  and  a  consolidated  aging  of  the  accounts
receivable of the Borrower and its  Subsidiaries,  in each case as of the end of
such fiscal  quarter,  including  (i) a detailed  report by payor for  Medicare,

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private pay and  Medicaid  (for system  integrated  accounts  receivables  only,
PROVIDED,  that payor  detail  shall  cover not less than 70% of total  accounts
receivable),  (ii) a Consolidated trend analysis report,  (iii) an actual versus
budget  report,  (iv) a  summary  report  of  cash  collections  (actual  versus
forecast)  and (v) a report of all material  changes/trends  that have  occurred
since  the  last  fiscal   quarter-end  with  respect  to  accounts   receivable
collections,  billings,  bad  debt  provisions,  top ten  payors,  policies  and
procedures  and other  material  matters  related  to  accounts  receivable.  In
addition, the Agent, on behalf of the Lenders, shall have the right (i) promptly
upon the Borrower's receipt thereof after the end of each of the first three (3)
fiscal quarters of the Borrower, to receive a copy of the report, if any, issued
pursuant  to a review of the  quarterly  financial  statements  of the  Borrower
performed by the Borrower's  independent  public  accountants in accordance with
SAS No. 71 and (ii) to request from the Borrower  copies of any written  reports
that are delivered by such independent public accountants to the Borrower; and

          (e)  stating  that  all  filings  with the SEC or  NASDAQ  made by the
Borrower and its  Subsidiaries  are in compliance with Applicable Law (including
the Sarbanes-Oxley Act of 2002 or any successor statute).

     Section 8.3 ACCOUNTANTS' CERTIFICATE. At each time financial statements are
delivered  pursuant to Section 8.1(c),  a certificate of the independent  public
accountants certifying such financial statements stating that in connection with
their audit, to the best of their knowledge nothing came to their attention that
caused them to believe the Borrower failed to comply with the terms,  covenants,
provisions or conditions of Section 10.1 through 10.5 of this Agreement  insofar
as they relate to accounting matters.

     Section 8.4 OTHER REPORTS.

          (a) Promptly after filed,  all reports and forms filed with respect to
all Plans under ERISA except (i) as filed in the ordinary  course of business or
(ii) that would not result in any Material Adverse Effect or action under ERISA;

          (b) Promptly  upon  receipt  thereof,  copies of all reports,  if any,
submitted  to each Credit  Party or its Board of  Directors  by its  independent
public  accountants  in  connection  with their  auditing  function,  including,
without limitation, any management report and any management responses thereto;

          (c) If  reasonably  requested by the Agent,  statements  in conformity
with the requirements of Federal Reserve Form U-1 referred to in Regulation U of
the Board of Governors of the Federal Reserve System;

          (d) Promptly but in any event within ten (10)  Business Days after the
filing  thereof,  a copy of (i) each report or other filing made by the Borrower
or any of its Subsidiaries with the Securities and Exchange  Commission  ("SEC")
and required by the SEC to be delivered to the  shareholders  of the Borrower or
any of its Subsidiaries, and (ii) each report made by the Borrower or any of its
Subsidiaries to the SEC on Form 8-K and each final registration statement of the
Borrower or any of its  Subsidiaries  filed with the SEC,  together in each case

                                       57
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with any certifications  required by the SEC under Applicable Law (including the
Sarbanes-Oxley Act of 2002 or any successor statute);

          (e) Within  forty-five  (45) days after the end of each fiscal quarter
of the Borrower,  the description required pursuant to Section 6.4(i) hereof for
each Permitted  Acquisition  for which such  description  was not required to be
delivered  pursuant to Section  6.4(i) and in which the fair market value of all
consideration   paid  in  connection  with  such  acquisition  is  greater  than
$2,000,000;

          (f)  Immediately  upon receiving  notice from the  counterparty of any
Material  Contract  of the  termination,  cancellation  or  non-renewal  of such
Material Contract; and

          (g) Such other information regarding the operations,  business affairs
and financial  condition of the Borrower or any of its Subsidiaries as the Agent
may reasonably request.

     Section 8.5 NOTICE OF LITIGATION AND OTHER MATTERS. Prompt (but in no event
later  than ten (10)  days  after an  officer  of the  Borrower  obtains  actual
knowledge thereof) telephonic and written notice of:

          (a) to the extent it has or could  reasonably  be  expected  to have a
Material Adverse Effect,  the commencement of all proceedings and investigations
by or before any  Governmental  Authority and all actions and proceedings in any
court or  before  any  arbitrator  against  or  involving  the  Borrower  or any
Subsidiary thereof or any of their respective  properties,  assets or businesses
including any notice received from the Internal  Revenue Service or other taxing
authority regarding employment related taxes;

          (b) to the extent it has or could  reasonably  be  expected  to have a
Material Adverse Effect, any notice of any violation received by the Borrower or
any  Subsidiary  thereof  from any  Governmental  Authority  including,  without
limitation, any notice of violation of Environmental Laws;

          (c) to the extent it has or could  reasonably  be  expected  to have a
Material  Adverse  Effect,  any  labor  controversy  that has  resulted  in,  or
threatens  to result in, a strike or other work action  against the  Borrower or
any Subsidiary thereof;

          (d) any Default or Event of  Default,  or any event which has or could
reasonably be expected to have a Material Adverse Effect;

          (e) of  any  material  change  in  accounting  policies  or  financial
reporting practices by the Borrower or any Subsidiary; and

          (f) to the extent it has or could  reasonably  be  expected  to have a
Material Adverse Effect (i) the  establishment of any new Employee Benefit Plan,
the commencement of contributions to any plan to which the Borrower or any ERISA
Affiliate was not previously contributing or any increase in the benefits of any
existing  Employee  Benefit Plan,  (ii) each funding  waiver  request filed with
respect to any Employee Benefit Plan and all communications  received or sent by
the  Borrower or any ERISA  Affiliate  with respect to such  request,  (iii) the

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failure of the Borrower or any ERISA Affiliate to make a required installment or
payment  under  Section 302 of ERISA or Section 412 of the Code by the due date,
(iv) any Termination Event or "prohibited transaction",  as such term is defined
in Section  406 of ERISA or Section  4975 of the Code,  in  connection  with any
Employee Benefit Plan or any trust created thereunder,  along with a description
of the nature thereof, what action the Borrower has taken, is taking or proposes
to take with respect thereto and, when known,  any action taken or threatened by
the Internal Revenue  Service,  the Department of Labor or the PBGC with respect
thereto, (v) any favorable or unfavorable determination letter from the Internal
Revenue Service  regarding the  qualification  of an Employee Benefit Plan under
Section  401(a)  of the Code  (along  with a copy  thereof),  (vi)  all  notices
received  by the  Borrower  or any  ERISA  Affiliate  of the  PBGC's  intent  to
terminate  any Pension  Plan or to have a trustee  appointed to  administer  any
Pension Plan, (vii) each Schedule B (Actuarial Information) to the annual report
(Form  5500  Series)  filed by the  Borrower  or any  ERISA  Affiliate  with the
Internal  Revenue Service with respect to each Pension Plan,  (viii) all notices
received  by the  Borrower  or any ERISA  Affiliate  from a  Multiemployer  Plan
sponsor concerning the imposition or amount of withdrawal  liability pursuant to
Section  4202 of ERISA  and (ix) the  Borrower  obtaining  knowledge  that  such
Borrower or any ERISA  Affiliate has filed or intends to file a notice of intent
to terminate any Pension Plan under a distress termination within the meaning of
Section 4041(c) of ERISA;

     Section 8.6 ACCURACY OF INFORMATION.  All written information,  reports and
statements  furnished by or on behalf of the Borrower to the Agent or any Lender
(other than financial forecasts) whether pursuant to this Article 8 or any other
provision  of this  Agreement,  shall be, at the time the same is so  furnished,
true and correct in all material respects.

                                    ARTICLE 9
                              AFFIRMATIVE COVENANTS

     Until all of the  Obligations  have been finally paid and satisfied in full
and the Aggregate Commitment terminated, unless consent has been obtained in the
manner provided for in Section 14.10,  the Borrower will, and will cause each of
its Subsidiaries to:

     Section 9.1 PRESERVATION OF CORPORATE EXISTENCE AND RELATED MATTERS. Except
as  permitted  by  Section  11.5 or any other  provision  of any Loan  Document,
preserve  and  maintain  its  separate  corporate   existence  and  all  rights,
franchises,  licenses and  privileges  necessary to the conduct of its business;
and qualify and remain  qualified as a foreign  corporation and authorized to do
business  in  each  jurisdiction  in  which  the  failure  to so  qualify  could
reasonably be expected to have a Material Adverse Effect.

     Section 9.2  MAINTENANCE  OF PROPERTY.  Protect and preserve all properties
material to its business,  including the Intellectual Property; maintain in good
working order and condition all buildings, equipment and other tangible real and
personal property material to its business;  and from time to time make or cause
to be made all repairs,  renewals,  replacements  and additions to such property
material  to its  business,  so  that  the  business  carried  on in  connection
therewith may be properly and advantageously conducted at all times.

     Section  9.3  INSURANCE.  Maintain  insurance  with  responsible  insurance
companies  against such risks  (including  professional  liability risks) and in
such amounts as are  customarily  maintained  by similar  businesses,  as may be

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required by Applicable Law and reasonably  satisfactory to the Required Lenders,
and on the Closing Date and upon the reasonable request of the Agent thereafter,
deliver  to the Agent  (a) a  detailed  list of the  insurance  then in  effect,
stating the names of the insurance companies,  the amounts of the insurance, the
dates  of the  expiration  thereof  and  the  risks  covered  thereby  and (b) a
certified copy of the policies of insurance.

     Section 9.4 ACCOUNTING METHODS AND FINANCIAL RECORDS.  Maintain a system of
accounting,  and keep such  books,  records and  accounts  (which  shall  fairly
present the financial condition of the Borrower and its Subsidiaries, taken as a
whole) as may be required or as may be  necessary to permit the  preparation  of
financial  statements  in  accordance  with  GAAP  and in  compliance  with  the
regulations of any Governmental  Authority having jurisdiction over it or any of
its properties.

     Section 9.5 PAYMENT AND  PERFORMANCE  OF  OBLIGATIONS.  Pay and perform all
Obligations under this Agreement and the other Loan Documents and pay or perform
(a) all material taxes,  assessments and other governmental  charges that may be
levied  or  assessed  upon  it  or  any  of  its  property  (including,  without
limitation, withholding, social security, payroll and similar employment related
taxes)  prior  to  delinquency,   and  (b)  all  other  material   indebtedness,
obligations  and  liabilities  in accordance  with  customary  trade  practices;
provided,  that the Borrower  may contest any item  described in clauses (a) and
(b)  hereof in good  faith so long as  adequate  reserves  are  maintained  with
respect thereto in accordance with GAAP.

     Section 9.6 COMPLIANCE WITH LAWS, APPROVALS AND MATERIAL CONTRACTS. Observe
and remain in compliance  with all  Applicable  Laws and Material  Contracts and
maintain  in full  force and effect all  Governmental  Approvals,  except to the
extent failure to do so could not, individually or in the aggregate,  reasonably
be expected to have a Material Adverse Effect,

     Section 9.7 ENVIRONMENTAL  MANAGEMENT.  In addition to and without limiting
the generality of Section 9.6, maintain its business premises (whether leased or
owned in fee) free of any Hazardous Materials,  the removal of which is required
under  Environmental  Laws and the  failure  to so remove  could  reasonably  be
expected to have a Material  Adverse  Effect;  and adopt and maintain  Hazardous
Materials  management  practices  including  generation,  storage,  disposal and
remediation  as may be required by  Environmental  Laws for all other  Hazardous
Materials located on its business premises.

     Section 9.8 COMPLIANCE WITH ERISA. In addition to and without  limiting the
generality of Section 9.6, make timely payment of contributions required to meet
the minimum  funding  standards  set forth in ERISA with respect to any Employee
Benefit  Plan;  not take any  action or fail to take  action the result of which
could be a liability to the PBGC or to a Multiemployer  Plan; not participate in
any prohibited transaction that could result in any material civil penalty under
ERISA or material tax under the Code; operate each Employee Benefit Plan in such
a manner that will not incur any tax  liability  under Section 4980B of the Code
or any material  liability to any  qualified  beneficiary  as defined in Section
4980B of the Code other than liabilities  which could not reasonably be expected
to have a Material  Adverse  Effect;  and  furnish to the Agent upon the Agent's
request such additional  information  about any Employee  Benefit Plan as may be
reasonably requested by the Agent.

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     Section 9.9 CONDUCT OF BUSINESS.  Engage in the  business  conducted by the
Borrower  and its  Subsidiaries  as of the  Closing  Date or any other  business
reasonably related to the foregoing.

     Section  9.10 VISITS AND  INSPECTIONS.  (a) Permit  representatives  of the
Agent,  the Issuing Bank or any of the Lenders,  from time to time,  as often as
may be reasonably  requested but in no event less  frequently  than on an annual
basis,  to visit and inspect its  properties;  inspect,  audit and make extracts
from its books,  records and files,  including,  but not limited to,  management
letters  prepared by  independent  accountants;  and discuss with its  principal
officers, and its independent accountants,  its business,  assets,  liabilities,
financial  condition,  results of operations and business  prospects;  provided,
that if an Event of Default has occurred and is  continuing,  the Borrower shall
provide access to  representatives  of the Agent, the Issuing Bank or any of the
Lenders at all times after reasonable advance notice.

          (b) The  Borrower  shall  pay all  reasonable  fees  and  expenses  of
representatives  of the Agent, the Issuing Bank or any of the Lenders,  plus all
out-of-pocket  costs and  expenses,  in connection  with the field  examinations
permitted under Section  9.10(a) above;  PROVIDED,  HOWEVER,  that so long as no
Default or Event of Default shall have occurred and be continuing,  the Borrower
shall not be obligated to reimburse the Agent,  the Issuing Bank and the Lenders
for  more  than  one  (1)  collective  field   examination  for  its  respective
representative in any Fiscal Year.

     Section 9.11  ADDITIONAL  SUBSIDIARY  GUARANTORS.  Upon the creation of any
Wholly-Owned  Domestic  Subsidiary  permitted  by this  Agreement,  cause  to be
executed  and  delivered to the Agent  within ten (10)  Business  Days after the
creation of such Wholly-Owned  Domestic Subsidiary  incorporated or organized in
the United States,  (a) the supplement to the  Subsidiary  Guaranty  attached as
Exhibit F hereto executed by such new Wholly-Owned Domestic Subsidiary,  (b) the
supplement  to the  Intercompany  Subordination  Agreement  attached  hereto  as
Exhibit H hereto  executed by such  Wholly-Owned  Domestic  Subsidiary,  (c) the
closing  documents  and  certificates  required  of each of the  Credit  Parties
pursuant to Section 6.2(d) hereof with respect to such new Wholly-Owned Domestic
Subsidiary;  provided,  that  upon the  written  request  of the  Borrower,  the
Required  Lenders,  in their sole discretion,  may waive the requirement that an
opinion of counsel be delivered with respect to such new Subsidiary and (d) such
other documents  reasonably requested by the Agent in order that such Subsidiary
shall become bound by all of the terms,  covenants and  agreements  contained in
the Subsidiary  Guaranty.  Upon satisfaction of the conditions set forth in this
Section  9.11,  each  such  Wholly-Owned  Domestic  Subsidiary  shall  become  a
Subsidiary Guarantor under the Subsidiary Guaranty and a Credit Party hereunder,
as of such date, as if an original signatory thereto.

     Section 9.12 BOARD  INFORMATION  RIGHTS.  Concurrently with the delivery of
any operational or financial  information or  presentations  (collectively,  the
"Board Information") provided to the Board of Directors of the Borrower, deliver
to the Agent and each Lender copies of such Board Information.

     Section 9.13 NEW FACILITY LOAN  ADVANCES.  Maintain the proceeds of any New
Facility  Loan in an  interest-bearing  escrow  account  (which the Borrower may
retain the interest earned thereon) designated by the issuers of the New Letters
of Credit until the earlier of (a) the date on which the New Letter of Credit to
which such proceeds  have been pledged as cash  collateral  has been  terminated

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without being drawn,  in which case the proceeds  shall be released to repay the
associated New Facility Loans in accordance with Section 3.3(b)(iii), or (b) the
date on which the New Letter of Credit  has been  drawn in whole or in part,  in
which case the  proceeds  may be released to repay the issuer of such New Letter
of Credit for the amount so drawn.

     Section 9.14 DELIVERY OF AUDITED FINANCIAL STATEMENTS. Deliver to the Agent
and each Lender  before  October 12, 2002 audited  financial  statements  of the
Borrower  and its  Subsidiaries  for the  Fiscal  Year  ended  June 30,  2002 in
accordance with the requirements under Section 8.1(c).

     Section 9.15 POST-CLOSING ITEMS.  Deliver to the Agent and each Lender each
of the following within forty-five (45) days of the Closing Date: (a) a complete
and accurate  listing as of the Closing Date of all  Guarantees  of the Borrower
and its Subsidiaries,  (b) a certificate of the secretary or assistant secretary
of each Credit Party (other than the Borrower) certifying,  as applicable,  that
(1) the articles of incorporation and bylaws of such Credit Party (or applicable
documentation  in the case of any Credit Party  organized as a partnership  or a
limited  liability  company)  delivered to the Agent on September  29, 1995 (or,
with respect to any Credit Party who joined the Existing Credit  Agreement after
September 29, 1995, the date of the  applicable  Joinder  Agreement  executed by
such Credit Party) have not been repealed,  revoked, rescinded or amended in any
respect or (2) if such documents have not previously been provided to the Agent,
such  documents  are  attached  thereto  and have not  been  repealed,  revoked,
rescinded  or amended in any respect;  (c) a complete  and accurate  list of the
information  required  to be  included in  Schedule  7.1(u),  and (d)  long-form
certifications  as of a recent date of good  standing of each Credit Party under
the laws of its respective  jurisdictions of organization  and, if available,  a
certificate of the relevant taxing authorities of such jurisdictions  certifying
that each  Credit  Party has filed  required  franchise  tax returns and owes no
delinquent  franchise taxes for at least  two-thirds of the Credit Parties.  For
any Credit  Party for which such tax  certificate  is not  obtained  within such
forty-five (45) day period,  the Borrower shall deliver a certificate  from each
applicable Credit Party certifying that it has filed all required  franchise tax
returns and owes no delinquent  franchise taxes,  attaching copies of applicable
filings and payments.  If the Borrower  fails to provide any of the  information
required by this Section 9.15 within  forty-five  (45) days of the Closing Date,
the Borrower shall pay a fee of $500 per day for each of clause (a), (b), (c) or
(d) that remains  undelivered  after such forty-five (45) day period except such
fee shall not apply in the case of items  described  in clause (d) to the extent
such delay in delivery is caused by factors outside of the reasonable control of
the Borrower.

     Section  9.16  PROJECTIONS  OF NEW  CONTRACT  CONTRIBUTION  AND  TERMINATED
CONTRACT  CONTRIBUTION.  Deliver to the Agent and each Lender within twenty (20)
after the end of each fiscal quarter,  (a) copies of the Borrower's  projections
with respect to the calculation of New Contract  Contribution  for such quarter,
and  (b)  copies  of  the  Borrower's  calculation  of the  Terminated  Contract
Contribution  for such  quarter,  in each  case,  together  with any  additional
documentation  or  information  requested  by the Agent or any of the Lenders in
connection  with such  projections  or  calculations,  promptly upon the written
request of the Agent or any of the Lenders.

     Section  9.17  FURTHER  ASSURANCES.  Make,  execute  and  deliver  all such
additional and further acts, things, deeds and instruments as the Agent, Issuing
Bank or the Required  Lenders may reasonably  require to document and consummate

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the  transactions  contemplated  hereby and to vest completely in and insure the
Agent,  Issuing  Bank  and  the  Lenders  their  respective  rights  under  this
Agreement,  the Notes,  and the other Loan  Documents.  In the case of any items
which are  required to be delivered  after the Closing Date  pursuant to Section
9.15,  the Borrower and the other  Credit  Parties  shall also take such further
actions as shall be  necessary  to remedy any  defects or correct  any errors or
mistakes  discovered by the Agent, the Issuing Bank or any of the Lenders and to
deliver all such additional and further acts,  things,  deeds and instruments as
the Agent or the Required Lenders may reasonably require in connection with such
post-Closing Date matters.

                                   ARTICLE 10
                               FINANCIAL COVENANTS

     Until all of the  Obligations  have been finally paid and satisfied in full
and the Aggregate Commitment terminated, unless consent has been obtained in the
manner set forth in Section 14.10 hereof, the Borrower and its Subsidiaries will
not:

     Section 10.1 TOTAL DEBT  LEVERAGE  RATIO.  As of any date of  determination
during  any  fiscal  quarter  as set forth  below,  permit  the ratio of (a) the
Consolidated Debt of the Borrower and its Domestic  Subsidiaries on such date of
determination  to (b)  Consolidated  EBITDA  of the  Borrower  and its  Domestic
Subsidiaries  measured  on an  Annualized  Basis  for the  fiscal  quarter  most
recently ended on or before such date of determination, to exceed:

FISCAL QUARTER ENDING                                      REQUIRED RATIO
---------------------                                      --------------
September 30, 2002                                           7.48:1.00
December 31, 2002                                            7.14:1.00
March 31, 2003                                               7.08:1.00
June 30, 2003                                                7.08:1.00
September 30, 2003                                           7.04:1.00
December 31, 2003                                            6.90:1.00
March 31, 2004                                               6.68:1.00
June 30, 2004                                                6.74:1.00
September 30, 2004                                           6.68:1.00
December 31, 2004                                            6.60:1.00

     Section 10.2 MINIMUM  TANGIBLE NET WORTH.  Permit the Tangible Net Worth of
the Borrower and its Domestic Subsidiaries on a Consolidated basis in accordance
with GAAP at the end of each fiscal  quarter set forth  below,  of less than the
following:

FISCAL QUARTER ENDING                                      MINIMUM NET WORTH
---------------------                                      -----------------
September 30, 2002                                           -230,070,000
December 31, 2002                                            -227,623,000
March 31, 2003                                               -225,584,000
June 30, 2003                                                -222,576,000
September 30, 2003                                           -221,206,000
December 31, 2003                                            -217,922,000
March 31, 2004                                               -214,365,000
June 30, 2004                                                -213,066,000
September 30, 2004                                           -211,339,000
December 31, 2004                                            -207,554,000

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     Section  10.3 FIXED  CHARGE  COVERAGE  RATIO.  As of the end of each fiscal
quarter as set forth below,  permit the ratio of (a) Consolidated  EBIRTA of the
Borrower  and its  Domestic  Subsidiaries  on  such  fiscal  quarter  end to (b)
Consolidated  Fixed  Charges of the Borrower and its Domestic  Subsidiaries,  in
each case measured on an Annualized  Basis for such fiscal  quarter,  to be less
than:

FISCAL QUARTER ENDING                                      REQUIRED RATIO
---------------------                                      --------------
September 30, 2002                                           0.99:1.00
December 31, 2002                                            1.04:1.00
March 31, 2003                                               1.05:1.00
June 30, 2003                                                1.05:1.00
September 30, 2003                                           1.06:1.00
December 31, 2003                                            1.07:1.00
March 31, 2004                                               1.11:100
June 30, 2004                                                1.10:1.00
September 30, 2004                                           1.11:1.00
December 31, 2004                                            1.12:1.00

     Section 10.4  LIMITATION  ON CAPITAL  EXPENDITURES.  Make or incur  Capital
Expenditures  during  any  Fiscal  Year in an  aggregate  amount  in  excess  of
$11,000,000.

     Section 10.5 LIMITATION ON OPERATING LEASES. Incur Net Rental and Operating
Lease  Expense  for any period of four (4)  consecutive  fiscal  quarters  in an
amount greater than 3.10% of Consolidated  Net Revenues for such four (4) fiscal
quarter period.

                                   ARTICLE 11
                               NEGATIVE COVENANTS

     Until all of the  Obligations  have been finally paid and satisfied in full
and the Aggregate Commitment terminated, unless consent has been obtained in the
manner set forth in Section  14.10  hereof,  the Borrower  will not and will not
permit any of its Subsidiaries to:

     Section  11.1  LIMITATIONS  ON DEBT.  Create,  incur or suffer to exist any
Debt, other than:

          (a) the Obligations;

          (b) Debt  existing on the Closing Date and set forth on SCHEDULE  11.1
hereto,  including the extension of maturity,  modification or refinancing  (but
not in any such case an  increase  in the  principal  amount or  decrease of the
average weighted maturity thereof);

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          (c)  obligations  under  Hedging  Agreements  approved by the Required
Lenders;

          (d) Non-Seller  Financing  Subordinated Debt in an aggregate amount at
any time  outstanding  not to  exceed  an amount  satisfactory  to the  Required
Lenders;

          (e)  Parent  Seller  Financing,   Subordinated  Seller  Financing  and
Earn-Out  Obligations  (which amount shall be  calculated  as if the  contingent
amount  thereunder  has  become  fixed at the  maximum  amount of such  Earn-Out
Obligation)  in an aggregate  principal  amount at any time  outstanding  not to
exceed $1,000,000 (less any and all current outstanding principal amounts of all
items identified on SCHEDULE 11.1 as "seller financing");

          (f) (i) Debt for borrowed money owing to any Credit Party by any other
Credit  Party;  PROVIDED,  that such  Debt is  subordinated  to the  Obligations
pursuant to the terms and conditions of the Intercompany Subordination Agreement
and (ii) Debt owing from any and all Foreign  Subsidiaries  to any Credit Party;
PROVIDED  that such Debt shall not exceed  $5,000,000  in the  aggregate  and is
otherwise permitted by the terms of Section 11.4 hereof;

          (g)  business  expenses  and trade  accounts  payable  arising  in the
ordinary  course of business  that are being paid in accordance  with  customary
trade practices (subject to normal disputes);

          (h) Guarantees permitted by Section 11.2 hereof;

          (i)  Capital  Leases  and  purchase  money Debt  described  in Section
11.3(c) and Debt of any Person  assumed by a Credit Party in  connection  with a
Permitted  Acquisition (but excluding new Debt incurred in connection with or in
contemplation of a Permitted  Acquisition),  in an aggregate principal amount at
any  time  outstanding  not to  exceed  $25,000,000  (less  any and all  current
outstanding  principal  amounts  of all items  identified  on  SCHEDULE  11.1 as
Capital Leases and purchase money Debt);

          (j) Debt  pursuant  to the Senior  Notes,  in an  aggregate  principal
amount not to exceed $150,000,000;

          (k) Performance bonds in an individual amount not to exceed $2,500,000
and letters of credit and reimbursement  obligations or guarantees thereof in an
aggregate  amount not to exceed the  amount  agreed to among the Agent,  Issuing
Bank and the Lenders in a separate letter delivered by the Borrower on September
27, 2002 at any time securing  obligations of the Borrower and its  Subsidiaries
incurred  in the  ordinary  course of business  in  connection  with (i) workers
compensation or other insurance,  unemployment  insurance or similar legislation
and utility deposits or (ii) bids, tenders,  statutory  obligations,  surety and
appeal bonds and other obligations of like nature; and

          (l) Additional Debt of the Credit Parties and their  Subsidiaries  not
otherwise  specifically  provided for herein in an aggregate principal amount at
any time outstanding not to exceed $1,000,000.

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     Section 11.2 LIMITATIONS ON GUARANTEES. Create, incur, assume, or suffer to
exist any Guarantees except (a) Guarantees in favor of the Agent for the benefit
of the Lenders,  (b) Guarantees existing on the Closing Date, and any renewal or
modification  (but  not any  increase  in the  principal  amount)  thereof,  (c)
Guarantees representing the endorsement of negotiable instruments for deposit or
collection  in the ordinary  course of business,  (d)  Guarantees  by any Credit
Party of the payments under any operating lease entered into by any other Credit
Party and  permitted  pursuant to Section 10.5  hereof,  (e)  Guarantees  by any
Credit Party of any Debt  permitted by Section 11.1,  and (f)  Guarantees by the
Credit Parties and their Subsidiaries not otherwise  permitted herein of Debt of
their Affiliates in an aggregate amount at any time not to exceed $500,000.

     Section 11.3 LIMITATIONS ON LIENS. Create, incur, assume or suffer to exist
any Lien on or with respect to any of its assets or properties (including shares
of capital stock),  real or personal,  whether now owned or hereafter  acquired,
except:

          (a) Liens of the Agent for the benefit of the Lenders;

          (b) Liens  existing  on the  Closing  Date and set  forth on  SCHEDULE
7.1(U) hereto;

          (c)  Liens  securing  Debt  permitted  pursuant  to  Section  11.1(i);
PROVIDED,  that (i) the aggregate  amount of Debt secured by such Liens does not
exceed the amount permitted under Section 11.1(i), (ii) the Lien attaches solely
to the assets being leased or acquired (including,  in the case of Liens related
to Debt of any Person  assumed by a Credit Party in connection  with a Permitted
Acquisition, any assets acquired in connection with a Permitted Acquisition) and
(iii) in the case of Liens  arising  under  Capital  Leases and  purchase  money
Liens,  the  Debt  secured  by any  such  Liens  does  not  exceed  100%  of the
capitalized amount or purchase price of the asset being leased or acquired;

          (d) Liens for taxes,  assessments  and other  governmental  charges or
levies (excluding any Lien imposed pursuant to any of the provisions of ERISA or
Environmental  Laws)  not yet due or as to which the  period  of grace,  if any,
related  thereto has not expired or which are being  contested in good faith and
by  appropriate  proceedings  if adequate  reserves are maintained to the extent
required by GAAP;

          (e) the  claims of  materialmen,  mechanics,  carriers,  warehousemen,
processors or landlords for labor,  materials,  supplies or rentals  incurred in
the ordinary course of business,  (i) which are not overdue for a period of more
than  sixty  (60) days or (ii)  which are being  contested  in good faith and by
appropriate proceedings;

          (f) Liens made in the ordinary course of business in connection  with,
or to secure payment of,  obligations under the letters of credit referred to in
Section 11.1(k), workers compensation or other insurance, unemployment insurance
or similar legislation and utility deposits;

          (g)  Liens  securing  the  performance  of  bids,  tenders,  statutory
obligations,  surety  and appeal  bonds and other  obligations  of like  nature,
incurred as an incident to and in the ordinary course of business;

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          (h)  Liens   constituting   encumbrances   in  the  nature  of  zoning
restrictions,  easements and rights or restrictions of record on the use of real
property,  which in the aggregate do not, in any case,  materially  detract from
the value of such property or impair the use thereof in the ordinary  conduct of
business;

          (i) Leases and subleases not materially  interfering with the ordinary
course  of  conduct  of  the   businesses  of  the  Credit   Parties  and  their
Subsidiaries, taken as a whole;

          (j) in addition to the Liens  permitted  under  subsection  (c) above,
Liens  incurred  under Capital  Leases and purchase  money Liens with respect to
motor vehicles acquired or held in the ordinary course of business of the Credit
Parties and their Subsidiaries;  PROVIDED, that (i) the aggregate amount of Debt
secured  by such  Liens does not  exceed  the  amount  permitted  under  Section
11.1(l),  (ii) the Lien  attaches  solely to the assets being leased or acquired
and  (iii)  the Debt  secured  by any such  Liens  does not  exceed  100% of the
capitalized amount or purchase price of the asset being leased or acquired;

          (k)  Judgment  liens which do not create a Default or Event of Default
under Section 12.1(k); and

          (l) in favor of  Governmental  Authorities  in the form of  contingent
lease  agreements,  in form  and  substance  satisfactory  to the  Agent  in its
reasonable discretion,  which agreements permit such Governmental Authorities to
lease or purchase  existing  inventory  and equipment  used in  connection  with
emergency service contracts between the Credit Parties or their Subsidiaries and
such Governmental Authorities upon the early termination of such contracts for a
period not to exceed  twelve (12) months after such  termination;  PROVIDED that
any such  contingent  lease  agreement shall have (i) a lease price equal to the
fair market value of the assets so leased and (ii) fair and reasonable  terms no
less favorable  than any Credit Party would obtain in a comparable  arm's length
transaction.

     Section 11.4 LIMITATIONS ON LOANS, ADVANCES,  INVESTMENTS AND ACQUISITIONS.
Purchase,  own,  invest in or otherwise  acquire,  directly or  indirectly,  any
capital stock,  interests in any partnership or joint venture,  evidence of Debt
or other obligation or security,  substantially all or a material portion of the
business  or assets of any other  Person  or any other  investment  or  interest
whatsoever  in any  other  Person;  or make or  permit  to  exist,  directly  or
indirectly, any loans, advances or extensions of credit to, or any investment in
cash or by  delivery  of property  in, any  Person;  or enter into,  directly or
indirectly, any commitment or option in respect of the foregoing except:

          (a)  investments  existing on the Closing Date and the other  existing
loans, advances and investments set forth on SCHEDULE 11.4 hereto;

          (b)  investments  in  (i)  marketable  direct  obligations  issued  or
unconditionally  guaranteed by the United States 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  thereof,  (ii) commercial
paper  maturing  no more than one year from the date  issued and, at the time of
acquisition,  having a rating of at least A-1 from Standard & Poor's Corporation
or at least P-1 from Moody's  Investors  Service,  Inc.,  (iii)  certificates of
deposit  or  bankers'  acceptances  maturing  within  one year  from the date of

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issuance thereof issued by, or overnight reverse repurchase agreements from, any
commercial  bank organized under the laws of the United States of America or any
state thereof or the District of Columbia having combined capital and surplus of
not less than $500,000,000,  and (iv) time deposits maturing no more than thirty
(30)  days  from the date of  creation  thereof  with  commercial  banks  having
membership in the Federal Deposit Insurance Corporation in amounts not exceeding
the lesser of $100,000  or the maximum  amount of  insurance  applicable  to the
aggregate amount of such Person's deposits at such institution;

          (c) capital  contributions  and investments in  Wholly-Owned  Domestic
Subsidiaries  created or acquired  after the Closing Date;  PROVIDED,  that such
Wholly-Owned Subsidiaries become Subsidiary Guarantors hereunder pursuant to the
requirements of Section 9.11 hereof;  intercompany  loans and advances permitted
under Section 11.1(f); and loans and advances to employees for reasonable travel
and business expenses in the ordinary course of business;

          (d) for  utilities,  security  deposits,  leases and  similar  prepaid
expenses incurred in the ordinary course of business;

          (e) trade  accounts  created,  or  prepaid  expenses  accrued,  in the
ordinary course of business;

          (f) investments by any Credit Party in the form of acquisitions of all
or  substantially  all of the  business  or a line of  business  (whether by the
acquisition of capital stock, assets, any combination thereof or any "pooling of
interests")  of any  other  Person  if each  such  acquisition  meets all of the
following  requirements:  (i) the  Person  to be  acquired  shall  engage in the
business  conducted by the Borrower and its  Subsidiaries as of the Closing Date
or any other business  reasonably related to the foregoing,  (ii) a Wholly-Owned
Subsidiary of the Borrower shall be the surviving Person and no Default or Event
of Default shall have  occurred and be  continuing  both before and after giving
effect to the acquisition,  (iii) the Borrower shall have certified to the Agent
that it is in PRO FORMA compliance with each covenant contained in Section 9.11,
Article 10 and Article 11 hereof prior to consummating  the acquisition  and, if
any Lender  requests in its sole  discretion,  the Borrower  shall have provided
evidence to the Agent of such PRO FORMA  compliance,  (iv) the Fair Market Value
of all Consideration (as defined below) paid in connection with such acquisition
(or series of related  acquisitions  in the same  Fiscal  Year) shall not exceed
$1,500,000;  PROVIDED,  that the Fair Market Value of all Consideration  paid in
connection  with  such  acquisition  of (x) a  Foreign  Subsidiary  or of assets
located outside of the United States or Canada shall not exceed $250,000 and (y)
a Foreign  Subsidiary or of assets located in Canada shall not exceed  $750,000,
and (v) the Fair Market Value of all  Consideration  paid in connection with all
such  acquisitions  shall not exceed $3,000,000 in the aggregate for each Fiscal
Year;  PROVIDED  that  the  Fair  Market  Value  of all  Consideration  paid  in
connection  with any such  acquisitions of (x) Foreign  Subsidiaries  and assets
located  outside of the United States or Canada shall not exceed $250,000 in the
aggregate for each Fiscal Year and (y) Foreign  Subsidiaries  and assets located
in Canada shall not exceed $750,000 in the aggregate for each such Fiscal Year;

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          (g) loans,  investments,  advances and acquisitions otherwise approved
in writing by the Required Lenders; and

          (h) investments  (including working capital investments) by any Credit
Party  or  any  Subsidiary   thereof  in  Persons  that  are  not   Wholly-Owned
Subsidiaries  of such  Credit  Party  or any  Subsidiary  thereof  if each  such
investment meets all of the following  requirements:  (i) no Default or Event of
Default  shall have  occurred  and be  continuing  both before and after  giving
effect to such investment,  (ii) the Fair Market Value of all Consideration paid
in  connection  with  any  investment   shall  not  exceed   $1,000,000,   which
consideration  to be paid may be increased upon the prior written consent of the
Required Lenders which will not be unreasonably withheld or delayed, (net of any
proceeds received from the sale or other disposition of any investment or return
on any  investment  made  pursuant to this Section  11.4(h);  PROVIDED  that the
Borrower  shall have  delivered  to the Agent,  evidence  in form and  substance
satisfactory to the Agent of the amount of such proceeds,  and (iii) there shall
be no more than three (3) such investments in any fiscal year.

     For the purposes of calculating  compliance with clause (f) and (h) of this
Section 11.4,  the "Fair Market Value of all  Consideration"  paid in connection
with any acquisition or investment shall include (1) any cash consideration paid
in connection  with such  acquisition or investment,  (2) the face amount of any
Seller Financing (which shall include the maximum amount of Earn-Out Obligations
that could be paid in connection with such acquisition or investment)  issued in
connection with such acquisition or investment  (excluding Earn-Out  Obligations
on terms  and  conditions  satisfactory  to the  Agent to be paid to a seller in
connection with additional business or contracts not in existence at the time of
such  acquisition  or  investment),  (3) the face amount of any Debt  assumed in
connection  with  such  acquisition  or  investment,   (4)  the  amount  of  any
commissions paid in connection with such acquisition or investment,  (5) 100% of
the fair  market  value  (calculated  in the same  manner  as in the  applicable
acquisition  or  investment   contract,   such   calculation  to  be  reasonably
satisfactory to the Agent) of any unrestricted  stock issued or transferred in a
pooling  of  interest  or  otherwise  and  (6)  65% of  the  fair  market  value
(calculated  in the same manner as in the  applicable  acquisition or investment
contract,  such  calculation to be reasonably  satisfactory to the Agent) of any
restricted  stock (stock which cannot by agreement be sold or transferred  for a
period of at least 2 years or is otherwise deemed to be restricted by the Agent,
in its reasonable  discretion) issued or transferred in a pooling of interest or
otherwise and MINUS (7) any cash balances, including accounts receivable (to the
extent indemnified by the seller) assumed in such acquisition or investment.

     Section 11.5  LIMITATIONS ON MERGERS AND  LIQUIDATION.  Except solely as to
the permitted  dissolutions  set forth on Schedule  11.5,  otherwise  liquidate,
wind-up or dissolve  itself (or suffer any liquidation or dissolution) or merge,
consolidate  or enter  into any  similar  combination  with any other  Person or
except, so long as no Default or Event of Default shall have occurred before and
after  giving  effect to the  merger,  (a) any  Wholly-Owned  Subsidiary  of the
Borrower  may merge  with the  Borrower  or any other  Wholly-Owned  Subsidiary;
provided,  that (i) if the Borrower is party to such  transaction,  the Borrower
shall be the  surviving  person and (ii) except as set forth in (i) above if any
other Credit Party is party to such transaction,  such Credit Party shall be the
surviving  Person,  (b) the Borrower or any other Credit Party may merge with or
into any other Person for the purpose of consummating any acquisition  permitted
under Section 11.4(f); provided, that if the Borrower is a party to such merger,
the  Borrower  shall be the  surviving  Person and (c) the Borrower or any other
Credit  Party may merge  with any  Person  as long as such  Credit  Party is the

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surviving  Person and no Default or Event of Default shall have occurred  before
and after giving effect to such merger.

     Section 11.6 LIMITATIONS ON SALE OF ASSETS.  Convey,  sell, lease,  assign,
transfer  or  otherwise  dispose  of any of its  property,  business  or  assets
(including,  without  limitation,  the  sale of any  receivables  and  leasehold
interests and any sale-leaseback or similar  transaction),  whether now owned or
hereafter acquired except:

          (a) the conveyance,  sale, lease,  assignment,  exchange,  transfer or
other disposition of obsolete assets or assets no longer used in the business of
the Borrower or such Subsidiary;

          (b)  the  conveyance,  sale,  lease,  assignment,  transfer  or  other
disposition  without  recourse of accounts  receivable  arising in the  ordinary
course of business in connection with the compromise or collection thereof;

          (c)  the  conveyance,  sale,  lease,  assignment,  transfer  or  other
disposition of inventory in the ordinary course of business;

          (d)  the  conveyance,  sale,  lease,  assignment,  transfer  or  other
disposition  by any Credit Party or any of its  Subsidiaries  of its business or
assets to another  Credit Party;  PROVIDED,  that no Default or Event of Default
shall have occurred before and after giving effect to such sale;

          (e) any other conveyance,  sale, lease, assignment,  transfer or other
disposition  of assets in any  Fiscal  Year  having a fair  market  value not to
exceed $500,000;

          (f)  any  conveyance,  sale,  lease,  assignment,  transfer  or  other
disposition of assets to Governmental  Authorities in connection with contingent
lease  agreements  executed  or  assumed  by a Credit  Party  or any  Subsidiary
thereof,  in form and  substance  satisfactory  to the  Agent in its  reasonable
discretion,  which agreements permit such  Governmental  Authorities to lease or
purchase  existing  inventory and equipment  used in connection  with  emergency
service  contracts  between Credit Parties or any Subsidiaries  thereof and such
Governmental  Authorities  upon the early  termination  of such  contracts for a
period not to exceed twelve (12) months after such termination;  PROVIDED,  that
any such  conveyance  shall have (i) a purchase  price  equal to the fair market
value of the  assets  so  conveyed  and (ii) fair and  reasonable  terms no less
favorable  than any Credit  Party  would  obtain in a  comparable  arm's  length
transaction;

          (g) Capital  Leases and operating  leases for fair market value to any
Person; PROVIDED, that the aggregate fair saleable value of all assets so leased
shall not exceed $1,000,000;

          (h) any other sale, conveyance,  lease, assignment,  transfer or other
disposition;  PROVIDED,  that  (i)  the  Borrower  or such  Subsidiary  receives
consideration at the time of such sale, conveyance,  lease,  assignment or other
disposition  at least  equal to the fair  market  value  thereof  as  reasonably
determined  for such sales or  dispositions  (x) in excess of $500,000  but less
than or equal to $2,000,000 in good faith by the board of directors as evidenced
by a  resolution  provided  to the Agent and (y) in  excess of  $2,000,000  by a
nationally  recognized  third party appraisal or a written opinion provided by a

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nationally  recognized  investment  banking  firm  as to the  fairness  of  such
transaction,  from a  financial  point  of  view  delivered  to  and  reasonably
acceptable to the Agent, (ii) no less than 75% of the consideration  received by
the  Borrower  or such  Subsidiary  is in the  form of cash or cash  equivalents
described  in  Section  11.4(b)  and  (iii)  the  proceeds  from  such  sale  or
disposition are invested in a Credit Party within 270 days following the receipt
of such proceeds;

          (i)  the  Latin  American  Divestiture;  PROVIDED  that  the  executed
definitive documentation is consistent with the draft documentation delivered by
the Borrower pursuant to Section 6.2(f) and that the Agent, Issuing Bank and the
Lenders shall have received copies of  documentation  evidencing the release and
indemnities  contemplated  in Section  7.1(aa)  which shall be in full force and
effect.

     Section 11.7 LIMITATIONS ON DIVIDENDS AND DISTRIBUTIONS. Declare or pay any
dividends upon any of its capital stock or purchase, redeem, retire or otherwise
acquire,  directly or indirectly,  any shares of its capital stock,  or make any
distribution  of cash,  property  or assets  among the  holders of shares of its
capital  stock;  provided that (a) any Credit Party may pay dividends  solely in
shares of its own capital stock,  (b) any Subsidiary may pay cash dividends to a
Credit Party, (c) the Borrower may redeem the Preferred Stock in accordance with
the mandatory redemption provisions set forth in the Certificate of Designation,
(d) the Borrower may make  contributions  of (i) any amount of capital stock and
(ii) cash in an aggregate amount not to exceed $1,000,000, in any Fiscal Year to
its Employee  Stock  Ownership  Plan;  provided  that,  in  connection  with any
distribution  or payment  pursuant to clauses (b), (c) and (d) above, no Default
or Event of Default  shall have  occurred  before and after giving effect to any
such dividend or payment.

     Section 11.8  TRANSACTIONS WITH AFFILIATES.  Except as otherwise  permitted
hereunder,  directly or indirectly: (a) make any loan or advance to, or purchase
or  assume  any  note or  other  obligation  to or  from,  any of its  officers,
directors,  shareholders  or other  Affiliates,  or to or from any member of the
immediate  family  of any of its  officers,  directors,  shareholders  or  other
Affiliates,  or  subcontract  any  operations  to any of  its  Affiliates  in an
aggregate principal amount in excess of $125,000 at any time outstanding, or (b)
enter into, or be a party to, any transaction with any of its Affiliates, except
pursuant  to the  reasonable  requirements  of its  business  and upon  fair and
reasonable  terms no less  favorable  to it than it would obtain in a comparable
arm's length  transaction  with a Person not its Affiliate.  In any  transaction
permitted  pursuant to clause (b) above involving an amount or having a value in
excess of $1,000,000 in any Fiscal Year,  the Borrower or such  Subsidiary  must
obtain a resolution of its board of directors  certifying that such  transaction
complies with the terms and conditions of clause (b) above.  In any  transaction
permitted  pursuant to clause (b) above involving an amount or having a value in
excess of $250,000 in the aggregate  with respect to  transactions  with Foreign
Subsidiaries  and $3,750,000 in the aggregate with respect to transactions  with
Domestic  Subsidiaries  in any Fiscal Year, the Borrower or such Subsidiary must
(i) obtain a written  opinion as to the  fairness  of such  transaction,  from a
financial point of view, and (ii) such  transaction  complies with all rules and
requirements promulgated by the SEC and NASDAQ.

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     Section 11.9  CERTAIN  ACCOUNTING  CHANGES.  Change its Fiscal Year end, or
make any material  change in its  accounting  treatment and reporting  practices
except as required by GAAP or the SEC.

     Section 11.10 PAYMENTS AND PREPAYMENTS OF NON-SELLER FINANCING SUBORDINATED
DEBT;  AMENDMENTS TO CERTAIN  AGREEMENTS.  Directly or  indirectly  (a) make any
payment or prepayment on any Non-Seller  Financing  Subordinated Debt other than
payments as are expressly required thereunder or redeem or otherwise acquire for
value any Non-Seller Financing  Subordinated Debt or (b) amend or supplement any
of the terms or provisions of any Non-Seller Financing Subordinated Debt.

     Section 11.11 RESTRICTIVE AGREEMENTS.  Enter into any agreement (other than
the Senior Note  Indenture)  after the Closing Date which  restricts,  limits or
otherwise  encumbers its ability to (a) with respect to any Subsidiary,  (i) pay
dividends or make any other  distributions  in cash or otherwise to the Borrower
or any  Subsidiary,  (ii) pay any Debt owed to the  Borrower or any  Subsidiary,
(iii) make loans or advances to the  Borrower or any  Subsidiary  thereof , (iv)
transfer any of its assets or property to the Borrower or any Subsidiary (except
the restrictions  set forth in any agreement  governing a Permitted Lien) or (v)
guaranty the Debt under this  Agreement  and (b) with respect to the Borrower or
any  Subsidiary,  incur  Liens  on or  with  respect  to any of  its  assets  or
properties;  provided, that any contingent lease agreement permitted pursuant to
Sections  11.3(l) and  11.6(g)  may  restrict or limit the ability of the Credit
Party to such contingent lease agreement to incur Liens on or otherwise encumber
the assets subject to such contingent lease agreement.

     Section 11.12 AMENDMENTS TO SENIOR NOTE INDENTURE OR SENIOR NOTES. Amend or
modify  (or  permit  the  amendment  or  modification  of) any of the  terms  or
provisions  of the Senior Note  Indenture or the Senior Notes  without the prior
written consent of the Required Lenders.

                                   ARTICLE 12
                              DEFAULT AND REMEDIES

     Section 12.1 EVENTS OF DEFAULT.  Each of the following shall  constitute an
Event of  Default,  whatever  the reason for such event and  whether it shall be
voluntary or  involuntary  or be effected by operation of law or pursuant to any
judgment  or  order  of any  court  or any  order,  rule  or  regulation  of any
Governmental Authority or otherwise:

          (a) DEFAULT IN PAYMENT.  (i) The Borrower shall default in any payment
of  principal of any Loan,  Note or  Reimbursement  Obligation,  when and as due
(whether at maturity, by reason of acceleration or otherwise), (ii) the Borrower
shall fail to make any payment of interest  on any Loan,  Note or  Reimbursement
Obligation  or any fee due  hereunder  within three (3) Business  Days after the
same becomes due and payable,  (iii) the Borrower shall fail to make any payment
of any other amount due hereunder or under any other Loan  Document  within five
(5)  Business  Days after such  amount has become due and  payable,  or (iv) the
Borrower  shall  fail to make any  payment  of  reasonable  attorneys'  fees and
expenses  of the Agent,  the  Issuing  Bank and the  Lenders  for which  written
statements  have been  delivered to the Borrower in  accordance  with the notice
provisions  set forth in Section 14.1 within  thirty (30) days of receipt by the
Borrower of such statements.

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          (b)  MISREPRESENTATION.  Any  representation  or warranty  made by the
Borrower or any of its Subsidiaries  under this Agreement,  any Loan Document or
any  amendment  hereto or thereto,  shall prove to be incorrect or misleading in
any material respect as of the date made or deemed made under Article 6.

          (c) DEFAULT IN  PERFORMANCE OF CERTAIN  COVENANTS.  The Borrower shall
default in the performance or observance of any covenant or agreement  contained
in  Sections  8.2,  8.5(d),  9.1  (only if the  default  in the  performance  or
observance  of such  covenant  could  reasonably  be expected to have a Material
Adverse Effect) , 9.3, 9.11, 9.14 and Articles 10 and 11 of this Agreement.

          (d) DEFAULT IN  PERFORMANCE  OF OTHER  COVENANTS AND  CONDITIONS.  The
Borrower  or  any  Subsidiary  thereof  shall  default  in  the  performance  or
observance  of any term,  covenant,  condition  or  agreement  contained in this
Agreement  (other than as  specifically  provided for  otherwise in this Section
12.1) or any other Loan Document and such default shall continue for a period of
thirty (30) days after the occurrence thereof.

          (e)  CROSS-DEFAULT.  The Borrower or any of its Subsidiaries shall (i)
default in the payment of any Debt  (other  than the Notes or any  Reimbursement
Obligation) or Guarantee in principal amount in excess of $2,000,000  beyond the
period of grace if any, provided in the instrument or agreement under which such
Debt or Guarantee was created or (ii) default in the  observance or  performance
of any other  provision or condition  contained in any  instrument  or agreement
evidencing,  securing or relating to such Debt or Guarantee  described in clause
(i) above  beyond the period of grace if any,  provided  in such  instrument  or
agreement; PROVIDED, that no Event of Default shall occur hereunder by reason of
the Borrower or any of its  Subsidiaries'  good faith  exercise of its rights of
offset  contained in any Seller  Financing  (or similar  financing  described on
SCHEDULE   7.1(V))   for   breaches,   violations   or   inaccuracies   in   any
representations,  warranties or  undertakings  of a seller in connection  with a
Permitted  Acquisition  (or any  acquisition  which  occurred prior to March 16,
1998).

          (f) CHANGE IN CONTROL.  (i) Any person or group of persons (within the
meaning of Section 13(d) of the Exchange Act) shall obtain  ownership or control
in one or more series of  transactions  of more than forty  percent (40%) of the
common stock or forty percent (40%) of the voting power of the Borrower entitled
to vote in the election of members of the board of  directors  of the  Borrower,
(ii) less than a  majority  of the  members  of the  board of  directors  of the
Borrower  are  Persons  who (A) were  members of the board of  directors  of the
Borrower on the Closing  Date or (B) were  nominated  for election or elected to
such board of directors  with the approval of a majority of the Persons who meet
the  qualifications  of clause (A) or this  clause  (B) who were  members of the
board of directors at the time of such nomination or election or (iii) except as
permitted  in Section  11.5,  any  Guarantor  shall  cease to be a  Wholly-Owned
Subsidiary of the Borrower (any such event, a "CHANGE IN CONTROL").

          (g) VOLUNTARY  BANKRUPTCY  PROCEEDING.  The Borrower or any Subsidiary
thereof shall (i) commence a voluntary  case under the federal  bankruptcy  laws
(as now or hereafter in effect);  (ii) file a petition seeking to take advantage
of any other  laws,  domestic or foreign,  relating to  bankruptcy,  insolvency,
reorganization,  winding up or composition for adjustment of debts;  (iii) apply
for or consent to, or fail to contest in a timely and  appropriate  manner,  the

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appointment of, or the taking of possession by, a receiver,  custodian, trustee,
or liquidator of itself or of a  substantial  part of its property,  domestic or
foreign;  (iv) admit in writing  its  inability  to pay its debts as they become
due; (v) make a general  assignment  for the benefit of creditors;  or (vi) take
any corporate action for the purpose of authorizing any of the foregoing.

          (h)  INVOLUNTARY  BANKRUPTCY  PROCEEDING.  A case or other  proceeding
shall be commenced  against the Borrower or any of its Subsidiaries in any court
of competent  jurisdiction  seeking (i) relief under the federal bankruptcy laws
(as now or  hereafter  in effect) or under any other laws,  domestic or foreign,
relating to bankruptcy, insolvency,  reorganization, winding up or adjustment of
debts; or (ii) the appointment of a trustee, receiver, custodian,  liquidator or
the  like  for  the  Borrower  or  any  of its  Subsidiaries  or for  all or any
substantial part of its assets,  domestic or foreign,  and (A) such Person shall
consent to or fail to contest in a timely and  appropriate  manner any such case
or proceeding  or (B) such case or  proceeding  shall  continue  undismissed  or
unstayed  for a period of sixty  (60)  consecutive  calendar  days,  or an order
granting the relief  requested in such case or  proceeding  (including,  but not
limited to, an order for relief  under such  federal  bankruptcy  laws) shall be
entered.

          (i) FAILURE OF  AGREEMENTS.  Any material  provision of the Subsidiary
Guaranty  shall for any reason  cease to be valid and binding on the  Subsidiary
Guarantors or any Subsidiary  Guarantor shall so state in writing,  in each case
other than in  accordance  with the express  terms thereof and except where such
circumstance  arises as a result of the action or  inaction  of the Agent or any
Lender.

          (j) TERMINATION  EVENT. The occurrence of any of the following events:
(i) the Borrower or any ERISA  Affiliate fails to make full payment when due (or
promptly  after the Borrower  obtains  knowledge  of any such amounts  which are
due), which under the provisions of any Pension Plan or Section 412 of the Code,
the Borrower or any ERISA Affiliate is required to pay as contributions thereto;
(ii) an accumulated funding deficiency in excess of $1,000,000 occurs or exists,
whether or not waived,  with respect to any Pension  Plan;  (iii) a  Termination
Event  resulting in liability  the Borrower or any ERISA  Affiliate in excess of
$1,000,000;  or (iv) the Borrower or any ERISA  Affiliate as employers under one
or more  Multiemployer Plan makes a complete or partial withdrawal from any such
Multiemployer  Plan and the plan sponsor of such  Multiemployer  Plans  notifies
such withdrawing employer that such employer has incurred a withdrawal liability
requiring payments in an amount exceeding $1,000,000.

          (k)  JUDGMENT.  A judgment  or order for the  payment  of money  which
exceeds $1,000,000 in amount shall be entered against the Borrower or any of its
Subsidiaries   by  any  court  and  such   judgment  or  order  shall   continue
undischarged, unstayed or unbonded for a period of thirty (30) days.

          (l)  ATTACHMENT.  A warrant  or writ of  attachment  or  execution  or
similar  process  shall be issued  against any  property of the  Borrower or any
Subsidiary thereof which exceeds $1,000,000 in value and such warrant or process
shall continue  undischarged or unstayed for a period of thirty (30) days (or in
any  event  later  than  five  days  prior  to the  date  of any  proposed  sale
thereunder).

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          (m) NET CONTRACT LOSS. The Borrower experiences a Net Contract Loss in
any fiscal quarter exceeding $5,000,000.

          (n)  MEDICARE/MEDICAID  PARTICIPATION.  The  Borrower  or  any  of its
Subsidiaries,  in each  case to the  extent it is  engaged  in the  business  of
providing services for which Medicare or Medicaid reimbursement is sought, shall
for any reason,  including,  without  limitation,  as the result of any finding,
designation or de-certification,  lose its right or authorization,  or otherwise
fail to be  eligible,  to  participate  in Medicaid  or Medicare  programs or to
accept  assignments or rights to  reimbursements  under Medicaid  regulations or
Medicare regulations, or the Borrower or any Subsidiary has, for any reason, had
its right to receive  reimbursements  under  Medicaid  or  Medicare  regulations
suspended,  and such loss,  failure or suspension  (together with all such other
losses,  failures and suspensions  continuing at such time) could  reasonably be
expected to result in (i) a Material  Adverse  Effect or (ii)  Consolidated  Net
Revenues  for the  immediately  preceding  four  fiscal  quarter  period  of the
Borrower  constituting  less  than  95% of  Consolidated  Net  Revenues  for any
preceding four fiscal quarter period of the Borrower.

          (o) REDEMPTION OF PREFERRED  STOCK.  The Borrower shall fail to redeem
the  Preferred  Stock  in  accordance  with  the  terms  and  conditions  of the
Certificate of Designation.

     Section 12.2 REMEDIES. Upon the occurrence and during the continuance of an
Event of Default,  with the consent of the Required  Lenders,  the Agent may, or
upon the request of the Required Lenders,  the Agent shall, by written notice to
the Borrower:

          (a) ACCELERATION;  TERMINATION OF FACILITIES. Declare the principal of
and interest on the Loans,  the Notes and the  Reimbursement  Obligations at the
time outstanding, and all other amounts owed to the Lenders, Issuing Bank and to
the Agent under this  Agreement  or any of the other Loan  Documents  (including
without limitation all L/C Obligations,  whether or not the beneficiaries of the
then outstanding  Letters of Credit shall have presented the documents  required
thereunder,  and all New Facility Loans, whether or not the beneficiaries of the
New  Letters of Credit  which have been cash  collateralized  with the  proceeds
thereof,  have  made a drawing  thereunder)  and all  other  Obligations,  to be
forthwith due and payable,  whereupon the same shall immediately  become due and
payable without  presentment,  demand,  protest or any additional  notice of any
kind, all of which are expressly waived, anything in this Agreement or the other
Loan  Documents to the contrary  notwithstanding,  and  terminate  the Aggregate
Commitment;  PROVIDED, that upon the occurrence of an Event of Default specified
in Section  12.1(g) or (h),  the  Aggregate  Commitment  shall be  automatically
terminated and all Obligations shall automatically become due and payable.

          (b)  LETTERS OF CREDIT.  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 the preceding paragraph,  require the Borrower at such
time to deposit  in a cash  collateral  account  opened by the  Issuing  Bank 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
Issuing Bank 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 paid  over  to the  Agent  for
application  to the other  Obligations.  After all such  Letters of Credit shall

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have expired or been fully drawn upon, the Reimbursement  Obligations shall have
been  satisfied  and all other  Obligations  shall  have been paid in full,  the
balance,  if any,  in such cash  collateral  account  shall be  returned  to the
Borrower.

          (c) RIGHTS OF COLLECTION. Exercise on behalf of the Lenders all of its
other rights and remedies  under this  Agreement,  the other Loan  Documents and
Applicable Law, in order to satisfy all of the Credit Parties' Obligations.

     Section  12.3  RIGHTS  AND  REMEDIES  CUMULATIVE;   NON-WAIVER;   ETC.  The
enumeration  of the rights and  remedies of the Agent,  the Issuing Bank and the
Lenders set forth in this  Agreement  is not intended to be  exhaustive  and the
exercise by the Agent,  the Issuing  Bank and the Lenders of any right or remedy
shall not preclude  the  exercise of any other rights or remedies,  all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter  exist in law
or in equity or by suit or otherwise.  No delay or failure to take action on the
part of the Agent, the Issuing Bank or any Lender in exercising any right, power
or privilege shall operate as a waiver thereof,  nor shall any single or partial
exercise  of any  such  right,  power or  privilege  preclude  other or  further
exercise thereof or the exercise of any other right, power or privilege or shall
be  construed  to be a waiver of any  Event of  Default.  No  course of  dealing
between  the  Borrower,  the Agent,  the  Issuing  Bank and the Lenders or their
respective agents or employees shall be effective to change, modify or discharge
any  provision  of this  Agreement  or any of the  other  Loan  Documents  or to
constitute a waiver of any Event of Default.

     Section  12.4  CREDITING OF PAYMENTS  AND  PROCEEDS.  In the event that the
Borrower shall fail to pay any of the  Obligations  when due and the Obligations
have been  accelerated  pursuant to Section 12.2,  all payments  received by the
Agent,  the Lenders and the Issuing Bank with respect to the Notes and the other
Obligations and all net proceeds from the  enforcement of the Obligations  shall
be applied first to all expenses then due and payable by the Borrower hereunder,
then  to all  indemnity  obligations  then  due  and  payable  by  the  Borrower
hereunder,  then to all Agent's and  Issuing  Bank's fees then due and  payable,
then to all commitment and other fees and commissions then due and payable, then
to accrued and unpaid interest on the Notes, the  Reimbursement  Obligations and
any termination  payments due in respect of a Hedging  Agreement with any Lender
(PRO RATA in accordance with all such amounts due as if the Borrower were to pay
all  amounts  on such  date) and then to the  principal  amount of the Notes and
Reimbursement Obligations,  and then to the cash collateral account described in
Section  12.2(b)  hereof to be  applied to the  payment of any drafts  under the
Letters of Credit then outstanding, in that order.

     Section 12.5 SET-OFF.  Except to the extent  prohibited by law, in addition
to any rights now or hereafter  granted under  Applicable  Law and not by way of
limitation  of any such rights,  upon and after the  occurrence  of any Event of
Default and during the  continuance  thereof,  the Lenders and any assignee of a
Lender in accordance with Section 14.9 are hereby  authorized by the Borrower at
any time or from time to time,  without  notice to the  Borrower or to any other
Person,  any  such  notice  being  hereby  expressly  waived,  to set off and to
appropriate  and to apply any and all  deposits  (general  or  special,  time or
demand, including, but not limited to, indebtedness evidenced by certificates of
deposit, whether matured or unmatured,  excluding government securities required
by Applicable Law to be held as security for worker's  compensation  and similar
claims) and any other  indebtedness  at any time held or owing by the Lenders or
the Issuing Bank, or any such  assignee or  participant  to or for the credit or

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the  account of the Credit  Parties  against  and on account of the  Obligations
irrespective  of whether or not (a) the Lenders and the Issuing  Bank shall have
made any demand under this  Agreement or any of the other Loan  Documents or (b)
the  Agent  shall  have  declared  any or all of the  Obligations  to be due and
payable as permitted by Section 12.2.

                                   ARTICLE 13
                                    THE AGENT

     Section 13.1 APPOINTMENT. Each of the Lenders hereby irrevocably designates
and appoints  Wachovia Bank as the Agent of such Lender under this Agreement and
the other Loan Documents and each such Lender  irrevocably  authorizes  Wachovia
Bank as Agent for such  Lender,  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 Agent by the
terms of this Agreement and such other Loan Documents,  together with such other
powers as are reasonably  incidental  thereto.  Notwithstanding any provision to
the contrary elsewhere in this Agreement or such other Loan Documents, the Agent
shall not have any duties or responsibilities,  except those expressly set forth
herein and  therein,  or any  fiduciary  relationship  with any  Lender,  and no
implied  covenants,   functions,   responsibilities,   duties,   obligations  or
liabilities  shall be read into this  Agreement  or the other Loan  Documents or
otherwise exist against the Agent. To the extent any provision of this Agreement
permits  action by the Agent,  the Agent  shall,  subject to the  provisions  of
Section  14.10  hereof and of this  Article  13, take such action if directed in
writing to do so by the Required Lenders.

     Section  13.2  DELEGATION  OF  DUTIES.  The  Agent may  execute  any of its
respective  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  Agent  shall not be
responsible for the negligence or misconduct of any agents or  attorneys-in-fact
selected by the Agent with reasonable care.

     Section 13.3 EXCULPATORY PROVISIONS.  Neither the Agent or the Issuing Bank
nor  any  of  their   respective   officers,   directors,   employees,   agents,
attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable for any action
lawfully  taken  or  omitted  to be  taken  by it or  such  Person  under  or in
connection  with this Agreement or the other Loan  Documents  (except for its or
such Person's own gross negligence or willful misconduct), or (b) responsible in
any manner to any of the Lenders for any recitals,  statements,  representations
or  warranties  made by the Borrower or any of its  Subsidiaries  or any officer
thereof  contained  in this  Agreement  or the other  Loan  Documents  or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agent or the Issuing Bank under or in connection  with,  this
Agreement or the other Loan Documents or for the value, validity, effectiveness,
genuineness,  enforceability  or sufficiency of this Agreement or the other Loan
Documents  or for any  failure of the  Borrower  or any of its  Subsidiaries  to
perform  its  obligations  hereunder  or  thereunder.  Neither the Agent nor the
Issuing  Bank shall 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 to inspect the  properties,  books or
records of the Borrower or any of its Subsidiaries.

     Section  13.4  RELIANCE  BY THE AGENT AND ISSUING  BANK.  The Agent and the
Issuing Bank shall be entitled to rely, and shall be fully protected in relying,
upon any note, writing,  resolution,  notice, consent,  certificate,  affidavit,

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letter,  cablegram,  telegram,  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,  without limitation,  counsel
to the Credit  Parties),  independent  accountants and other experts selected by
the Agent.  The Agent and the  Issuing  Bank may deem and treat the payee of any
Note as the owner  thereof  for all  purposes  unless  such Note shall have been
transferred  in accordance  with Section 14.9 hereof.  The Agent and the Issuing
Bank shall be fully  justified  in failing or refusing to take any action  under
this Agreement and the other Loan Documents unless they shall first receive such
advice or  concurrence  of the Required  Lenders (or,  when  expressly  required
hereby or by the  relevant  other Loan  Document,  all the Lenders) as they deem
appropriate  or they shall first be  indemnified  to their  satisfaction  by the
Lenders  against any and all liability and expense which may be incurred by them
by reason of taking or  continuing  to take any such action except for their own
gross negligence or willful misconduct.  The Agent and the Issuing Bank shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement  and the Notes in  accordance  with a request of the Required  Lenders
(or, when expressly required hereby, all the 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 Notes.

     Section  13.5  NOTICE OF  DEFAULT.  The  Agent  shall not be deemed to have
knowledge  or  notice  of the  occurrence  of any  Default  or Event of  Default
hereunder unless it has received notice from a Lender 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 Agent receives such
a notice, it shall promptly give notice thereof to the Lenders.  The Agent shall
take such  action with  respect to such  Default or Event of Default as shall be
reasonably directed by the Required Lenders;  PROVIDED that unless and until the
Agent  shall  have  received  such  directions,  the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such  Default  or Event of Default  as it shall  deem  advisable  in the best
interests of the Lenders.

     Section  13.6  NON-RELIANCE  ON THE AGENT AND OTHER  LENDERS.  Each  Lender
expressly acknowledges that neither the Agent, the Issuing Bank nor any of their
respective   officers,   directors,   employees,   agents,    attorneys-in-fact,
Subsidiaries or Affiliates has made any  representations or warranties to it and
that no act by the Agent or the Issuing Bank  hereinafter  taken,  including any
review of the  affairs  of the  Borrower  or any of its  Subsidiaries,  shall be
deemed to constitute any  representation or warranty by the Agent or the Issuing
Bank to any Lender.  Each Lender  represents  to the Agent and the Issuing  Bank
that it has, independently and without reliance upon the Agent, the Issuing Bank
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 Borrower and its Subsidiaries and made its own decision
to make its Loans and enter into this  Agreement.  Each Lender  also  represents
that it will,  independently  and without  reliance upon the Agent,  the Issuing
Bank 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 Borrower and its Subsidiaries.  Except for
notices,  reports and other documents  expressly required to be furnished to the
Lenders by the Agent hereunder or by the other Loan Documents, neither the Agent
nor the Issuing Bank shall have any duty or responsibility to provide any Lender

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with any  credit  or other  information  concerning  the  business,  operations,
property,  financial and other condition or creditworthiness of the Borrower and
its  Subsidiaries  which may come into the possession of the Agent,  the Issuing
Bank  or  any  of  their  respective  officers,  directors,  employees,  agents,
attorneys-in-fact, Subsidiaries or Affiliates.

     Section 13.7 INDEMNIFICATION.  The Lenders agree to indemnify the Agent, in
its  capacity as such,  the Issuing  Bank,  in its  capacity as such and (to the
extent not reimbursed by the Borrower and without limiting the obligation of the
Borrower  to do so),  ratably  according  to the  respective  amounts  of  their
Commitment Percentages,  from and against any and all liabilities,  obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements of any kind whatsoever  which may at any time (including,  without
limitation,  at any time following the payment of the Notes or any Reimbursement
Obligation)  be imposed on,  incurred  by or  asserted  against the Agent or the
Issuing  Bank in any way  relating  to or arising out of this  Agreement  or 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 the Agent or the Issuing Bank 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  resulting solely from the
Agent's or the Issuing Bank's bad faith, gross negligence or willful misconduct.
The agreements in this Section 13.7 shall survive the payment of the Notes,  any
Reimbursement  Obligation  and  all  other  amounts  payable  hereunder  and the
termination of this Agreement.

     Section 13.8 THE AGENT AND ISSUING BANK IN THEIR INDIVIDUAL CAPACITIES. The
Agent,  the Issuing Bank and their  respective  Subsidiaries  and Affiliates may
make loans to, accept deposits from and generally engage in any kind of business
with the  Borrower  as though  the  Agent  were not an Agent  hereunder  and the
Issuing Bank were not an Issuing Bank hereunder.  With respect to any Extensions
of Credit  made or renewed by it and any Note issued to it, the 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 the Agent in its individual capacity.

     Section 13.9 RESIGNATION OF THE AGENT; SUCCESSOR AGENTS. If at any time the
Agent deems it advisable,  in its sole discretion,  it may submit to each of the
Lenders,  the  Issuing  Bank and the  Borrower  a  written  notification  of its
resignation as the Agent under this Agreement,  such resignation (subject to the
further  provisions  of this  Section  13.9) to be effective on the sixtieth day
after the date of such notice.  Upon any such resignation,  the Required Lenders
shall have the right to appoint a successor  Agent.  If no successor Agent shall
have been so  appointed by the Required  Lenders and accepted  such  appointment
within  sixty  (60)  days  after  the  retiring  Agent's  giving  of  notice  of
resignation,  then the retiring  Agent may, on behalf of the Lenders,  appoint a
successor  Agent,  which  successor Agent shall be either a Lender or if none of
the  Lenders is willing to serve as  successor  Agent,  a bank  having  combined
capital  and  surplus  of at least  $100,000,000.  The  Borrower  shall  pay the
successor Agent a reasonable  agency fee for serving in such capacity.  Upon the
acceptance of any  appointment  as Agent  hereunder by a successor  Agent,  such
successor  Agent shall  thereupon  succeed to and become vested with all rights,
powers,  privileges  and duties of the retiring  Agent,  and the retiring  Agent
shall be discharged  from its duties and  obligations  hereunder.  The successor
Agent  shall  not  succeed  to or assume  by  virtue  of  accepting  the role as
successor  Agent any of the liabilities of the retiring Agent that accrued prior
to the date of the  successor  Agent's  assumption of the duties of the retiring

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Agent.  After any  retiring  Agent's  resignation  hereunder  as the Agent,  the
provisions  of this  Section  13.9 shall  continue  in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Agent. The Borrower,  the Lenders and the successor Agent shall execute such
documents as shall be necessary to effect such appointment.

                                   ARTICLE 14
                                  MISCELLANEOUS

     Section 14.1 NOTICES.

          (a) METHOD OF  COMMUNICATION.  Except as  otherwise  provided  in this
Agreement,  all notices and communications  hereunder shall be in writing, or by
telephone  subsequently  confirmed  in writing if  otherwise  permitted  by this
Agreement.  Any notice shall be effective if delivered by hand  delivery or sent
via telecopy,  recognized  overnight  courier service or certified mail,  return
receipt requested, and shall be presumed to be received by a party hereto (i) on
the date of delivery if delivered by hand or sent by telecopy,  (ii) on the next
Business Day if sent by recognized  overnight  courier  service and (iii) on the
fifth  Business Day following the date sent by certified  mail,  return  receipt
requested.  Nothing  is this  Section  14.1(a)  shall be deemed  to  modify  the
presentment  and  notice  provisions  contained  in the  Letters  of  Credit.  A
telephonic  notice to the Agent as  understood by the Agent will be deemed to be
the controlling and proper notice in the event of a discrepancy  with or failure
to receive a confirming written notice.

          (b) ADDRESSES FOR NOTICES. Notices to any party shall be sent to it at
the following addresses,  or any other address as to which all the other parties
are notified in writing.

          If to any Credit Party:   Rural/Metro Corporation
                                    8401 E. Indian School Road
                                    Scottsdale, Arizona 85251
                                    Attention: John Banas
                                    Telephone: (480) 606-3301
                                    Telecopy:  (480) 606-3415

                                    and

                                    Attention: Jack Brucker
                                    Telephone: (480) 606-3620
                                    Telecopy:  (480) 606-3619

          with copies to:           Squire, Sanders & Dempsey LLP
                                    40 North Central Avenue
                                    Suite 2700
                                    Phoenix, Arizona 85004
                                    Attention: Tom Salerno
                                    Telephone: (602) 528-4043
                                    Telecopy:  (602) 253-8129

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<PAGE>
          If to Wachovia Bank,

          as Agent or Issuing Bank: Wachovia Bank National Association
                                    301 S. College Street, NC-0537
                                    Charlotte, NC 28288-0537
                                    Attention: Ron Ferguson
                                    Telephone: (704) 373-4560
                                    Telecopy:  (704) 383-6249

                                    and

                                    Attention: Paul Hulbert
                                    Telephone: (704) 715-1728
                                    Telecopy:  (704) 383-6249

          with copies to:           Milbank, Tweed, Hadley & McCloy
                                    601 S. Figueroa Street
                                    Suite 3000
                                    Los Angeles, California 90017
                                    Attention: Gregory Bray, Esq.
                                    Telephone: (213) 892-4470
                                    Telecopy:  (213) 892-4770

          If to any Lender:         At the address for notices set forth
                                    opposite  such Lender's name on SCHEDULE 1
                                    hereto

          (c) AGENT'S OFFICE.  The Agent hereby designates its office located at
the address set forth  above,  or any  subsequent  office  which shall have been
specified for such purpose by written notice to the Borrower and Lenders, as the
Agent's Office  referred to herein,  to which payments due are to be made and at
which Extensions of Credit will be disbursed.

     Section 14.2 EXPENSES.  The Borrower will pay all reasonable  out-of-pocket
expenses of the Agent,  the Issuing Bank and the Lenders in connection with: (a)
the preparation,  negotiation, execution and delivery of this Agreement and each
of the other Loan Documents,  whenever the same shall be executed and delivered,
including all  reasonable  syndication  and due diligence  expenses,  reasonable
appraiser's fees,  reasonable search fees,  recording fees, taxes and reasonable
fees and disbursements of Milbank,  Tweed Hadley & McCloy,  LLP, counsel for the
Agent,  the Issuing Bank and the Lenders;  (b) the  preparation,  execution  and
delivery of any waiver,  amendment or consent by the Agent,  the Issuing Bank or
the  Lenders  relating  to this  Agreement  or any of the other Loan  Documents,
including  reasonable fees and  disbursements of one law firm for the Agent, the
Issuing Bank and the Lenders,  reasonable  search fees,  reasonable  appraiser's
fees, recording fees and taxes imposed in connection  therewith,  whether or not
such amendment, waiver or consent shall be executed or become effective; and (c)
consulting  with one or more  Persons,  including  one firm each of  appraisers,
accountants, engineers and attorneys, concerning or related to the nature, scope
or value of any right or remedy of the  Agent,  the  Issuing  Bank or any of the

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Lenders hereunder or under any of the other Loan Documents, including any review
of factual  matters in connection  therewith,  which  expenses shall include the
reasonable fees and  disbursements  of such Persons.  In addition,  the Borrower
will pay all reasonable  out-of-pocket  expenses of the Agent,  the Issuing Bank
and each Lender in connection with prosecuting or defending any claim in any way
arising out of, related to,  connected with, or enforcing any provision of, this
Agreement or any of the other Loan Documents, in connection with any refinancing
or  restructuring of the credit  arrangements  provided by this Agreement in the
nature of a "workout" or pursuant to any  insolvency or bankruptcy  proceedings,
which expenses shall include the reasonable  fees and  disbursements  of one law
firm and of experts and other  consultants  retained  by the Agent,  the Issuing
Bank or any of the Lenders (including allocated costs of in-house counsel of any
of the Agents,  the Issuing  Banks or Lenders),  or in  connection  with the any
pending  lawsuits  against  the  Borrower  or any  Credit  Party or any of their
respective  officers or directors,  including two purported  class actions suits
captioned:  HASKELL V.  RURAL/METRO  CORPORATION,  ET AL., Civil Action C-328448
filed on August 25, 1998 in Pima  County,  Arizona  Superior  Court and RUBLE V.
RURAL/METRO CORPORATION, ET AL., CIV 98--413-TUC-JMR, filed on September 2, 1998
in the United States District Court for the District of Arizona.

     Section 14.3  GOVERNING LAW. THIS  AGREEMENT,  THE NOTES AND THE OTHER LOAN
DOCUMENTS,  UNLESS OTHERWISE EXPRESSLY SET FORTH THEREIN,  SHALL BE GOVERNED BY,
CONSTRUED  AND  ENFORCED IN  ACCORDANCE  WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REFERENCE TO THE CONFLICTS OR CHOICE OF LAW PRINCIPLES THEREOF.

     Section  14.4 CONSENT TO  JURISDICTION.  The  Borrower  hereby  irrevocably
consents to the personal jurisdiction of the state and federal courts located in
New York County, New York, in any action,  claim or other proceeding arising out
of any dispute in connection with this  Agreement,  the Notes and the other Loan
Documents, any rights or obligations hereunder or thereunder, or the performance
of such rights and obligations.  The Borrower hereby irrevocably consents to the
service of a summons and  complaint  and other  process in any action,  claim or
proceeding  brought by the Agent,  the Issuing Bank or any Lender in  connection
with this  Agreement,  the  Notes or the other  Loan  Documents,  any  rights or
obligations  hereunder  or  thereunder,  or the  performance  of such rights and
obligations,  on  behalf of itself or its  property,  by the  mailing  of copies
thereof by registered or certified mail, postage prepaid, to the Borrower at its
address for notices  contained  in Section  14.1.  Nothing in this  Section 14.4
shall  affect the right of the Agent,  the  Issuing  Bank or any Lender to serve
legal  process in any other  manner  permitted by  Applicable  Law or affect the
right of the  Agent,  the  Issuing  Bank or any  Lender to bring  any  action or
proceeding  against the  Borrower or its  properties  in the courts of any other
jurisdictions.

     Section 14.5 ARBITRATION.

          (a) BINDING ARBITRATION. Upon demand of any party, whether made before
or  after  institution  of  any  judicial  proceeding,  any  dispute,  claim  or
controversy  arising out of,  connected with or relating to the Notes, any other
Loan  Documents  (other  than  the  Letters  of  Credit  and  the  Applications)
("DISPUTES"),  between or among  parties to the Notes,  any other Loan  Document
(other  than the  Letters of Credit and the  Applications)  shall be resolved by
binding arbitration as provided herein.  Institution of a judicial proceeding by
a party does not waive the right of that party to demand arbitration  hereunder.
Disputes may include,  without limitation,  tort claims,  counterclaims,  claims

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brought as class  actions,  claims  arising from Loan  Documents(other  than the
Letters  of  Credit  and  the  Applications)  executed  in  the  future,  claims
concerning any aspect of the past, present or future  relationships  arising out
or connected  with the Loan  Documents(other  than the Letters of Credit and the
Applications).  The  parties  hereto  acknowledge  and  agree  that  any and all
disputes,  claims or controversies arising out of, connected with or relating to
the Letters of Credit,  Applications and Reimbursement  Obligations shall not be
subject to the binding  arbitrations  provisions  set forth herein.  Arbitration
shall be  conducted  under and  governed by the  Commercial  Financial  Disputes
Arbitration  Rules  (the  "ARBITRATION   RULES")  of  the  American  Arbitration
Association  (the "AAA") and Title 9 of the U.S. Code. All arbitration  hearings
shall be conducted in New York, New York. The expedited  procedures set forth in
Rule 51, ET SEQ. of the Arbitration  Rules shall be applicable to claims of less
than  $1,000,000.  All  applicable  statutes  of  limitation  shall apply to any
Dispute.  A  judgment  upon  the  award  may  be  entered  in any  court  having
jurisdiction.  The  panel  from  which all  arbitrators  are  selected  shall be
comprised of licensed  attorneys.  The single arbitrator  selected for expedited
procedure   shall  be  a  retired  judge  from  the  highest  court  of  general
jurisdiction,  state  or  federal,  of the  state  where  the  hearing  will  be
conducted.  The  arbitrators  shall be appointed as provided in the  Arbitration
Rules.

          (b) PRESERVATION OF CERTAIN  REMEDIES.  Notwithstanding  the preceding
binding  arbitration  provisions,  the Agent and the Lenders  preserve,  without
diminution,  certain  remedies  that the Agent  and the  Lenders  may  employ or
exercise  freely,  either alone,  in conjunction  with or during a Dispute.  The
Agent and the Lenders shall have and hereby  reserve the right to proceed in any
court of  proper  jurisdiction  or by self help to  exercise  or  prosecute  the
following  remedies:  (i) all rights to  foreclose  against any real or personal
property or other  security by  exercising  a power of sale  granted in the Loan
Documents or under Applicable Law or by judicial  foreclosure and sale, (ii) all
rights of self help including peaceful  occupation of property and collection of
rents,  set off,  and  peaceful  possession  of  property  and  (iii)  obtaining
provisional or ancillary  remedies including  injunctive relief,  sequestration,
garnishment,  attachment,  appointment  of receiver and in filing an involuntary
bankruptcy  proceeding.  Preservation of these remedies does not limit the power
of an arbitrator to grant similar remedies that may be requested by a party in a
Dispute.

     Section  14.6 WAIVER OF JURY TRIAL.  WITH  RESPECT TO ANY AND ALL  DISPUTES
WHICH CANNOT BE ARBITRATED  NOTWITHSTANDING  THE INTENT OF THE PARTIES HERETO TO
HAVE SUCH DISPUTE RESOLVED BY BINDING  ARBITRATION,  THE PARTIES TO SUCH DISPUTE
AGREE TO HAVE SUCH DISPUTE  RESOLVED IN A BENCH TRIAL AND,  ACCORDINGLY,  TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE AGENT, THE ISSUING BANK, EACH LENDER AND
THE BORROWER HEREBY  IRREVOCABLY  WAIVE THEIR RESPECTIVE  RIGHTS TO A JURY TRIAL
WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE
IN CONNECTION  WITH THIS AGREEMENT,  THE NOTES,  THE OTHER LOAN DOCUMENTS OR THE
REIMBURSEMENT OBLIGATIONS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR
THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.

     Section  14.7  REVERSAL OF  PAYMENTS.  To the extent the  Borrower  makes a
payment or  payments  to the Agent or the  Issuing  Bank for the  benefit of the
Lenders  and/or  the  Issuing  Bank in  accordance  with this  Agreement,  which

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payments or proceeds or any part thereof are subsequently invalidated,  declared
to be fraudulent or  preferential,  set aside and/or  required to be repaid to a
trustee,  receiver or any other party under any bankruptcy law, state or federal
law,  common law or  equitable  cause,  then,  to the extent of such  payment or
proceeds repaid,  the Obligations or part thereof intended to be satisfied shall
be revived and continued in full force and effect as if such payment or proceeds
had not been received by the Agent or the Issuing Bank.

     Section 14.8 INJUNCTIVE RELIEF. The Borrower  recognizes that, in the event
the Borrower  fails to perform,  observe or discharge any of its  obligations or
liabilities  under this Agreement,  any remedy of law may prove to be inadequate
relief to the Lenders or the Issuing Bank.  Therefore,  the Borrower agrees that
the Lenders, at the Lenders' or the Issuing Bank's option, as applicable,  shall
be  entitled  to  temporary  and  permanent  injunctive  relief in any such case
without the necessity of proving actual damages.

     Section 14.9 SUCCESSORS AND ASSIGNS; PARTICIPATIONS.

          (a) BENEFIT OF  AGREEMENT.  This  Agreement  shall be binding upon and
inure to the  benefit  of the  Borrower , the Agent,  the  Issuing  Bank and the
Lenders,  all future holders of the Notes, and their  respective  successors and
assigns,  except  that the  Borrower  may not  assign or  transfer  any of their
respective  rights or obligations under this Agreement without the prior written
consent of each Lender.

          (b)  ASSIGNMENT  BY LENDERS.  Each Lender may, with the consent of the
Agent and the Issuing Bank,  which consent shall not be  unreasonably  withheld,
assign to one or more  Eligible  Assignees  all or a portion  of its  interests,
rights and obligations under this Agreement (including,  without limitation, all
or a portion  of the  Obligations  at the time owing to it and the Notes held by
it); PROVIDED, that:

               (i)  each  such  assignment  shall  be of a  constant,  and not a
varying,  percentage of all the assigning  Lender's rights and obligations under
this Agreement;

               (ii) the Commitment of the assigning  Lender to be assigned shall
not be less than $5,000,000  (other than assignments of the entire Commitment of
a Lender or assignments to another Lender).

               (iii) the  parties  to each such  assignment  shall  execute  and
deliver to the Agent,  for its acceptance and recording in the Register,  with a
copy to the Issuing Bank, an Assignment  and Acceptance in the form of EXHIBIT E
attached  hereto (an  "ASSIGNMENT  AND  ACCEPTANCE"),  together with any Note or
Notes subject to such  assignment and a side letter  regarding  voting rights in
the form referenced in the Assignment and Acceptance;

               (iv) such  assignment  shall  not,  without  the  consent  of the
Borrower,  require  the  Borrower  to file a  registration  statement  with  the
Securities and Exchange Commission or apply to or qualify the Loans or the Notes
under the blue sky laws of any state; and

               (v) the assigning Lender shall pay to the Agent an assignment fee
of $3,000 upon the execution by such Lender of the Assignment and Acceptance.

                                       84
<PAGE>
Upon such  execution,  delivery,  acceptance and  recording,  from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business  Days after the execution  thereof,  (A) the
assignee  thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereunder
and (B) the Lender  thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.

          (c)  REGISTER.  The  Agent,  acting  for this  limited  purpose in the
capacity as an agent of the Borrower,  shall maintain a copy of each  Assignment
and Acceptance  delivered to it and a register for the  recordation of the names
and addresses of the Lenders and the amount of the  Obligations  with respect to
each Lender  from time to time (the  "REGISTER").  The  entries in the  Register
shall be conclusive,  in the absence of manifest  error,  and the Borrower,  the
Agent,  the Issuing  Bank and the  Lenders  may treat each person  whose name is
recorded  in the  Register  as a  Lender  hereunder  for  all  purposes  of this
Agreement.  The Register shall be available for inspection by the Borrower,  the
Issuing  Bank or  Lender  at any  reasonable  time  and from  time to time  upon
reasonable  prior notice.  The Borrower agrees to indemnify the Agent for acting
as its agent in  maintaining  the  Register  on the same  terms as the  Lenders'
indemnification  obligations  set forth in Section 13.7 and such provision shall
be incorporated  herein MUTATIS MUTANDIS for the Borrower's  indemnification  of
the Agent acting as its agent hereunder.

          (d)  ISSUANCE  OF NEW NOTES.  Upon its  receipt of an  Assignment  and
Acceptance  executed by an assigning  Lender and an Eligible  Assignee  together
with any Note or Notes  subject to such  assignment  and the written  consent to
such  assignment,  the Agent shall,  if such  Assignment and Acceptance has been
completed and is substantially in the form of EXHIBIT E:

               (i) accept such Assignment and Acceptance;

               (ii) record the information contained therein in the Register;

               (iii) give prompt notice thereof to the Lenders, the Issuing Bank
and the Borrower; and

               (iv) promptly deliver a copy of such Assignment and Acceptance to
the Borrower.

Within  five (5)  Business  Days after  receipt of notice,  the  Borrower  shall
execute and deliver to the Agent, in exchange for the surrendered Note or Notes,
a new Note or Notes to the order of such  Eligible  Assignee in amounts equal to
the Commitment assumed by such Eligible Assignee pursuant to such Assignment and
Acceptance  and a new Note or Notes to the order of the  assigning  Lender in an
amount equal to the Commitment retained by it hereunder.  Such new Note or Notes
shall be in an  aggregate  principal  amount  equal to the  aggregate  principal
amount of such  surrendered  Note or Notes,  shall be dated the Closing Date and
shall otherwise be in substantially  the form of the assigned Notes delivered to
the  assigning  Lender.  Each  surrendered  Note or Notes shall be canceled  and
returned to the Borrower.

                                       85
<PAGE>
          (e) PARTICIPATIONS. Each Lender may sell participations to one or more
banks or other entities in all or a portion of its rights and obligations  under
this  Agreement  (including,  without  limitation,  all  or  a  portion  of  its
Commitment and the Notes held by it); PROVIDED that:

               (i) each such  participation  shall be in an amount not less than
$3,000,000;

               (ii) such Lender's  obligations under this Agreement  (including,
without limitation, its Commitment) shall remain unchanged;

               (iii) such Lender shall remain  solely  responsible  to the other
parties hereto for the performance of such obligations;

               (iv) such Lender  shall remain the holder of the Notes held by it
for all purposes of this Agreement;

               (v) the  Borrower,  the  Issuing  Bank,  the  Agent and the other
Lenders  shall  continue  to deal  solely  and  directly  with  such  Lender  in
connection with such Lender's rights and obligations under this Agreement;

               (vi) such Lender shall not permit such  participant  the right to
approve any waivers,  amendments or other modifications to this Agreement or any
other Loan Document other than waivers,  amendments or modifications which would
reduce  the  principal  of or the  interest  rate on any  Loan or  Reimbursement
Obligation,  extend the term or increase  the amount of the  Commitment  of such
participant,  reduce  the  amount  of any  fees to  which  such  participant  is
entitled, or, extend any scheduled payment date for principal; and

               (vii) any such disposition  shall not, without the consent of the
Borrower,  require  the  Borrower  to file a  registration  statement  with  the
Securities  and Exchange  Commission  to apply to qualify the Loans or the Notes
under the blue sky law of any state.

     Any  information  disclosed  by or on behalf of the  Borrower or any of its
Subsidiaries  or acquired  Person to the Agent,  the Issuing  Bank or any of the
Lenders and any  information  obtained by the Agent,  the Issuing Bank or any of
the Lenders pursuant to the provisions of, or in connection with, this Agreement
shall be used solely for purposes of this Agreement and not in any other manner,
and, if such  information  is not otherwise in the public  domain,  shall not be
disclosed  by the Agent,  the Issuing  Bank or such  Lender to any other  Person
except (A) to its independent accountants,  auditors,  officers,  directors, and
legal counsel (it being  understood  that the Persons to whom such disclosure is
made  will be  informed  of the  confidential  nature  of such  information  and
instructed to keep such information confidential), (B) pursuant to statutory and
regulatory requirements,  including,  without limitation, state and federal bank
regulators  (C) pursuant to any mandatory  court order,  subpoena or other legal
process,  (D) subject to an agreement  containing  provisions  substantially the
same as  those  of this  Section,  to any  participant  in or  assignee  of,  or
prospective  participant  in or assignee of, any Loan, (E) except to enforce the
Agent's,  the Issuing  Bank's or any  Lender's  rights and  remedies  under this
Agreement or the other Loan  Documents  (it being  understood  that prior to any
such  disclosures  contemplated by clause (C) above, the Agent, the Issuing Bank
or such Lender shall, if practicable,  give the Borrower prior written notice of
such disclosure).

                                       86
<PAGE>
          (f) CERTAIN PLEDGES OR ASSIGNMENTS.  Nothing herein shall prohibit any
Lender  from  pledging or  assigning  any Note to any  Federal  Reserve  Bank in
accordance with Applicable Law.

     Section 14.10 AMENDMENTS,  WAIVERS AND CONSENTS.  Except as set forth below
or as otherwise provided herein or in any of the other Loan Documents, any term,
covenant,  agreement  or  condition  of this  Agreement or any of the other Loan
Documents may be amended or waived by the Lenders,  and any consent given by the
Lenders, if, but only if, such amendment, waiver or consent is in writing signed
by the  Required  Lenders  (or by the Agent  with the  consent  of the  Required
Lenders) and delivered to the Agent and, in the case of an amendment,  signed by
the Borrower;  PROVIDED, that no amendment, waiver or consent shall (i) increase
the amount or extend the time of the  obligation of the Lenders to make Loans or
to repay the  Reimbursement  Obligations,  (ii) extend the originally  scheduled
time  or  times  of  payment  of the  principal  of any  Loan  or  Reimbursement
Obligation,  or the  time  or  times  of  payment  of  interest  on any  Loan or
Reimbursement  Obligation,  (iii) reduce the rate of interest or fees payable on
any Loan (other than  amendments or waivers with respect to interest paid at the
default rate pursuant to Section 5.1(c)),  (iv) permit any  subordination of the
principal or interest on any Loan or  Reimbursement  Obligation,  (v) reduce the
"Guaranteed  Obligations"  as  defined in  Subsidiary  Guaranty  or release  any
Subsidiary Guarantor from its obligations under the Subsidiary Guaranty, or (vi)
amend the  provisions of this Section 14.10,  the number of Lenders  required to
approve any amendment or waiver otherwise set forth herein, or the definition of
Required  Lenders,  without  the prior  written  consent of each  Lender and the
Issuing Bank. In addition, (a) no amendment, waiver or consent to the provisions
of Article 13 shall be made without the prior written consent of the Agent,  (b)
no amendment, waiver or consent to any provision of this Agreement affecting the
rights,  obligations  or remedies of the Issuing  Bank shall be made without the
prior written  consent of the Issuing Bank, (c) no amendment,  waiver or consent
to any provision of this Agreement affecting the rights, obligations or remedies
of the Term Loan Lenders shall be made without the prior written  consent of the
Term Loan Lenders  holding at least  fifty-one  percent (51%) of the outstanding
Term Loans and (d) no  amendment,  waiver or consent  to any  provision  of this
Agreement  affecting  the rights,  obligations  or remedies of the New  Facility
Lenders  shall be made  without the prior  written  consent of the New  Facility
Lenders holding at least fifty-one percent (51%) of the outstanding New Facility
Loans.

     Section  14.11  PERFORMANCE  OF  THE  BORROWER'S   DUTIES.  The  Borrower's
obligations  under  this  Agreement  and  each of the  Loan  Documents  shall be
performed by the Borrower at its sole cost and expense.

     Section 14.12 INDEMNIFICATION.  The Borrower agrees to reimburse the Agent,
the  Issuing  Bank and the Lenders for all  reasonable  out-of-pocket  costs and
expenses,  including all  reasonable  counsel  (including  the allocated cost of
in-house   counsel),   appraisal,   or  other  expert  or  consultant  fees  and
disbursements  incurred,  and to indemnify and hold the Agent,  the Issuing Bank
and the Lenders  harmless from and against all losses suffered by the Agent, the
Issuing  Bank  and  the  Lenders  (up  to the  maximum  amount  permitted  under
applicable  law) in connection  with (a) the exercise by the Agent,  the Issuing
Bank or the Lenders of any right or remedy  granted to them under this Agreement
or any of the other  Loan  Documents,  (b) any  claim,  and the  prosecution  or
defense  thereof,  arising out of or in any way connected with this Agreement or
any of the other Loan  Documents,  and (c) the  collection or enforcement of the
Obligations or any of them;  PROVIDED,  that the Borrower shall not be obligated
to reimburse  the Agent,  the Issuing Bank or any Lender for costs and expenses,

                                       87
<PAGE>
or  indemnify  the Agent,  the  Issuing  Bank or any Lender for any loss that is
finally determined by a court of competent  jurisdiction to have resulted solely
from the gross  negligence or willful  misconduct of the Agent, the Issuing Bank
or such Lender, respectively.

     Section 14.13 ALL POWERS COUPLED WITH INTEREST.  All powers of attorney and
other authorizations granted to the Lenders, the Issuing Bank, the Agent and any
Persons  designated  by the Agent,  the Issuing Bank or Lenders  pursuant to any
provisions of this Agreement or any of the other Loan Documents  shall be deemed
coupled  with  an  interest  and  shall  be  irrevocable  so  long as any of the
Obligations  remain  unpaid  or  unsatisfied  or the  Commitments  have not been
terminated.

     Section 14.14 SURVIVAL OF INDEMNITIES.  Notwithstanding  any termination of
this  Agreement,  the  indemnities to which the Agent,  the Issuing Bank and the
Lenders  are  entitled  under the  provisions  of this  Article 14 and any other
provision of this Agreement and the Loan Documents  shall continue in full force
and effect and shall protect the Agent, the Issuing Bank and the Lenders against
events arising after such termination as well as before.

     Section  14.15  TITLES AND  CAPTIONS.  Titles  and  captions  of  Articles,
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.

     Section 14.16  SEVERABILITY OF PROVISIONS.  Any provision of this Agreement
or  any  other  Loan  Document  which  is  prohibited  or  unenforceable  in any
jurisdiction  shall, as to such jurisdiction,  be ineffective only to the extent
of such prohibition or  unenforceability  without  invalidating the remainder of
such  provision or the remaining  provisions  hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.

     Section 14.17 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate  counterparts,  each of
which when so executed  shall be deemed to be an  original  and shall be binding
upon all parties,  their successors and assigns, and all of which taken together
shall constitute one and the same agreement.

     Section 14.18 TERM OF AGREEMENT. This Agreement shall remain in effect from
the Closing Date through and including the date upon which all Obligations shall
have been paid and satisfied in full. No  termination  of this  Agreement  shall
affect the rights and  obligations  of the parties  hereto arising prior to such
termination.

     Section 14.19  ADJUSTMENTS.  If any Lender (a "BENEFITED  LENDER") shall at
any  time  receive  any  payment  of all or  part  of the  Obligations  (whether
voluntarily or involuntarily,  by set-off or otherwise) in a greater  proportion
than any such payment to any other Lender,  such Benefited Lender shall purchase
for cash  from the other  Lenders  such  portion  of each  such  other  Lender's
Extensions of Credit,  as shall be necessary to cause such  Benefited  Lender to
share the excess payment ratably with each of the Lenders; PROVIDED, that if all
or any portion of such excess  payment or benefits is thereafter  recovered from
such Benefited Lender, such purchase shall be rescinded,  and the purchase price
and benefits returned to the extent of such recovery,  but without interest. The
Borrower  agrees that each Lender so  purchasing  a portion of another  Lender's
Extensions  of Credit may  exercise  all rights of payment  (including,  without
limitation,  rights of set-off) with respect to such portion as fully as if such
Lender were the direct holder of such portion.

                                       88
<PAGE>
     Section  14.20  INDEPENDENT  EFFECT OF  COVENANTS.  The Borrower  expressly
acknowledges  and agrees that each  covenant  contained in Articles 9, 10 and 11
hereof shall be given independent  effect.  Accordingly,  the Borrower shall not
engage in any  transaction or other act otherwise  permitted  under any covenant
contained  in Articles  9, 10 or 11 if,  before or after  giving  effect to such
transaction  or act,  the  Borrower  shall or would be in  breach  of any  other
covenant contained in Articles 9, 10 or 11.

     Section 14.21 NON-DISCLOSURE AGREEMENT. Notwithstanding any other provision
of this Agreement, with respect to the Board Information,  each of the Borrower,
the Agent and the Lenders shall be bound by the provisions of the Non-Disclosure
Agreement attached hereto as ANNEX B.

     Section 14.22 REPRESENTATIONS  REGARDING THE SERIES B PREFERRED STOCK. Each
Lender,  on its own behalf or on behalf of its  designee  who is to receive  any
shares of Series B Preferred  Stock,  represents  and  warrants to the  Borrower
that:

          (a) PURCHASE ENTIRELY FOR OWN ACCOUNT.  Such Lender, or such designee,
is purchasing the Series B Preferred  Stock for its own account,  for investment
purposes and not with a view to the resale or  distribution of any part thereof.
Such  Lender,  or such  designee,  will  not,  directly  or  indirectly,  offer,
transfer,  sell, assign, pledge,  hypothecate or otherwise dispose of any of the
Series B Preferred Stock or the common stock issuable upon  conversion  thereof,
except in compliance  with the Securities Act of 1933, as amended.  By executing
this  Agreement,  each  Lender  further  represents  that such  Lender,  or such
designee, does not have any contract, undertaking, agreement or arrangement with
any person to sell or transfer to such person or to any third person, the Series
B Preferred Stock.

          (b) DISCLOSURE OF INFORMATION.  Such Lender, or such designee, further
represents  that it has had an opportunity to ask questions and receive  answers
from the Borrower  regarding the terms and  conditions of the Series B Preferred
Stock and the business,  properties and financial  condition of the Borrower and
to obtain  additional  information  (to the extent the Borrower  possessed  such
information  or  could  acquire  it  without  unreasonable  effort  or  expense)
necessary to verify the accuracy of any information  furnished to such Lender or
its designee solely in connection with the acquisition of the Series B Preferred
Stock. The foregoing,  however, does not limit or modify the representations and
warranties  of the Borrower in ARTICLE 7 of this  Agreement or the right of such
Lender or its designee to rely thereon.

          (c) INVESTMENT EXPERIENCE.  Such Lender, or such designee,  represents
that it is an "accredited investor" as defined in Regulation D promulgated under
the Securities Act of 1933, as amended.  Such Lender, or its designee,  can bear
the economic risk of its  investment  and has such  knowledge and  experience in
financial or business  matters that it is capable of  evaluating  the merits and
risks of the  investment in the Series B Preferred  Stock.  Such Lender,  or its
designee,  also  represents it has not been organized  solely for the purpose of
acquiring the Series B Preferred Stock.

          (d) RESTRICTED SECURITIES.  Such Lender, or its designee,  understands
that shares of the Series B Preferred  Stock are  characterized  as  "restricted
securities"  under  the  federal  securities  laws  inasmuch  as they are  being
acquired from the Borrower in a transaction  not involving a public offering and
that under such laws and applicable  regulations  such  securities may be resold

                                       89
<PAGE>
without  registration  under the  Securities  Act of 1933,  as amended,  only in
certain  limited  circumstances.  In  addition,  such Lender,  or its  designee,
represents  that it is familiar  with SEC Rule 144, as  currently  in effect and
understands  the  resale  limitations  imposed  thereby.  Each  Lender,  or  its
designee,  understands  that no public market  currently exists for the Series B
Preferred  Stock and that there are no  assurances  that any such market will be
created.

     Section 14.23 COVENANT  REGARDING  VOTING THE SERIES B PREFERRED  STOCK. At
any  meeting of  Borrower's  stockholders  prior to  conversion  of the Series B
Preferred  Stock,  each Lender  hereby  agrees to vote, or cause its designee to
vote, each share of its Series B-1 Preferred Stock having voting rights in favor
of any proposal to increase Borrower's authorized common stock to facilitate the
conversion of the Series B Preferred Stock.

     Section 14.24 CANCELLATION OF THE NEW FACILITY.  Each of the Borrower,  the
Agent and the  Lenders  hereby  acknowledges  and agrees that the  Borrower  has
elected not to utilize the New  Facility as of the Closing  Date and pursuant to
Section  3.1(b)(i),  the New Facility has been deemed to be canceled and all New
Facility  Commitments  are zero.  The parties  hereto agree that this  Agreement
shall be construed for all purposes  without given any effect to any  provisions
contained  in this  Agreement  relating to the New  Facility,  the New  Facility
Commitment, the New Facility Loans, and the New Facility Lenders.

     Section 14.25 CANCELLATION OF THE EXISTING NOTES. Upon the satisfaction (or
waiver by the Lenders  and the  Issuing  Bank) of the  conditions  precedent  to
effectiveness  of this  Agreement and upon the issuance of the Notes  evidencing
the Obligations under this Agreement,  all promissory notes previously  executed
by the Borrower to evidence the Existing  Obligations  shall be deemed cancelled
and of no further force and effect and shall be superseded by the Notes executed
and delivered to the Lenders by the Borrower pursuant to this Agreement.

                           [SIGNATURE PAGES TO FOLLOW]

                                       90
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly  authorized  officers,  all as of the day and year  first  written
above.

                                BORROWER:

                                RURAL/METRO CORPORATION,
                                A DELAWARE CORPORATION

                                By: /s/ John S. Banas III
                                    --------------------------------------------
                                Name: John S. Banas III
                                      ------------------------------------------
                                Title: Senior Vice President and General Counsel
                                       -----------------------------------------
<PAGE>
                                AGENT:

                                WACHOVIA BANK NATIONAL ASSOCIATION,
                                as Agent

                                By: /s/ Ron R. Ferguson
                                    --------------------------------------------
                                Name: Ron R. Ferguson
                                      ------------------------------------------
                                Title: Managing Director
                                       -----------------------------------------
<PAGE>
                                LENDERS:

                                SPECIAL VALUE BOND FUND II, LLC

                                By: SVIM/MSM II, LLC
                                    Its Managing Member

                                    By: Tennenbaum & Co., LLC
                                        Its Managing Member

                                By: /s/ Howard M. Levkowitz
                                    --------------------------------------------
                                Name: Howard M. Levkowitz
                                      ------------------------------------------
                                Title: Portfolio Manager
                                       -----------------------------------------
<PAGE>
                                GENERAL ELECTRIC CAPITAL CORPORATION

                                By: /s/ Patrick Flynn
                                    --------------------------------------------
                                Name: Patrick Flynn
                                      ------------------------------------------
                                Title: Risk Mngr.
                                       -----------------------------------------
<PAGE>
                                CONTINENTAL CASUALTY COMPANY

                                By: /s/ Marilou R. Mcgirr
                                    --------------------------------------------
                                Name: Marilou R. Mcgirr
                                      ------------------------------------------
                                Title: Vice President
                                       -----------------------------------------
<PAGE>
                                HIGHLAND CRUSADER OFFSHORE PARTNERS, L.P.

                                By: Highland Capital Management, L.P.,
                                    Its General Partner

                                By: /s/ Todd Travers
                                    --------------------------------------------
                                Name: Todd Travers
                                      ------------------------------------------
                                Title: Senior Portfolio Manager
                                       -----------------------------------------
<PAGE>
                                CERBERUS PARTNERS, L.P.

                                By: Cerberus Associates, L.L.C.
                                    Its General Partner

                                By: /s/ Mark A. Neporent
                                    --------------------------------------------
                                Name: Mark A. Neporent
                                      ------------------------------------------
                                Title: Vice President
                                       -----------------------------------------
<PAGE>
                                PAMCO CAYMAN LTD.

                                By: Highland Capital Management, L.P.,
                                    as Collateral Manager

                                By: /s/ Todd Travers
                                    --------------------------------------------
                                Name: Todd Travers
                                      ------------------------------------------
                                Title: Senior Portfolio Manager
                                       -----------------------------------------

                                PAM CAPITAL FUNDING LP

                                By: Highland Capital Management, L.P.,
                                    as Collateral Manager

                                By: /s/ Todd Travers
                                    --------------------------------------------
                                Name: Todd Travers
                                      ------------------------------------------
                                Title: Senior Portfolio Manager
                                       -----------------------------------------
<PAGE>
                                   EXHIBIT A-1
                                       to
                  Second Amended and Restated Credit Agreement
                         dated as of September 30, 2002
                                  by and among
                            Rural/Metro Corporation,
                                  as Borrower,
                        the Lenders referred to therein,
                                       and
                       Wachovia Bank National Association
                       (f/k/a First Union National Bank),
                                    as Agent

                                FORM OF TERM NOTE
<PAGE>
                                    TERM NOTE

$________________                                             September __, 2002

     FOR VALUE RECEIVED,  Rural/Metro Corporation, a corporation organized under
the  laws  of  Delaware  (the  "BORROWER"),  promises  to pay to  the  order  of
____________________,  (the  "LENDER"),  the principal sum of  _________________
($__________) at the place and times provided in the Second Amended and Restated
Credit Agreement dated as of September ___, 2002 (as amended, restated, modified
or otherwise  supplemented  from time to time,  the "CREDIT  AGREEMENT")  by and
among the Borrower,  the financial  institutions which are or may become a party
thereto  (collectively,  the "LENDERS"),  and Wachovia Bank National Association
(f/k/a First Union National Bank), as Agent for the Lenders.  Capitalized  terms
used herein and not defined herein shall have the meanings  assigned  thereto in
the Credit Agreement.

     The unpaid  principal  amount of this Note from time to time outstanding is
subject  to  mandatory  repayment  from time to time as  provided  in the Credit
Agreement  and shall bear  interest  as  provided  in Section  5.1 of the Credit
Agreement.  All payments of principal and interest on this Note shall be payable
in lawful  currency  of the United  States of America in  immediately  available
funds to the account designated in the Credit Agreement.

     This Note is one of the Term Notes referred to in the Credit  Agreement and
is entitled to the benefits of the Credit  Agreement to which  reference is made
for a statement of the terms and  conditions  on which the Borrower is permitted
and required to make  prepayments and repayments of principal of the Obligations
evidenced  by this Note and on which  such  Obligations  may be  declared  to be
immediately due and payable.  This Note evidences existing  Obligations incurred
under the Existing Credit Agreement, which were converted into Obligations under
the Credit Agreement.

     THIS NOTE SHALL BE GOVERNED,  CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK,  WITHOUT  REFERENCE TO THE CONFLICTS OR CHOICE OF
LAW PRINCIPLES THEREOF.

     The Debt  evidenced  by this  Note is  senior  in right of  payment  to all
Subordinated Debt and Earn-Out Obligations referred to in the Credit Agreement.

     The Borrower hereby waives all  requirements as to diligence,  presentment,
demand of payment,  protest  and  (except as  required by the Credit  Agreement)
notice of any kind with respect to this Note.

                           [SIGNATURE PAGE TO FOLLOW]
<PAGE>
         IN WITNESS  WHEREOF,  the  undersigned  Borrower has executed this Note
under seal as of the day and year first above written.

                                        RURAL/METRO CORPORATION,
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________
<PAGE>
                                    EXHIBIT F
                                       to
                  Second Amended and Restated Credit Agreement
                         dated as of September 30, 2002
                                  by and among
                            Rural/Metro Corporation,
                                  as Borrower,
                        the Lenders referred to therein,
                                       and
                       Wachovia Bank National Association
                       (f/k/a First Union National Bank),
                                    as Agent

                           FORM OF SUBSIDIARY GUARANTY
<PAGE>
               AMENDED AND RESTATED SUBSIDIARY GUARANTY AGREEMENT

     THIS AMENDED AND RESTATED  SUBSIDIARY GUARANTY AGREEMENT (this "GUARANTY"),
dated as of September 30, 2002, made by each of the  Subsidiaries of Rural/Metro
Corporation,  a Delaware  corporation (the  "BORROWER")  listed on the signature
pages hereto  (individually  and  collectively,  and jointly and severally,  the
"GUARANTORS"), in favor of WACHOVIA BANK NATIONAL ASSOCIATION (f/k/a FIRST UNION
NATIONAL BANK), a national banking  association,  as Agent (the "AGENT") for the
ratable  benefit of itself and the Lenders (the  "LENDERS")  party to the Second
Amended and Restated Credit Agreement dated of even date (as amended,  restated,
modified or supplemented from time to time, the "CREDIT  AGREEMENT") between the
Borrower, the financial institutions which are, or may from time to time become,
party thereto (collectively, the "LENDERS") and the Agent.

                                    RECITALS

     WHEREAS,  Borrower, Lenders and Agent entered into that certain Amended and
Restated  Credit  Agreement  dated as of March 16, 1998 (as  amended,  restated,
modified or  otherwise  supplemented  from time to time,  the  "EXISTING  CREDIT
AGREEMENT");

     WHEREAS,  Borrower,  Lenders,  Agent  and  Guarantors  desire  to amend and
restate the Existing Credit  Agreement in its entirety as provided in the Credit
Agreement; and

     WHEREAS, Guarantors entered into that certain Subsidiary Guaranty Agreement
date  as of  March  16,  1998  (as  amended,  restated,  modified  or  otherwise
supplemented from time to time, the "EXISTING SUBSIDIARY GUARANTY");

     WHEREAS,  in connection  with the  transactions  contemplated by the Credit
Agreement, the Lenders have requested, and each of the Guarantors have agreed to
amend and restate the Existing Guaranty and execute and deliver, this Guaranty.

     NOW, THEREFORE,  in consideration of the premises and the mutual agreements
set forth herein,  and to induce the Lenders to continue to make available Loans
pursuant to the Credit Agreement, it is agreed as follows:

     SECTION 1.  DEFINITIONS.  Capitalized  terms  used  herein  (including  the
preamble  hereof)  shall  have  the  meanings  assigned  to them  in the  Credit
Agreement,  unless the context  otherwise  requires or unless otherwise  defined
herein.  References in the Credit Agreement to a "SUBSIDIARY GUARANTY" or herein
to  this  "GUARANTY"  shall  include  and  mean  this  Guaranty,  including  all
amendments, restatements,  modifications and supplements hereto now or hereafter
in effect.

     SECTION 2. GUARANTY OF  OBLIGATIONS  OF BORROWER.  Each  Guarantor  hereby,
jointly and severally with the other Guarantors,  unconditionally  guarantees to
the  Agent  for the  ratable  benefit  of  itself  and the  Lenders,  and  their
respective  successors,  endorsees,  transferees and assigns, the prompt payment
and performance of all Obligations of the Borrower, whether primary or secondary
<PAGE>
(whether by way of endorsement or otherwise),  whether now existing or hereafter
arising,  whether or not from time to time  reduced or  extinguished  (except by
payment thereof) or hereafter increased or incurred, whether or not recovery may
be or hereafter become barred by the statute of limitations, whether enforceable
or unenforceable as against the Borrower,  whether or not discharged,  stayed or
otherwise  affected  by any  bankruptcy,  insolvency  or  other  similar  law or
proceeding, whether created directly with the Agent or any Lender or acquired by
the Agent or any Lender through  assignment,  endorsement or otherwise,  whether
matured or unmatured,  whether joint or several, as and when the same become due
and  payable  (whether  at  maturity  or  earlier,  by reason  of  acceleration,
mandatory  repayment or  otherwise),  in  accordance  with the terms of any such
instruments evidencing any such obligations,  including all renewals, extensions
or  modifications  thereof (all  Obligations of the Borrower to the Agent or any
Lender, including all of the foregoing,  being hereinafter collectively referred
to as the "GUARANTEED OBLIGATIONS");  PROVIDED, that notwithstanding anything to
the contrary  contained  herein,  it is the intention of each  Guarantor and the
Lenders  that,  in any  proceeding  involving  the  bankruptcy,  reorganization,
arrangement,  adjustment of debts, relief of debtors,  dissolution or insolvency
or any similar  proceeding  with  respect to any  Guarantor  or its assets,  the
amount  of  such   Guarantor's   obligations  with  respect  to  the  Guaranteed
Obligations  shall be in, but not in excess of, the maximum  amount  thereof not
subject to  avoidance  or  recovery as a  fraudulent  conveyance  or  fraudulent
transfer by operation of applicable  law governing  bankruptcy,  reorganization,
arrangement,  adjustment of debts, relief of debtors,  dissolution,  insolvency,
fraudulent  transfers or conveyances or other similar laws  (including,  without
limitation,  11 U.S.C.  ss.548,  ss.550 of Title 11 of the United  States  Code)
applicable  in  any  such   proceeding  to  such  Guarantor  and  this  Guaranty
(collectively, "APPLICABLE INSOLVENCY LAWS"). To that end, but only in the event
and  to the  extent  that  such  Guarantor's  obligations  with  respect  to the
Guaranteed   Obligations   or  any  payment  made  pursuant  to  the  Guaranteed
Obligations would, but for the operation of the foregoing proviso, be subject to
avoidance or recovery in any such proceeding under  Applicable  Insolvency Laws,
the  amount of such  Guarantor's  obligations  with  respect  to the  Guaranteed
Obligations  shall be limited to the largest  amount after taking into  account,
among other things,  each  Guarantor's  right of  contribution  under Section 12
hereof,  which  after  giving  effect  thereto,   would  not,  under  Applicable
Insolvency  Laws,  render  such  Guarantor's  obligations  with  respect to such
Guaranteed  Obligations  unenforceable  or  avoidable  or  otherwise  subject to
recovery under  Applicable  Insolvency  Laws. To the extent any payment actually
made  pursuant  to the  Guaranteed  Obligations  exceeds the  limitation  of the
foregoing proviso and is otherwise subject to avoidance and recovery in any such
proceeding  under  Applicable  Insolvency  Laws, the amount subject to avoidance
shall in all  events be  limited  to the  amount by which  such  actual  payment
exceeds  such  limitation  and the  Guaranteed  Obligations  as  limited  by the
foregoing  proviso  shall in all  events  remain in full force and effect and be
fully  enforceable  against such  Guarantor.  The foregoing  proviso is intended
solely to preserve the rights of the Agent  hereunder  against such Guarantor in
such  proceeding to the maximum extent  permitted by Applicable  Insolvency Laws
and neither such  Guarantor,  the  Borrower,  any other  Guarantor nor any other
Person shall have any right or claim under such proviso that would not otherwise
be available under Applicable Insolvency Laws in such proceeding.

     SECTION 3. NATURE OF GUARANTY.  Each Guarantor agrees that this Guaranty is
a  continuing,  unconditional  guaranty  of payment and  performance  and not of
collection,  and that its  obligations  under this  Guaranty  shall be  primary,
absolute and unconditional, irrespective of, and unaffected by:

                                      -2-
<PAGE>
          (a)  the  genuineness,  validity,  regularity,  enforceability  or any
     future  amendment of, or change in, the Credit  Agreement or any other Loan
     Document  or any  other  agreement,  document  or  instrument  to which the
     Borrower or any Subsidiary thereof is or may become a party;

          (b) the  absence of any action to enforce  this  Guaranty,  the Credit
     Agreement or any other Loan  Document or the waiver or consent by the Agent
     or any Lender with respect to any of the provisions of this  Guaranty,  the
     Credit Agreement or any other Loan Document;

          (c) the  existence,  value or condition  of, or failure to perfect its
     Lien, if any, against, any security for or other guaranty of the Guaranteed
     Obligations  or any action,  or the absence of any action,  by the Agent or
     any Lender in respect of such  security  or  guaranty  (including,  without
     limitation, the release of any such security or guaranty); or

          (d) any other action or circumstances which might otherwise constitute
     a legal or equitable discharge or defense of a surety or guarantor;

it being  agreed by each  Guarantor  that,  subject to the  proviso in Section 2
hereof,  its obligations  under this Guaranty shall not be discharged  until the
final  and  indefeasible  payment  and  performance,  in  full in  cash,  of the
Guaranteed  Obligations  and the termination of the  Commitments.  To the extent
permitted by Applicable Law, each Guarantor  expressly  waives all rights it may
now or in the  future  have  under  any  statute,  or at  law or in  equity,  or
otherwise,  to compel  the Agent or any  Lender to  proceed  in  respect  of the
Guaranteed  Obligations  against the  Borrower or any other party or against any
security for or other guaranty of the payment and  performance of the Guaranteed
Obligations before proceeding  against, or as a condition to proceeding against,
such  Guarantor.  To the extent  permitted by  Applicable  Law,  each  Guarantor
further  expressly  waives  and agrees  not to assert or take  advantage  of any
defense  based upon the failure of the Agent or any Lender to commence an action
in respect of the Guaranteed  Obligations against the Borrower,  such Guarantor,
any other  guarantor  or any other  party or any  security  for the  payment and
performance of the Guaranteed Obligations. Each Guarantor agrees that any notice
or directive  given at any time to the Agent or any Lender which is inconsistent
with the waivers in the preceding  two sentences  shall be null and void and may
be ignored by the Agent or such Lender, and, in addition,  may not be pleaded or
introduced  as evidence in any  litigation  relating  to this  Guaranty  for the
reason that such pleading or introduction  would be at variance with the written
terms  of  this  Guaranty.  The  foregoing  waivers  are of the  essence  of the
transaction  contemplated  by the Loan  Documents and, but for this Guaranty and
such  waivers,  the Agent and  Lenders  would  decline  to enter into the Credit
Agreement.

     SECTION  4.  DEMAND BY THE  AGENT.  In  addition  to the terms set forth in
Section 3, and in no manner imposing any limitation on such terms, if all or any
portion  of  the  then  outstanding  Guaranteed  Obligations  under  the  Credit
Agreement are declared to be  immediately  due and payable,  then the Guarantors
shall,  upon demand in writing therefor by the Agent to the Guarantors,  pay all
or such portion of the outstanding  Guaranteed Obligations then declared due and
payable.  Payment by the Guarantors  shall be made to the Agent,  to be credited
and applied upon the Guaranteed Obligations, in immediately available Dollars to
an account  designated by the Agent or at the address  referenced herein for the
giving of notice to the Agent or at any other  address  that may be specified in
writing from time to time by the Agent.

                                      -3-
<PAGE>
     SECTION 5. WAIVERS. In addition to the waivers contained in Section 3, each
Guarantor,  to the extent  permitted by law, waives and agrees that it shall not
at any time  insist  upon,  plead or in any  manner  whatever  claim or take the
benefit or advantage of, any appraisal, valuation, stay, extension,  marshalling
of assets or redemption laws, or exemption, whether now or at any time hereafter
in force,  which may delay,  prevent or otherwise affect the performance by such
Guarantor  of its  obligations  under,  or the  enforcement  by the Agent or the
Lenders of, this  Guaranty.  Each  Guarantor  further  hereby waives  diligence,
presentment,  demand, protest and notice of whatever kind or nature with respect
to any of the Guaranteed Obligations and waives the benefit of all provisions of
law which are or might be in  conflict  with the  terms of this  Guaranty.  Each
Guarantor  represents,  warrants  and  agrees  that its  obligations  under this
Guaranty  are not and shall not be  subject  to any  counterclaims,  offsets  or
defenses of any kind against the Agent,  the Lenders or the Borrower whether now
existing or which may arise in the future.

     SECTION 6.  BENEFITS OF GUARANTY.  The  provisions of this Guaranty are for
the  benefit  of the Agent and the  Lenders  and  their  respective  successors,
transferees,  endorsees and assigns,  and nothing herein contained shall impair,
as between the  Borrower,  the Agent and the  Lenders,  the  obligations  of the
Borrower  under  the  Loan  Documents.  In the  event  all or  any  part  of the
Guaranteed Obligations are transferred, endorsed or assigned by the Agent or any
Lender to any Person or Persons, any reference to an "AGENT," or "LENDER" herein
shall be deemed to refer equally to such Person or Persons.

     SECTION 7.  MODIFICATION OF LOAN DOCUMENTS ETC. If the Agent or the Lenders
shall at any time or from  time to time,  with or  without  the  consent  of, or
notice to, the Guarantors:

          (a) change or extend  the  manner,  place or terms of  payment  of, or
     renew or alter all or any portion of, the Guaranteed Obligations;

          (b) take any action  under or in respect of the Loan  Documents in the
     exercise of any remedy,  power or privilege  contained therein or available
     to it at law, in equity or otherwise,  or waive or refrain from  exercising
     any such remedies, powers or privileges;

          (c) amend or modify, in any manner whatsoever, the Loan Documents;

          (d) extend or waive the time for  performance  by any  Guarantor,  any
     other  guarantor,  the Borrower or any other Person of, or compliance with,
     any term,  covenant or  agreement  on its part to be  performed or observed
     under a Loan Document,  or waive such  performance or compliance or consent
     to a failure of, or departure from, such performance or compliance;

                                      -4-
<PAGE>
          (e)  take and hold  security  or  collateral  for the  payment  of the
     Guaranteed Obligations or sell, exchange, release, dispose of, or otherwise
     deal with,  any property  pledged,  mortgaged or conveyed,  or in which the
     Agent or the Lenders  have been  granted a Lien,  to secure any Debt of any
     Guarantor, any other guarantor or the Borrower to the Agent or the Lenders;

          (f) release  anyone who may be liable in any manner for the payment of
     any amounts owed by any Guarantor,  any other  guarantor or the Borrower to
     the Agent or any Lender;

          (g)  modify  or   terminate   the  terms  of  any   intercreditor   or
     subordination  agreement pursuant to which claims of other creditors of any
     Guarantor,  any other  guarantor or the Borrower  are  subordinated  to the
     claims of the Agent or any Lender; or

          (h) apply any sums by whomever paid or however realized to any amounts
     owing by any Guarantor, any other guarantor or the Borrower to the Agent or
     any Lender in such manner as the Agent or any Lender shall determine in its
     reasonable discretion;

then neither the Agent nor any Lender shall incur any liability to any Guarantor
as a result thereof,  and no such action shall impair or release the obligations
of any Guarantor under this Guaranty.

     SECTION 8.  REINSTATEMENT.  Each Guarantor agrees that, if any payment made
by the Borrower or any other Person  applied to the  Obligations  is at any time
annulled,  set aside,  rescinded,  invalidated,  declared  to be  fraudulent  or
preferential  or otherwise  required to be refunded or repaid or the proceeds of
any  collateral  are  required  to be refunded by the Agent or any Lender to the
Borrower, its estate, trustee,  receiver or any other party, including,  without
limitation, any Guarantor, under any Applicable Law or equitable cause, then, to
the extent of such payment or repayment,  each Guarantor's  liability  hereunder
(and any Lien  securing  such  liability)  shall be and remain in full force and
effect,  as fully as if such payment had never been made, and, if prior thereto,
this  Guaranty  shall  have been  canceled  or  surrendered  (and if any Lien or
collateral  securing  such  Guarantor's  liability  hereunder  shall  have  been
released  or  terminated  by virtue of such  cancellation  or  surrender),  this
Guaranty  (and such Lien,  if any) shall be reinstated in full force and effect,
and such prior cancellation or surrender shall not diminish, release, discharge,
impair or otherwise  affect the  obligations of such Guarantor in respect of the
amount of such payment (or any Lien securing such obligation).

     SECTION 9.  REPRESENTATIONS  AND WARRANTIES.  To induce the Lenders to make
any Loans, each Guarantor hereby represents and warrants that:

          (a) such  Guarantor  has the corporate  right,  power and authority to
     execute,  deliver and perform  this  Guaranty  and has taken all  necessary
     corporate  action to authorize its execution,  delivery and performance of,
     this Guaranty;

          (b) this Guaranty  constitutes the legal, valid and binding obligation
     of such  Guarantor  enforceable  in  accordance  with its terms,  except as
     enforceability  may be limited by bankruptcy,  insolvency,  reorganization,

                                      -5-
<PAGE>
     moratorium or similar laws affecting the  enforcement of creditors'  rights
     generally and by the availability of equitable remedies;

          (c) the execution,  delivery and performance of this Guaranty will not
     violate any provision of any Applicable Law or Material Contract obligation
     of such  Guarantor and will not result in the creation or imposition of any
     Lien upon or with respect to any property or revenues of such Guarantor;

          (d) no consent or authorization of, filing with, or other act by or in
     respect of, any arbitrator or Governmental  Authority and no consent of any
     other Person (including, without limitation, any stockholder or creditor of
     such  Guarantor),  is required in connection with the execution,  delivery,
     performance, validity or enforceability of this Guaranty;

          (e)  no  actions,  suits  or  proceedings  before  any  arbitrator  or
     Governmental  Authority are pending or, to the knowledge of such Guarantor,
     threatened  by or against such  Guarantor or against any of its  properties
     with  respect  to this  Guaranty  or any of the  transactions  contemplated
     hereby;

          (f) such Guarantor has such title to the real property owned by it and
     a valid leasehold  interest in the real property leased by it, and has good
     and marketable title to all of its personal property sufficient to carry on
     its business free of any and all Liens of any type whatsoever, except those
     permitted by Section 11.3 of the Credit Agreement; and

          (g) as of the Closing Date, such Guarantor (i) has capital  sufficient
     to carry on its business and transactions and all business and transactions
     in which it engages and is able to pay its debts as they mature,  (ii) owns
     property  having  a  value,  both at fair  valuation  and at  present  fair
     saleable  value,  greater  than the  amount  required  to pay its  probable
     liabilities  (including  contingencies)  and (iii) does not believe that it
     will incur  debts or  liabilities  beyond its  ability to pay such debts or
     liabilities as they mature.

     SECTION 10. REMEDIES.

     (a) Upon the  occurrence  of any Event of Default,  with the consent of the
Required  Lenders,  the Agent may, or upon the request of the Required  Lenders,
the Agent shall, enforce against the Guarantors their respective obligations and
liabilities  hereunder  and  exercise  such other  rights and remedies as may be
available to the Agent hereunder, under the Loan Documents or otherwise.

     (b) No right or remedy  herein  conferred  upon the Agent is intended to be
exclusive  of any other  right or remedy  contained  herein or in any other Loan
Document  or  otherwise,  and every  such right or remedy  contained  herein and
therein or now or  hereafter  existing at law, or in equity,  or by statute,  or
otherwise  shall be cumulative.  The Required  Lenders may instruct the Agent to

                                      -6-
<PAGE>
pursue,  or refrain  from  pursuing,  any remedy  available to the Agent at such
times  and in such  order  as the  Required  Lenders  shall  determine,  and the
Required  Lenders'  election as to such  remedies  shall not impair any remedies
against any Guarantor not then exercised.  In addition, any election of remedies
which  results in the denial or  impairment  of the right of the Agent to seek a
deficiency  judgment  against  the  Borrower  shall not impair  any  Guarantor's
obligation to pay the full amount of the Guaranteed Obligations.

     SECTION 11. NO SUBROGATION.  Notwithstanding any payment or payments by any
of the  Guarantors  hereunder,  or any set-off or application of funds of any of
the Guarantors by the Agent or any Lender,  or the receipt of any amounts by the
Agent or any Lender with respect to any of the Guaranteed  Obligations,  none of
the  Guarantors  shall be entitled to be  subrogated to any of the rights of the
Agent or any Lender against the Borrower or the other  Guarantors or against any
collateral  security  or  guarantee  or right of offset held by the Agent or any
Lender  for the  payment  of the  Guaranteed  Obligations  nor  shall any of the
Guarantors  seek  any  reimbursement  from  the  Borrower  or any  of the  other
Guarantors in respect of payments made by such Guarantor in connection  with the
Guaranteed Obligations,  until all amounts owing to the Agent and the Lenders on
account  of the  Guaranteed  Obligations  are  paid  in  full  in  cash  and the
Commitments  are  terminated.  If any amount  shall be paid to any  Guarantor on
account  of such  subrogation  rights  at any time  when  all of the  Guaranteed
Obligations  shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Agent, segregated from other funds of such Guarantor,
and shall, forthwith upon receipt by such Guarantor, be turned over to the Agent
in the exact form received by such Guarantor (duly endorsed by such Guarantor to
the Agent,  if  required)  to be applied  against  the  Guaranteed  Obligations,
whether  matured  or  unmatured,  in  such  order  as set  forth  in the  Credit
Agreement.

     SECTION 12. RIGHT OF CONTRIBUTION. Each Guarantor hereby agrees that to the
extent a  Guarantor  shall  have paid more than its  proportionate  share of any
payment made  hereunder,  such  Guarantor  shall be entitled to seek and receive
contribution  from and against any other Guarantor  hereunder which has not paid
its proportionate share of such payment.  Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 11 of this Guaranty. The
provisions  of this  Section 12 shall in no respect  limit the  obligations  and
liabilities  of any Guarantor to the Agent and the Lenders,  and each  Guarantor
shall remain liable to the Agent and the Lenders for the full amount  guaranteed
by such Guarantor hereunder.

     SECTION 13. MISCELLANEOUS.

     (a) ENTIRE AGREEMENT;  AMENDMENTS.  This Guaranty,  together with the other
Loan  Documents,  constitutes  the entire  agreement  between the  parties  with
respect to the subject matter hereof and supersedes  all prior  agreements  with
respect to the  subject  matter  hereof  and may not be amended or  supplemented
except by a writing signed by each Guarantor and the Agent, consented to by such
Lenders as required by Section 14.10 of the Credit Agreement.

     (b)  HEADINGS.  Titles and  captions of sections  and  subsections  in this
Guaranty are for convenience of reference only, and neither limit or amplify the
provisions of this Guaranty.

                                      -7-
<PAGE>
     (c) NOTICES.  All notices and  communications  hereunder  shall be given in
accordance with Section 14.1 of the Credit Agreement.

     (d) BINDING EFFECT. This Guaranty shall bind each Guarantor and shall inure
to the  benefit of the Agent and  Lenders and their  respective  successors  and
assigns.  No  Guarantor  may assign this  Guaranty or delegate any of its duties
hereunder,  other than in connection with the merger of such Guarantor into such
other Person as permitted by Section 11.5 of the Credit Agreement.

     (e) NON-WAIVER. The failure of the Agent or any Lender to enforce any right
or remedy hereunder,  or promptly to enforce any such right or remedy, shall not
constitute a waiver thereof,  nor give rise to any estoppel against the Agent or
any Lender, nor excuse any Guarantor from its obligations hereunder.  Any waiver
of any such right or remedy by the Lenders  must be in writing and signed by the
Required Lenders.

     (f)  TERMINATION.  This Guaranty shall terminate and be of no further force
or effect on the date when the  Guaranteed  Obligations  have been  indefeasibly
paid in full.

     (g) GOVERNING  LAW.  This  Guaranty  shall be governed by and construed and
enforced in accordance with the laws of the State of New York, without reference
to the conflicts or choice of law principles thereof.

     (h) CONSENT TO JURISDICTION.  Each Guarantor hereby irrevocably consents to
the personal  jurisdiction  of the state and federal  courts located in New York
County,  New York, in any action,  claim or other proceeding  arising out of any
dispute in connection with this Guaranty,  any rights or obligations  hereunder,
or the  performance  of such  rights  and  obligations.  Each  Guarantor  hereby
irrevocably consents to the service of a summons and complaint and other process
in any  action,  claim or  proceeding  brought  by the  Agent or any  Lender  in
connection  with this  Guaranty,  any rights or  obligations  hereunder,  or the
performance of such rights and obligations, on behalf of itself or its property,
in the manner  referenced in Section 13(c).  Nothing in this Section 13(h) shall
affect the right of the Agent or any Lender to serve legal  process in any other
manner  permitted  by  Applicable  Law or  affect  the right of the Agent or any
Lender to bring any action or proceeding against any Guarantor or its properties
in the courts of any other jurisdictions.

     (i) BINDING ARBITRATION; WAIVER OF JURY TRIAL.

          (i) BINDING ARBITRATION. Upon demand of any party, whether made before
     or after  institution  of any judicial  proceeding,  any dispute,  claim or
     controversy  arising out of, connected with or relating to this Guaranty or
     any other Loan  Documents  ("DISPUTES"),  between or among  parties to this
     Guaranty  or  any  other  Loan  Document   shall  be  resolved  by  binding
     arbitration as provided herein.  Institution of a judicial  proceeding by a
     party  does not  waive  the  right  of that  party  to  demand  arbitration
     hereunder.   Disputes  may  include,   without  limitation,   tort  claims,
     counterclaims,  claims brought as class  actions,  claims arising from Loan
     Documents  executed in the future,  or claims  concerning any aspect of the
     past,  present or future  relationships  arising out or connected  with the
     Loan  Documents.  Arbitration  shall be conducted under and governed by the

                                      -8-
<PAGE>
     Commercial  Financial Disputes  Arbitration Rules (the "ARBITRATION RULES")
     of the American  Arbitration  Association and Title 9 of the U.S. Code. All
     arbitration  hearings  shall  be  conducted  in New  York,  New  York.  The
     expedited procedures set forth in Rule 51, ET SEQ. of the Arbitration Rules
     shall be  applicable  to  claims of less than  $1,000,000.  All  applicable
     statutes of  limitation  shall apply to any  Dispute.  A judgment  upon the
     award may be entered in any court having jurisdiction. The panel from which
     all arbitrators are selected shall be comprised of licensed attorneys.  The
     single arbitrator selected for expedited procedure shall be a retired judge
     from the highest court of general  jurisdiction,  state or federal,  of the
     state  where  the  hearing  will be  conducted.  The  arbitrators  shall be
     appointed as provided in the Arbitration Rules.

          (ii) JURY TRIAL.  WITH RESPECT TO ANY AND ALL DISPUTES WHICH CANNOT BE
     ARBITRATED  NOTWITHSTANDING  THE INTENT OF THE PARTIES  HERETO TO HAVE SUCH
     DISPUTE RESOLVED BY BINDING ARBITRATION,  THE PARTIES TO SUCH DISPUTE AGREE
     TO HAVE SUCH  DISPUTE  RESOLVED IN A BENCH TRIAL AND,  ACCORDINGLY,  TO THE
     EXTENT  PERMITTED  BY  APPLICABLE  LAW,  THE  AGENT,  EACH  LENDER AND EACH
     GUARANTOR HEREBY  IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
     WITH RESPECT TO ANY ACTION,  CLAIM OR OTHER  PROCEEDING  ARISING OUT OF ANY
     DISPUTE IN CONNECTION WITH THIS GUARANTY OR THE OTHER LOAN  DOCUMENTS,  ANY
     RIGHTS OR OBLIGATIONS  HEREUNDER OR THEREUNDER,  OR THE PERFORMANCE OF SUCH
     RIGHTS AND OBLIGATIONS.

          (iii) PRESERVATION OF CERTAIN REMEDIES.  Notwithstanding the preceding
     binding arbitration  provisions,  the parties hereto and the Loan Documents
     preserve,  without diminution,  certain remedies that Agent and the Lenders
     may employ or exercise freely,  either alone, in conjunction with or during
     a Dispute.  The Agent and the  Lenders  shall have and hereby  reserve  the
     right to  proceed  in any court of proper  jurisdiction  or by self help to
     exercise or prosecute the following  remedies:  (A) all rights to foreclose
     against any real or personal  property or other  security by  exercising  a
     power of sale granted in the Loan  Documents or under  Applicable Law or by
     judicial  foreclosure  and sale,  (B) all  rights  of self  help  including
     peaceful  occupation  of property  and  collection  of rents,  set off, and
     peaceful  possession of property,  (C) obtaining  provisional  or ancillary
     remedies   including   injunctive   relief,   sequestration,   garnishment,
     attachment, appointment of receiver and in filing an involuntary bankruptcy
     proceeding,  and (D) when applicable, a judgment by confession of judgment.
     Preservation of these remedies does not limit the power of an arbitrator to
     grant similar remedies that may be requested by a party in a Dispute.

     (j) EXPENSES.  The  Guarantors  agree jointly and severally  that they will
reimburse the Agent and each Lender for all  reasonable  out-of-pocket  expenses
(including  reasonable  attorneys' fees and expenses)  incurred by such Agent or
Lender in connection  with the  enforcement of the obligations of the Guarantors
under  this  Guaranty  and  any  other  Loan   Documents   and  all   reasonable
out-of-pocket  expenses  (including  reasonable  attorneys'  fees and  expenses)

                                      -9-
<PAGE>
incurred by the Agent in connection  with the amendment or  modification of this
Guaranty.

     (k)  INDEMNITIES.  Each Guarantor agrees jointly and severally to indemnify
and hold the Agent and the Lenders harmless from and against all losses suffered
by the Agent and the Lenders in connection with (i) the exercise by the Agent or
the Lenders of any right or remedy granted to them under this Guaranty, (ii) any
claim,  and the  prosecution  or defense  thereof,  arising out of or in any way
connected  with this  Guaranty,  and (iii) the  collection or enforcement of the
Obligations or any of them; PROVIDED, that such Guarantor shall not be obligated
to reimburse the Agent or the Lenders for costs and  expenses,  or indemnify the
Agent or the  Lenders  for any  loss,  resulting  from the gross  negligence  or
willful misconduct of the Agent or the Lenders.  Notwithstanding any termination
of this  Guaranty,  the  indemnities to which the Agent and Lenders are entitled
under this  Guaranty  shall  continue in full force and effect and shall protect
the Agent and the Lenders against events arising after such  termination as well
as before.

                           [SIGNATURE PAGES TO FOLLOW]

                                      -10-
<PAGE>
     IN WITNESS WHEREOF,  each of the Guarantors has executed and delivered this
Guaranty as of the date hereinabove first written.

                                        AID AMBULANCE AT VIGO COUNTY, INC.
                                        an Indiana corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        AMBULANCE TRANSPORT SYSTEMS, INC.
                                        a New Jersey corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        AMERICAN LIMOUSINE SERVICE, INC.
                                        an Ohio corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        BEACON TRANSPORTATION, INC.
                                        a New York corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        COASTAL EMS, INC., a Georgia corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -11-
<PAGE>
                                        CORNING AMBULANCE SERVICE INC.
                                        a New York corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        DONLOCK, LTD.
                                        a Pennsylvania corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        E.M.S. VENTURES, INC.
                                        a Georgia corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        EMS VENTURES OF SOUTH CAROLINA, INC.
                                        a South Carolina corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        EASTERN AMBULANCE SERVICE, INC.
                                        a Nebraska corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        EASTERN PARAMEDICS, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -12-
<PAGE>
                                        GOLD CROSS AMBULANCE SERVICES, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        GOLD CROSS AMBULANCE SERVICE, OF
                                        PA., INC.
                                        an Ohio corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        KEEFE & KEEFE, INC.
                                        a New York corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        KEEFE & KEEFE AMBULETTE, LTD.
                                        a New York corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        LASALLE AMBULANCE INC.
                                        a New York corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -13-
<PAGE>
                                        MEDI-CAB OF GEORGIA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        MEDICAL EMERGENCY DEVICES AND
                                        SERVICES (MEDS), INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        MEDICAL TRANSPORTATION SERVICES, INC.
                                        a South Dakota corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        MEDSTAR EMERGENCY MEDICAL SERVICES, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        MERCURY AMBULANCE SERVICE, INC.
                                        a Kentucky corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -14-
<PAGE>
                                        METRO CARE CORP.
                                        an Ohio corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        MO-RO-KO, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        MULTI CAB INC.
                                        a New Jersey corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        MULTI-CARE INTERNATIONAL, INC.
                                        a New Jersey corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        MULTI-CARE MEDICAL CAR SERVICE, INC.
                                        a New Jersey corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -15-
<PAGE>
                                        MULTI-HEALTH CORP.
                                        a Florida corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        MYERS AMBULANCE SERVICE, INC.
                                        an Indiana corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        NATIONAL AMBULANCE & OXYGEN
                                        SERVICE, INC.
                                        a New York corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        NORTH MISS. AMBULANCE SERVICE, INC.
                                        a Mississippi corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -16-
<PAGE>
                                        PROFESSIONAL MEDICAL SERVICES, INC.
                                        an Arkansas corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RISC AMERICA ALABAMA FIRE SAFETY
                                        SERVICES, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        R/M MANAGEMENT CO., INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        R/M OF MISSISSIPPI, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        R/M OF TENNESSEE G.P., INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -17-
<PAGE>
                                        R/M OF TENNESSEE L.P., INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        R/M OF TEXAS G.P., INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        R/M PARTNERS, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RMC CORPORATE CENTER, L.L.C.
                                        An Arizona Limited Liability Company

                                        By: RURAL/METRO CORPORATION,
                                            an Arizona corporation,
                                            Its Member

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RMFD OF NEW JERSEY, INC.,
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -18-
<PAGE>
                                        RURAL/METRO COMMUNICATIONS
                                        SERVICES, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO CORPORATION
                                        an Arizona corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO CORPORATION OF FLORIDA
                                        a Florida corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO CORPORATION OF TENNESSEE
                                        a Tennessee corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO FIRE DEPT., INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -19-
<PAGE>
                                        RURAL/METRO HOSPITAL SERVICES, INC.,
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO LOGISTICS, INC.,
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO MID-ATLANTIC, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF ALABAMA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO MID-SOUTH, L.P.
                                        a Delaware limited partnership

                                        By: R/M of Tennessee, a Delaware
                                            corporation
                                            Its General Partner

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -20-
<PAGE>
                                        RURAL/METRO PROTECTION SERVICES, INC.,
                                        an Arizona corporation
                                        (f/k/a Metropolitan Fire Dept., Inc.)

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF ALABAMA, INC.,
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF ARKANSAS, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF ARLINGTON, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF BREWERTON, INC.,
                                        a New York corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF CALIFORNIA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -21-
<PAGE>
                                        RURAL/METRO OF CENTRAL ALABAMA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF CENTRAL COLORADO, INC.,
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF CENTRAL OHIO, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF COLORADO, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF GEORGIA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF GREATER SEATTLE, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -22-
<PAGE>
                                        RURAL/METRO OF INDIANA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF INDIANA, L.P.
                                        a Delaware limited partnership

                                        By: THE AID AMBULANCE COMPANY, INC.
                                            a Delaware corporation,
                                            Its General Partner

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF INDIANA II, L.P.
                                        a Delaware corporation

                                        By: THE AID AMBULANCE COMPANY, INC.
                                            a Delaware corporation,
                                            Its General Partner

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF KENTUCKY, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -23-
<PAGE>
                                        RURAL/METRO OF MISSISSIPPI, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF NEBRASKA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF NEW YORK, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF NORTH FLORIDA, INC.
                                        a Florida corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF NORTH TEXAS, L.P.
                                        a Delaware limited partnership

                                        By: R/M of Texas G.P. Inc.,
                                            a Delaware corporation
                                            Its General Partner

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -24-
<PAGE>
                                        RURAL/METRO OF NORTHERN OHIO, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF OHIO, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF OREGON, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF ROCHESTER, INC.
                                        a New York corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF SAN DIEGO, INC.
                                        a California corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF SOUTH CAROLINA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -25-
<PAGE>
                                        RURAL/METRO OF SOUTH DAKOTA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF SOUTHERN OHIO, INC.
                                        an Ohio corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF TENNESSEE, L.P.
                                        a Delaware limited partnership

                                        By: R/M OF TENNESSEE, G.P., INC.
                                            a Delaware corporation,
                                            Its General Partner

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF TEXAS, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        RURAL/METRO OF TEXAS, L.P.,
                                        a Delaware limited partnership

                                        By: R/M OF TEXAS G.P., INC.,
                                            a Delaware corporation,
                                            Its General Partner

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -26-
<PAGE>
                                        RURAL/METRO TEXAS HOLDINGS, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        SW GENERAL, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        SIOUX FALLS AMBULANCE, INC.
                                        a South Dakota corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        SOUTH GEORGIA EMERGENCY MEDICAL
                                        SERVICES, INC.
                                        a Georgia corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        SOUTHWEST AMBULANCE OF CASA GRANDE, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -27-
<PAGE>
                                        SOUTHWEST AMBULANCE AND RESCUE
                                        OF ARIZONA
                                        an Arizona  corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        SOUTHWEST AMBULANCE OF TUCSON, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        SOUTHWEST GENERAL SERVICES, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        THE AID AMBULANCE COMPANY, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        THE AID COMPANY, INC.
                                        an Indiana corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -28-
<PAGE>
                                        TOWNS AMBULANCE SERVICE, INC.
                                        a New York corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        VALLEY FIRE SERVICE, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                        W & W LEASING COMPANY, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -29-
<PAGE>
                       SUPPLEMENT TO AMENDED AND RESTATED
                          SUBSIDIARY GUARANTY AGREEMENT

     THIS  SUPPLEMENT  TO AMENDED AND RESTATED  SUBSIDIARY  GUARANTY  AGREEMENT,
dated as of _____________________,  (the "SUPPLEMENT"),  is made by [INSERT NAME
OF NEW SUBSIDIARY],  a  __________________  (the "NEW  GUARANTOR"),  in favor of
Wachovia Bank National  Association  (f/k/a First Union National Bank), as agent
(in such capacity,  the "AGENT")  under the Credit  Agreement (as defined in the
Subsidiary Guaranty referred to below) for the ratable benefit of itself and the
Lenders (as so defined).

     1. Reference is hereby made to the Amended and Restated Subsidiary Guaranty
Agreement  dated as of September 30, 2002,  made by the certain  Subsidiaries of
the Borrower party thereto as  guarantors,  (the  "GUARANTORS")  in favor of the
Agent (as amended, supplemented or otherwise modified as of the date hereof, the
"SUBSIDIARY  GUARANTY").  This Supplement  supplements the Subsidiary  Guaranty,
forms a part thereof and is subject to the terms thereof. Capitalized terms used
and not defined  herein shall have the meanings  given  thereto or referenced in
the Subsidiary Guaranty.

     2. The New  Guarantor  hereby  agrees to  unconditionally  guarantee to the
Agent for the ratable  benefit of itself and the Lenders,  and their  respective
successors,  endorsees,  transferees and assigns, the prompt payment (whether at
stated   maturity,   by  acceleration  or  otherwise)  and  performance  of  all
Obligations  of the  Borrower  to the same  extent  and upon the same  terms and
conditions as are contained in the Subsidiary Guaranty.

     3. The New  Guarantor  hereby  agrees that it is a party to the  Subsidiary
Guaranty as if a signatory  thereto on the Closing Date of the Credit Agreement,
and the New Guarantor shall comply with all of the terms, covenants,  conditions
and agreements and hereby makes each  representation and warranty,  in each case
set forth therein.  The New Guarantor  agrees that the "SUBSIDIARY  GUARANTY" or
"GUARANTY"  as used  therein  or in any  other  Loan  Documents  shall  mean the
Subsidiary Guaranty as supplemented hereby.

     4. The New  Guarantor  hereby  acknowledges  it has  received a copy of the
Subsidiary Guaranty and that it has read and understands the terms thereof.

                           [SIGNATURE PAGE TO FOLLOW]
<PAGE>
     IN WITNESS  WHEREOF,  the  undersigned  hereby causes this Supplement to be
executed and delivered as of the day of 20__.

                                       [INSERT NAME OF NEW SUBSIDIARY]

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________

                                      -2-
<PAGE>
                                    EXHIBIT H
                                       to
                  Second Amended and Restated Credit Agreement
                         dated as of September 30, 2002
                                  by and among
                            Rural/Metro Corporation,
                                  as Borrower,
                        the Lenders referred to therein,
                                       and
                       Wachovia Bank National Association
                       (f/k/a First Union National Bank),
                                    as Agent

                  FORM OF INTERCOMPANY SUBORDINATION AGREEMENT
<PAGE>
                              AMENDED AND RESTATED
                      INTERCOMPANY SUBORDINATION AGREEMENT

     THIS  AMENDED  AND  RESTATED  INTERCOMPANY  SUBORDINATION  AGREEMENT  (this
"INTERCOMPANY SUBORDINATION AGREEMENT"),  dated as of September 30, 2002, by and
among RURAL/METRO  CORPORATION,  a Delaware  corporation (the  "BORROWER"),  the
subsidiaries  of the  Borrower  identified  on the  signature  pages hereto (the
"GUARANTORS" and together with the Borrower,  the  "INTERCOMPANY  LOAN PARTIES")
and WACHOVIA BANK NATIONAL  ASSOCIATION  (f/k/a FIRST UNION NATIONAL  BANK),  as
agent (the  "AGENT")  for the Lenders  party to the Second  Amended and Restated
Credit  Agreement  dated even date herewith (as amended,  restated,  modified or
otherwise supplemented from time to time, the "CREDIT AGREEMENT"),  by and among
the Borrower,  the financial  institutions  that are or may become party thereto
(the  "LENDERS")  and the Agent.  Capitalized  terms used herein and not defined
herein shall have the meanings assigned thereto in the Credit Agreement.

                                    RECITALS

     WHEREAS,  the  Borrower,  the Lenders and the Agent have  entered into that
certain Amended and Restated Credit  Agreement dated March 16, 1998 (as amended,
restated,  modified or otherwise  supplemented  from time to time, the "EXISTING
CREDIT AGREEMENT");

     WHEREAS,  the  Borrower,  Lenders and the Agent desire to amend and restate
the  Existing  Credit  Agreement  in its  entirety  as  provided  in the  Credit
Agreement;

     WHEREAS, the Borrower,  the Agent and the Intercompany Loan Parties entered
into that certain  Intercompany  Subordination  Agreement  dated as of March 16,
1998 (as  amended,  restated,  modified or otherwise  supplemented  from time to
time, the "EXISTING SUBORDINATION AGREEMENT"); and

     WHEREAS,  the Borrower,  the Agent and the Intercompany Loan Parties desire
to amend and restate the  Existing  Subordination  Agreement  in its entirety as
provided herein.

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

SECTION 1. SUBORDINATION.

     1.01. SUBORDINATION TO SENIOR INDEBTEDNESS.

     Each  Intercompany Loan Party for itself and its successors agrees that, to
the extent it is from time to time entitled to receive payment in respect of any
intercompany  loan,  advance or other account from any other  Intercompany  Loan
Party (a "SUBORDINATED  OBLIGATION"),  the payment of the principal of, premium,
if any,  interest on (including all interest  accruing  thereon  subsequent to a
<PAGE>
Bankruptcy Event ("POST-PETITION  INTEREST")) or other fees, costs, expenses and
any other amounts accrued, incurred or otherwise due in connection with all such
Subordinated Obligations from time to time, is subordinated in right of payment,
to the extent and in the manner provided  herein,  to the payment in full of all
Senior Indebtedness.

     1.02. NO PAYMENT ON THE SUBORDINATED OBLIGATIONS IN CERTAIN CIRCUMSTANCES.

     (a) No payment  shall be made,  either  directly  or  indirectly,  by or on
behalf of any  Intercompany  Loan  Party,  in cash,  property or  securities  on
account  of  the  principal  of,  premium,   if  any,  and  interest  (including
post-petition  interest) on any Subordinated Obligation at the time outstanding,
or other  fees,  costs,  expenses  and any other  amounts  accrued,  incurred or
otherwise  due in respect  of any such  Subordinated  Obligation,  or to prepay,
purchase,   redeem,   retire,   exchange,   defease  or  otherwise  acquire  any
Subordinated  Obligation or any instrument evidencing a Subordinated  Obligation
for  cash or  property  (collectively,  "SUBORDINATED  PAYMENTS"),  (i) upon the
maturity of any Senior  Indebtedness by  acceleration  or otherwise,  unless and
until all principal of, interest (including post-petition interest) and premium,
if any, on and all other fees,  costs,  expenses  and other  amounts  accrued or
incurred  pursuant to the terms of the Senior  Indebtedness then due, shall have
first been paid in full or waived,  or (ii) upon the  occurrence of any Event of
Default with respect to any Senior Indebtedness  (unless and until such Event of
Default  shall  have been  cured or waived in  accordance  with the terms of the
Credit Agreement).

     (b) In  furtherance  of the  provisions of Section 1.01, in the event that,
notwithstanding  the foregoing  provisions of subsection  1.02, any Subordinated
Payment,  either  directly or  indirectly,  shall be made by or on behalf of any
Intercompany  Loan Party, and received by another  Intercompany  Loan Party at a
time when such payment was prohibited by the provisions of this subsection 1.02,
then,  unless and until such payment is no longer  prohibited by this subsection
1.02,  such payment shall be segregated and held in trust for the benefit of and
shall be promptly paid over to, the Agent, for the benefit of the Lenders.

     (c)  The  Borrower   shall  give  prompt   written  notice  to  each  other
Intercompany  Loan Party of any Event of  Default  with  respect to such  Senior
Indebtedness.  Failure to give such notice shall not affect the subordination of
the  Subordinated  Obligations  to the  Senior  Indebtedness  provided  in  this
Intercompany Subordination Agreement.

     1.03. SUBORDINATION OF INTERCOMPANY OBLIGATIONS ON DISSOLUTION, LIQUIDATION
           OR REORGANIZATION OF AN INTERCOMPANY LOAN PARTY.

     Upon any distribution by any Intercompany  Loan Party of assets of any kind
or character,  whether in cash,  property or  securities,  to creditors upon any
dissolution, winding up, liquidation or reorganization (excluding, so long as no
Default or Event of Default  shall have  occurred  and be  continuing,  mergers,
sales of assets and other  combinations  permitted  pursuant to  Sections  11.5,
11.6(d) and 11.6(e) of the Credit  Agreement)  of such  Intercompany  Loan Party
(the   "LIQUIDATING   LOAN  PARTY")  (whether  in  a  voluntary  or  involuntary
bankruptcy,  insolvency or  receivership  proceedings or upon any assignment for
the benefit of creditors or otherwise):

                                       2
<PAGE>
          (a) the Lenders  shall first  receive  payment in full in cash, to the
     extent then presently  available for payment,  of the  principal,  interest
     (including all interest accruing on the Senior Indebtedness subsequent to a
     Bankruptcy Event, whether or not a claim for such post-petition interest is
     allowable as a claim in the bankruptcy case of the  Liquidating  Loan Party
     ("POST-PETITION INTEREST ON SENIOR INDEBTEDNESS")) and premium, if any, due
     thereon and all other fees,  costs,  expenses,  or other amounts accrued or
     incurred pursuant to the terms thereof (or have such payments duly provided
     for in a manner reasonably  satisfactory to holders of Senior  Indebtedness
     or their  representative)  before  any  other  Intercompany  Loan  Party is
     entitled  to receive any  Subordinated  Payment on account of or accrued or
     incurred in connection with any Subordinated Obligation;

          (b) any  payment or  distribution  of assets of the  Liquidating  Loan
     Party of any kind or character,  whether in cash, property or securities to
     which such other  Intercompany  Loan Party would be entitled except for the
     provisions of this  Intercompany  Subordination  Agreement shall be paid by
     the  Liquidating  Loan  Party,  the  liquidating  trustee or agent or other
     person making such a payment or  distribution,  directly to the Agent,  for
     the benefit of the Lenders, to the extent necessary to make payment in full
     of all Senior Indebtedness remaining unpaid; and

          (c) in the event that,  notwithstanding the foregoing,  any payment or
     distribution  of  assets  of the  Liquidating  Loan  Party  of any  kind or
     character,  whether in cash,  property or securities,  shall be received by
     any such  other  Intercompany  Loan  Party on  account  of, or  accrued  or
     incurred in connection with, any Subordinated  Obligation before all Senior
     Indebtedness  is paid in full in cash, or effective  provision (in a manner
     reasonably  satisfactory  to the Lenders)  made for its payment,  then such
     payment or distribution  shall be segregated and received and held in trust
     for the  benefit of and shall be promptly  paid over to the Agent,  for the
     benefit  of the  Lenders,  for  application  to the  payment  of all Senior
     Indebtedness  until such Senior  Indebtedness  shall have been paid in full
     (including post-petition interest on the Senior Indebtedness).

     The  Borrower  shall  give  prompt  written  notice  to the  Agent and each
Intercompany  Loan  Party  of  any  dissolution,   winding  up,  liquidation  or
reorganization  of any Intercompany  Loan Party, but failure to give such notice
shall not affect the subordination of the Subordinated Obligations to the Senior
Indebtedness provided in this Intercompany Subordination Agreement.

     1.04. SUBROGATION.

     Subject to the payment in full of all Senior  Indebtedness,  the holder of,
or obligee with respect to, any  Subordinated  Obligation shall be subrogated to
the rights of the Lenders to receive  payments or  distributions of assets of an
Intercompany Loan Party applicable to the Senior Indebtedness to the extent that
distributions  were paid to the Lenders that  otherwise  would have been paid to
such obligee,  until all amounts owing on such Subordinated  Obligation shall be
paid in full,  and for the  purpose  of such  subrogation  no such  payments  or
distributions  to the  Lenders  by  virtue  of this  Intercompany  Subordination
Agreement,  which  otherwise  would have been made to such  obligee,  shall,  as
between the obligor on such Subordinated  Obligation and such obligee, be deemed
to be payment on account of such  Subordinated  Obligation,  it being understood

                                       3
<PAGE>
that the  provisions of this  Intercompany  Subordination  Agreement are and are
intended  solely  for  the  purpose  of  defining  the  relative  rights  of the
Intercompany Loan Parties, on the one hand, and the Lenders, on the other hand.

     1.05. SUBORDINATION RIGHTS NOT IMPAIRED.

     (a) No right  of the  Agent  or any  Lender  to  enforce  subordination  as
provided  herein shall at any time in any way be  prejudiced  or impaired by any
act or failure to act on the part of any  Intercompany  Loan Party or by any act
or failure to act, in good  faith,  by the Agent or any such  Lender,  or by any
noncompliance by any Intercompany  Loan Party with the terms of any Subordinated
Obligation,  regardless of any knowledge  thereof which any such Lender may have
or be  otherwise  charged  with.  The Agent and the Lenders  may extend,  renew,
modify or amend the terms of Senior  Indebtedness  or any security  therefor and
release,  sell or exchange  such  security  and  otherwise  deal freely with any
Intercompany  Loan Party, all without  affecting the liabilities and obligations
of any other  Intercompany Loan Party or the rights of the Agent and the Lenders
hereunder.

     (b) All rights and interests hereunder or under any Subordinated Obligation
of the  Agent  and  the  Lenders,  and all  agreements  and  obligations  of the
Intercompany Loan Parties under this Intercompany Subordination Agreement, shall
remain in full  force and effect  irrespective  of (i) any lack of  validity  or
enforceability  of the Credit  Agreement or any other Loan  Document,  or of any
provision  of any thereof or (ii) any other  circumstance  that might  otherwise
constitute a defense  available  to, or a discharge  of, any  Intercompany  Loan
Party in respect of the Senior Indebtedness.

     1.06. AUTHORIZATION TO EFFECT SUBORDINATION.

     Each  Intercompany  Loan Party,  by its  acceptance  hereof,  solely in its
capacity  as  obligee  with  respect  to  Subordinated  Obligations,   upon  the
occurrence and during the  continuation  of an Event of Default under the Credit
Agreement,  (a)  irrevocably  authorizes and empowers (but without  imposing any
obligation on) the Agent (through its authorized representatives),  on behalf of
itself and the Lenders,  to demand,  sue for, collect and receive such obligee's
ratable  share  of  payments  or  distributions  with  respect  to  Subordinated
Obligations  which  are  required  to be paid or  delivered  to the  Lenders  as
provided herein,  and take all such other action, in the name of such obligee or
otherwise,  as such authorized  representatives may determine to be necessary or
appropriate  for  the  enforcement  of  the  provisions  of  this   Intercompany
Subordination   Agreement,   including   without   limitation,   that  (i)  such
representatives  shall  have the right to vote such  obligee's  interest  in any
proceeding  under the  Bankruptcy  Law as such vote relates to any  Subordinated
Obligation  or  Subordinated  Payment  and  (ii)  in any  such  proceeding  such
representatives may, as attorney-in-fact for such obligee, file any claim, proof
of claim or such other instrument of similar character,  in each case, solely to
the  extent  such  proof  of  claim  or such  other  instrument  relates  to any
Subordinated  Obligation or Subordinated  Payment; and (b) agrees to execute and
deliver to such  representatives,  all such further  instruments  confirming the
authorization  hereinabove set forth, and all such powers of attorney, proofs of
claim, assignments of claim and other instruments as may reasonably be requested
by the Agent.

                                       4
<PAGE>
     1.07. DEFINITIONS.

     "BANKRUPTCY  EVENT" means (a) any Intercompany  Loan Party,  pursuant to or
within the meaning of any  Bankruptcy Law (i) admits in writing its inability to
pay its debts  generally as they become due, (ii)  commences a voluntary case or
proceeding  under any Bankruptcy  Law with respect to itself,  (iii) consents to
the entry of a judgment, decree or order for relief against it in an involuntary
case or proceeding in which it is the alleged debtor under any  Bankruptcy  Law,
(iv)  consents to the  appointment  of a Custodian of it or for any  substantial
part of its  property,  (v)  consents to or  acquiesces  in the  institution  of
bankruptcy or insolvency  proceedings  against it, (vi) applies for, consents to
or acquiesces in the  appointment of or taking  possession by a Custodian of any
other  Intercompany  Loan Party for any  substantial  part of their  properties,
(vii)  makes a general  assignment  for the benefit of its  creditors  or (viii)
takes any  corporate act to authorize  any of the  foregoing;  or (b) a court of
competent jurisdiction enters a judgment,  decree or order for relief in respect
of any  Intercompany  Loan Party in an involuntary  case or proceeding under any
Bankruptcy  Law which  shall (i) approve as  properly  filed a petition  seeking
reorganization,  arrangement,  adjustment  or  composition  in  respect  of  any
Intercompany Loan Party, (ii) appoint a Custodian of any Intercompany Loan Party
for any  substantial  part of their  respective  properties  or (iii)  order the
winding-up or liquidation  of the affairs of any  Intercompany  Loan Party;  and
such judgment,  decree or order shall remain unstayed and in effect for a period
of 60 consecutive days; or any bankruptcy or insolvency  petition or application
is filed,  or any bankruptcy or insolvency  proceeding is commenced  against any
Intercompany  Loan Party and such  petition,  application  or  proceeding is not
dismissed within 60 days.

     "BANKRUPTCY  LAW" means Title 11, U.S. Code or any similar Federal or state
law for the relief of debtors.

     "CUSTODIAN" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.

SECTION 2. COUNTERPARTS.

     This Intercompany  Subordination Agreement may be executed in any number of
counterparts,  which may be originals or copies sent by facsimile  transmission,
each of which shall be an original and all of which shall constitute one and the
same agreement.

SECTION 3. BINDING EFFECT.

     This Intercompany  Subordination  Agreement shall be binding on the parties
hereto and their respective successors and assigns.

SECTION 4. EVIDENCE OF SUBORDINATION.

     To the extent that any of the  Subordinated  Obligations  is evidenced by a
promissory  note or other  instrument,  the  Intercompany  Loan Party  obligated
thereunder  shall cause to be placed  thereon a legend  stating that the payment
thereof is  subordinate to payment of all Senior  Indebtedness  pursuant to this
Intercompany Subordination Agreement and such Intercompany Loan Party shall mark

                                       5
<PAGE>
all books of  account  in such  manner  to  indicate  that  payment  thereof  is
subordinated pursuant to this Intercompany Subordination Agreement.

SECTION 5. GOVERNING LAW.

     This  Intercompany  Subordination  Agreement  shall  be  governed  by,  and
construed in accordance with, the laws of the State of New York,  without regard
to principles of conflicts of law.

SECTION 6. FURTHER ASSURANCES.

     The parties  hereto  agree to execute  such other  documents  and take such
other actions as may be reasonably necessary to implement the terms hereof.

                           [SIGNATURE PAGES TO FOLLOW]

                                       6
<PAGE>
     IN WITNESS  WHEREOF,  the  undersigned  have  executed and  delivered  this
Intercompany Subordination Agreement as of the date hereinabove first written.

                                        Agent:

                                        WACHOVIA BANK NATIONAL ASSOCIATION,
                                        as Agent for the Lenders

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       7
<PAGE>
                                        Intercompany Loan Parties:

                                        RURAL/METRO CORPORATION
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        AID AMBULANCE AT VIGO COUNTY, INC.
                                        an Indiana corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        AMBULANCE TRANSPORT SYSTEMS, INC.
                                        a New Jersey corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        AMERICAN LIMOUSINE SERVICE, INC.
                                        an Ohio corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        BEACON TRANSPORTATION, INC.
                                        a New York corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        COASTAL EMS, INC., a Georgia corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       8
<PAGE>
                                        CORNING AMBULANCE SERVICE INC.
                                        a New York corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        DONLOCK, LTD.
                                        a Pennsylvania corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        E.M.S. VENTURES, INC.
                                        a Georgia corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        EMS VENTURES OF SOUTH CAROLINA, INC.
                                        a South Carolina corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        EASTERN AMBULANCE SERVICE, INC.
                                        a Nebraska corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        EASTERN PARAMEDICS, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       9
<PAGE>
                                        GOLD CROSS AMBULANCE SERVICES, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        GOLD CROSS AMBULANCE SERVICE,
                                        OF PA., INC.
                                        an Ohio corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        KEEFE & KEEFE, INC.
                                        a New York corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        KEEFE & KEEFE AMBULETTE, LTD.
                                        a New York corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        LASALLE AMBULANCE INC.
                                        a New York corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       10
<PAGE>
                                        MEDI-CAB OF GEORGIA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        MEDICAL EMERGENCY DEVICES AND
                                        SERVICES (MEDS), INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        MEDICAL TRANSPORTATION SERVICES, INC.
                                        a South Dakota corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        MEDSTAR EMERGENCY MEDICAL SERVICES, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        MERCURY AMBULANCE SERVICE, INC.
                                        a Kentucky corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       11
<PAGE>
                                        METRO CARE CORP.
                                        an Ohio corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        MO-RO-KO, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        MULTI CAB INC.
                                        a New Jersey corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        MULTI-CARE INTERNATIONAL, INC.
                                        a New Jersey corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        MULTI-CARE MEDICAL CAR SERVICE, INC.
                                        a New Jersey corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       12
<PAGE>
                                        MULTI-HEALTH CORP.
                                        a Florida corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        MYERS AMBULANCE SERVICE, INC.
                                        an Indiana corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        NATIONAL AMBULANCE & OXYGEN
                                        SERVICE, INC.
                                        a New York corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        NORTH MISS. AMBULANCE SERVICE, INC.
                                        a Mississippi corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       13
<PAGE>
                                        PROFESSIONAL MEDICAL SERVICES, INC.
                                        an Arkansas corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RISC AMERICA ALABAMA
                                        FIRE SAFETY SERVICES, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        R/M MANAGEMENT CO., INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        R/M OF MISSISSIPPI, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        R/M OF TENNESSEE G.P., INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       14
<PAGE>
                                        R/M OF TENNESSEE L.P., INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        R/M OF TEXAS G.P., INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        R/M PARTNERS, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RMC CORPORATE CENTER, L.L.C.
                                        An Arizona Limited Liability Company

                                        By: RURAL/METRO CORPORATION,
                                            an Arizona corporation,
                                            Its Member

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RMFD OF NEW JERSEY, INC.,
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       15
<PAGE>
                                        RURAL/METRO COMMUNICATIONS
                                        SERVICES, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO CORPORATION
                                        an Arizona corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO CORPORATION OF FLORIDA
                                        a Florida corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO CORPORATION OF TENNESSEE
                                        a Tennessee corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO FIRE DEPT., INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       16
<PAGE>
                                        RURAL/METRO HOSPITAL SERVICES, INC.,
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO LOGISTICS, INC.,
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO MID-ATLANTIC, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF ALABAMA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO MID-SOUTH, L.P.
                                        a Delaware limited partnership

                                        By: R/M of Tennessee,
                                            a Delaware corporation
                                            Its General Partner

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       17
<PAGE>
                                        RURAL/METRO PROTECTION SERVIES, INC.,
                                        an Arizona corporation
                                        (f/k/a Metropolitan Fire Dept., Inc.)

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF ALABAMA, INC.,
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF ARKANSAS, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF ARLINGTON, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF BREWERTON, INC.,
                                        a New York corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       18
<PAGE>
                                        RURAL/METRO OF CALIFORNIA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF CENTRAL ALABAMA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF CENTRAL COLORADO, INC.,
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF CENTRAL OHIO, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF COLORADO, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF GEORGIA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF GREATER SEATTLE, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       19
<PAGE>
                                        RURAL/METRO OF INDIANA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF INDIANA, L.P.
                                        a Delaware limited partnership

                                        By: THE AID AMBULANCE COMPANY, INC.
                                            a Delaware corporation,
                                            Its General Partner

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF INDIANA II, L.P.
                                        a Delaware corporation

                                        By: THE AID AMBULANCE COMPANY, INC.
                                            a Delaware corporation,
                                            Its General Partner

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF KENTUCKY, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF MISSISSIPPI, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       20
<PAGE>
                                        RURAL/METRO OF NEBRASKA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF NEW YORK, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF NORTH FLORIDA, INC.
                                        a Florida corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF NORTH TEXAS, L.P.
                                        a Delaware limited partnership

                                        By: R/M of Texas G.P. Inc.,
                                            a Delaware corporation
                                            Its General Partner

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF NORTHERN OHIO, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       21
<PAGE>
                                        RURAL/METRO OF OHIO, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF OREGON, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF ROCHESTER, INC.
                                        a New York corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF SAN DIEGO, INC.
                                        a California corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF SOUTH CAROLINA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       22
<PAGE>
                                        RURAL/METRO OF SOUTH DAKOTA, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF SOUTHERN OHIO, INC.
                                        an Ohio corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF TENNESSEE, L.P.
                                        a Delaware limited partnership

                                        By: R/M OF TENNESSEE, G.P., INC.
                                            a Delaware corporation,
                                            Its General Partner

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF TEXAS, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        RURAL/METRO OF TEXAS, L.P.,
                                        a Delaware limited partnership

                                        By: R/M OF TEXAS G.P., INC.,
                                            a Delaware corporation,
                                            Its General Partner

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       23
<PAGE>
                                        RURAL/METRO TEXAS HOLDINGS, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        SW GENERAL, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        SIOUX FALLS AMBULANCE, INC.
                                        a South Dakota corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        SOUTH GEORGIA EMERGENCY MEDICAL
                                        SERVICES, INC.
                                        a Georgia corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        SOUTHWEST AMBULANCE OF CASA GRANDE, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       24
<PAGE>
                                        SOUTHWEST AMBULANCE AND RESCUE OF
                                        ARIZONA
                                        an Arizona  corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        SOUTHWEST AMBULANCE OF TUCSON, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        SOUTHWEST GENERAL SERVICES, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        THE AID AMBULANCE COMPANY, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        THE AID COMPANY, INC.
                                        an Indiana corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        TOWNS AMBULANCE SERVICE, INC.
                                        a New York corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       25
<PAGE>
                                        VALLEY FIRE SERVICE, INC.
                                        a Delaware corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                        W & W LEASING COMPANY, INC.
                                        an Arizona corporation

                                        By: ____________________________________
                                            Name: ______________________________
                                            Title: _____________________________

                                       26
<PAGE>
                       SUPPLEMENT TO AMENDED AND RESTATED
                      INTERCOMPANY SUBORDINATION AGREEMENT

     INTERCOMPANY    SUBORDINATION    AGREEMENT   SUPPLEMENT,    dated   as   of
_____________________,   (the  "SUPPLEMENT"),   made  by  [INSERT  NAME  OF  NEW
SUBSIDIARY],  a __________________ (the "NEW INTERCOMPANY LOAN PARTY"), in favor
of Wachovia Bank National  Association  (f/k/a First Union  National  Bank),  as
agent (in such capacity,  the "AGENT") under the Credit Agreement (as defined in
the  Intercompany  Subordination  Agreement  referred  to below) for the ratable
benefit of itself and the Lenders (as so defined).

     1.  Reference  is hereby  made to the  Amended  and  Restated  Intercompany
Subordination  Agreement,  dated as of September 30, 2002, made by and among the
Borrower and certain Subsidiaries of the Borrower party thereto,  (collectively,
the  "INTERCOMPANY  LOAN  PARTIES") and the Agent (as amended,  supplemented  or
otherwise  modified  as of the  date  hereof,  the  "INTERCOMPANY  SUBORDINATION
AGREEMENT").   This  Supplement   supplements  the  Intercompany   Subordination
Agreement, forms a part thereof and is subject to the terms thereof. Capitalized
terms used and not  defined  herein  shall have the  meanings  given  thereto or
referenced in the Intercompany Subordination Agreement.

     2. The New  Intercompany  Loan Party for itself and its  successors  hereby
agrees that, to the extent it is from time to time  entitled to receive  payment
in respect of any  Subordinated  Obligation,  the payment of the  principal  of,
premium, if any, interest on (including all interest accruing thereon subsequent
to a Bankruptcy Event ("POST-PETITION INTEREST")) or other fees, costs, expenses
and any other amounts accrued,  incurred or otherwise due in connection with all
such  Subordinated  Obligations  from time to time, is  subordinated in right of
payment,  to the  extent  and  in  the  manner  provided  in  the  Subordination
Agreement, to the payment in full of all Senior Indebtedness.

     3. The New Intercompany  Loan Party hereby agrees that it is a party to the
Intercompany  Subordination  Agreement as if a signatory  thereto on the Closing
Date of the Credit  Agreement,  and the New Intercompany Loan Party shall comply
with all of the terms,  covenants,  conditions  and  agreements and hereby makes
each  representation  and  warranty,  in each  case set forth  therein.  The New
Intercompany Loan Party agrees that the "INTERCOMPANY  SUBORDINATION  AGREEMENT"
as used  therein or in any other  Loan  Documents  shall  mean the  Intercompany
Subordination Agreement as supplemented hereby.

     4. The New  Intercompany  Loan Party hereby  acknowledges it has received a
copy of the  Intercompany  Subordination  Agreement  and  that it has  read  and
understands the terms thereof.

                           [SIGNATURE PAGE TO FOLLOW]
<PAGE>
     IN WITNESS  WHEREOF,  the  undersigned  hereby causes this Supplement to be
executed and delivered as of the day of 20__.

                                        [INSERT NAME OF NEW SUBSIDIARY]

                                        By: ____________________________________
                                        Name: __________________________________
                                        Title: _________________________________EXHIBIT 10.1

                                OPTION AGREEMENT

This OPTION AGREEMENT dated for reference June 10, 2002, is between FII
INTERNATIONAL INC., a Nevada company of 1100 Melville Street, Vancouver, British
Columbia, V6E 4A6, and fax (604) 664-0671 ("FII"); and PATRIZIA MITCHELL of
1901-1128 Quebec Street, Vancouver, British Columbia, V6A 4E1(the "Owner").

WHEREAS the Owner has agreed to grant FII an option to the Assets pursuant to
the terms of this agreement, FOR VALUABLE CONSIDERATION, the receipt and
sufficiency of which are acknowledged, the parties agree that:

                                 INTERPRETATION

1.  The definitions in the recitals are part of this agreement.

2.  In this agreement:

    a) "Assets" means the assets more particularly described in Schedule "A"
       attached to this agreement.
    b) "Option" means the option granted to FII to purchase the Assets.
    c) "Shares" means Common Capital Shares in the capital of FII restricted
       from trading in accordance with Rule 144.
    d) "Term" means June 10, 2002 to June 9, 2004.
    e) "$" means United States dollars unless otherwise indicated.

                         TERMS AND CONDITIONS OF OPTION

OPTION

3.  The Owner agrees to grant an option to FII to acquire the assets from the
    Owner.

4.  All developments made on or from the Assets during the Term of this
    agreement, and during any extensions to the Term pursuant to the terms of
    this agreement, will be the property of the Owner and will be included in
    the Assets to be transferred to FII.

EXERCISE OF OPTION

5.  To exercise the Option, FII must make the following payments to the Owner:

    a. 2 million Shares are a price of $0.005 per Share to be issued and
       delivered on the date this agreement is signed by all the parties; and
    b. a lump sum payment of $250,000 to be paid on or before the end of the
       Term.

6.  All payments to be made by FII will be delivered to the Owner at the address
    set out in the recitals.

EXTENSION OF OPTION

7.  FII has the option to extend the Option for another 12 months from the date
    of expiry of the Term. To exercise its option, FII must deliver to the Owner
    written notice of FII's intention to extend the Option no later than May 11,
    2004.

8.  As consideration for the extension of the Option, FII will issue an
    additional 500,000 Shares registered in the name of the Owner at a deemed
    price of $0.20 per Share, which will be delivered to the Owner on or before
    June 9, 2004; and

<PAGE>

Option Agreement                                                     2 / 5

9.  If FII makes the payments as noted in Section 8 in a timely manner, the
    Option will be extended and kept in good standing until June 9, 2005.

TERMINATION OF OPTION

10. The Owner agrees not to terminate this agreement without the consent of FII.
    FII may terminate this agreement by giving the Owner 30 days' written
    notice.

11. The parties agree that all improvements to the Assets will remain with the
    Assets and the Owner will be the owner of such improvements until FII
    exercises the Option in full. If the Option is not exercised in full by FII,
    all notes, data, records, and materials in any format that relate to the
    Assets in any way belong exclusively to the Owner.

12. If requested by the Owner, FII will immediately turn over to the Owner all
    copies of the materials described in paragraph 11 that are in FII's
    possession or control.

                         REPRESENTATIONS AND WARRANTIES

THE OWNER

13. The Owner represents and warrants that:

    a. The Owner is the sole beneficial and legal owner of the Assets.
    b. The Owner is legally entitled to option and sell the Assets.
    c. No other party has any right to the Assets.
    d. The Assets have been duly and validly registered and are in good standing
       on the date of this agreement.
    e. There is no adverse claim or challenge against or to the ownership of or
       title to the Assets, nor to the knowledge of the Owner is there any basis
       therefor, and there are no outstanding agreements or options to acquire
       or purchase the Assets or any portion thereof, with the exception of
       FII's right pursuant to the provisions of this agreement.
    f. The Owner has complied with all the laws in effect in the jurisdiction in
       which the Assets are located and FII may have access to the Assets for
       all purposes of this agreement without making any payment to, and without
       accounting to or obtaining the permission of, or any other person other
       that any payments required to be made under this agreement.

14. The representations and warranties contained in Section 13 are provided for
    the exclusive benefit of FII, and a breach of any one or more thereof may be
    waived by FII, in whole or in part at any time without prejudice to its
    rights in respect of any other breach of the same or any other
    representation or warranty; and the representations and warranties contained
    in Section 13 will survive the signing of this agreement.

FII

15. FII represents and warrants that:

    a. It is a company formed and in good standing under the laws of Nevada.
    b. Its authorized capital is 200,000,000 Common Capital Shares with a par
       value of $0.001 per share.
    c. It has the legal capacity and authority to make and perform this
       agreement.
    d. The signing of this agreement and the performance of its terms have been
       duly authorized by all necessary corporate actions including the
       resolution of the board of directors of FII.
    e. Any shares issued pursuant to the terms of this agreement will be subject
       to the trading restrictions set out in Section 19.

16. The representations and warranties contained in Section 15 are provided for
    the exclusive benefit of the Owner and a breach of any one or more thereof
    may be waived by the Owner in whole or in part at any time without prejudice
    to their rights in respect of any other breach of the same or any other
    representation or warranty; and the representations and warranties contained
    in Section 15 will survive the signing of this agreement.

<PAGE>

Option Agreement                                                     3 / 5

                         COVENANTS AND ACKNOWLEDGEMENTS

THE OWNER

17. The Owner will indemnify FII from any and all debts or liabilities arising
    out of or from the Assets prior to the date of this agreement.

18. The Owner consents to act as the sole director and the president of FII and
    will continue to act as president of FII for the Term of this agreement or
    until he is removed by the board of directors of FII.

19. The Owner acknowledges and understands that each certificate evidencing any
    shares issued to them under this agreement and any other securities issued
    on any stock split, stock dividend, recapitalization, merger, consolidation,
    or similar event will be imprinted with legends substantially in the
    following form:

          "THE SECURITIES REPRESENTED BY THIS INSTRUMENT TO WHICH THIS AGREEMENT
          RELATES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
          "1933 ACT"), OR UNDER ANY STATE SECURITIES LAWS ("BLUE SKY LAWS"), AND
          MAY NOT BE OFFERED OR SOLD WITHOUT REGISTRATION UNDER THE 1933 ACT,
          AND AS REQUIRED BY BLUE SKY LAWS IN EFFECT AS TO SUCH TRANSFER, UNLESS
          AN EXEMPTION FROM SUCH REGISTRATION UNDER STATE AND FEDERAL LAW IS
          AVAILABLE."

FII

20. During the Term, FII will:

    a. maintain in good standing the Assets that are in good standing on the
       date of this agreement by the payment of all annual fees and the
       performance of all other actions which may be necessary in that regard
       and in order to keep the Assets free and clear of all liens and other
       charges arising from FII's activities with the Assets, except those at
       the time that are contested in good faith by FII;
    b. permit the Owner, their agents, servants, employees and designated
       consultants, at their own risk, access to the Assets at all reasonable
       times, provided that the Owner agrees to indemnify FII against and to
       save them harmless from all costs, claims, liabilities and expenses that
       FII may incur or suffer as a result of any injury to or loss claimed by
       the Owner, or their agents, servants, employees or designated
       consultants; and
    c. indemnify and save the Owner harmless in respect of any and all costs,
       claims, liabilities and expenses arising out of FII's activities with the
       Assets, provided that FII will incur no obligation hereunder in respect
       of claims arising or damages suffered after termination of the agreement
       if upon termination of the agreement the Assets and any improvements made
       to the Assets are in good standing.

                                OTHER PROVISIONS

21. The Owner expressly acknowledges that FII has given him adequate time to
    review this agreement and to seek and obtain independent legal advice, and
    he represents to FII that he has in fact sought and obtained independent
    legal advice and is satisfied with all the terms and conditions of this
    agreement.

22. Time is of the essence of this agreement.

23. This agreement is governed by the laws of British Columbia and must be
    litigated in the courts of British Columbia.

24. Any notice that must be given or delivered under this agreement must be in
    writing and delivered by hand to the address or transmitted by fax to the
    fax number given for the party on page 1 and is deemed to have been received
    when it is delivered by hand or transmitted by fax unless the delivery or
    transmission is made after 4:00 p.m. or on a non-business day where it is
    received, in which case it is deemed to have been delivered or transmitted
    on the next business day. Any payments of money must be delivered by hand or
    wired as instructed in writing by the receiving party. Any delivery other
    than a written notice or money must be made by hand at the receiving party's
    address.

<PAGE>

Option Agreement                                                     4 / 5

25. The Owner may not assign this agreement or any part of it to another party.

26. Any amendment of this agreement must be in writing and signed by the
    parties.

27. This agreement enures to the benefit of and binds the parties and their
    respective successors, heirs and permitted assignees.

28. No failure or delay of FII in exercising any right under this agreement
    operates as a waiver of the right. FII's rights under this agreement are
    cumulative and do not preclude FII from relying on or enforcing any legal or
    equitable right or remedy.

29. If any provision of this agreement is illegal or unenforceable under any
    law, then it is severed and the remaining provisions remain legal and
    enforceable.

30. This agreement may be signed in counterparts and delivered to the parties by
    fax, and the counterparts together are deemed to be one original document.

THE PARTIES' signatures below are evidence of their agreement.

FII INTERNATIONAL INC.

------------------------------------                 ---------------------------
Authorized signatory                                 PATRIZIA MITCHELL
June 10, 2002                                        June 10, 2002

<PAGE>

Option Agreement                                                     5 / 5

                                  SCHEDULE "A"

                      Schedule "A" to the Option Agreement

              between FII International Inc. and Patrizia Mitchell
                 dated for reference the 10th day of June, 2002.

                     (number of pages including this one: 1)

                                     Assets

The following is the description of the Assets.

    1. The domain name "fashion-international" registered with VeriSign.
    2. All notes, data, records, and materials in any format that relate to the
       domain name.
    3. The website www.fashion-international.com and its design and layout
       structure.
    4. All the content previously prepared for the website.
    5. The business and fashion experience of Patrizia Mitchell.
    6. The business plan for "fashion international" prepared by Patrizia
       Mitchell.

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