Document:

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                                                                     Exhibit 4.1

                              AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT

                                 BY AND BETWEEN

                         CONGRESS FINANCIAL CORPORATION
                                   AS LENDER,

                               LIGGETT GROUP INC.
                                  AS BORROWER,

                                  100 MAPLE LLC

                                       AND

                               EPIC HOLDINGS, INC.

                           DATED AS OF APRIL 14, 2004

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                                TABLE OF CONTENTS

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<S>               <C>                                                                                           <C>
SECTION 1.        DEFINITIONS.....................................................................................1

SECTION 2.        CREDIT FACILITIES..............................................................................16

         2.1      Loans..........................................................................................16
         2.2      Letter of Credit Accommodations................................................................17
         2.3      Availability Reserves..........................................................................20
         2.4      Mebane Loan....................................................................................21
         2.5      Existing Loan..................................................................................21

SECTION 3.        INTEREST AND FEES..............................................................................21

         3.1      Interest.......................................................................................21
         3.2      Closing Fee....................................................................................22
         3.3      Servicing Fee..................................................................................23
         3.4      Unused Line Fee................................................................................23
         3.5      Changes in Laws and Increased Costs of Loans...................................................23

SECTION 4.        CONDITIONS PRECEDENT TO THIS AGREEMENT.........................................................25

         4.1      Conditions Precedent to Effectiveness of this Agreement........................................25
         4.2      Conditions Precedent to All Loans and Letter of Credit Accommodations..........................25

SECTION 5.        GRANT AND PERFECTION OF SECURITY INTEREST......................................................25

         5.1      Grant of Security Interest.....................................................................25
         5.2      Perfection of Security Interests...............................................................27

SECTION 6.        COLLECTION AND ADMINISTRATION..................................................................31

         6.1      Borrower's Loan Account........................................................................31
         6.2      Statements.....................................................................................31
         6.3      Collection of Accounts.........................................................................31
         6.4      Payments.......................................................................................32
         6.5      Authorization to Make Loans....................................................................33
         6.6      Use of Proceeds................................................................................34
         6.7      Grant of Irrevocable License...................................................................34
         6.8      Collected Credit Balances......................................................................34
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                                      (i)

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<S>               <C>                                                                                           <C>
SECTION 7.        COLLATERAL REPORTING AND COVENANTS.............................................................35

         7.1      Collateral Reporting...........................................................................35
         7.2      Accounts Covenants.............................................................................35
         7.3      Inventory Covenants............................................................................37
         7.4      Equipment Covenants............................................................................37
         7.5      Power of Attorney..............................................................................37
         7.6      Right to Cure..................................................................................38
         7.7      Access to Premises.............................................................................38

SECTION 8.        REPRESENTATIONS AND WARRANTIES.................................................................39

         8.1      Corporate Existence; Power and Authority.......................................................39
         8.2      Name; State of Organization; Chief Executive Office; Collateral Locations......................39
         8.3      Financial Statements; No Material Adverse Change...............................................40
         8.4      Priority of Liens; Title to Properties.........................................................40
         8.5      Tax Returns....................................................................................40
         8.6      Litigation.....................................................................................40
         8.7      Compliance with Other Agreements and Applicable Laws...........................................41
         8.8      Environmental Compliance.......................................................................41
         8.9      Employee Benefits..............................................................................41
         8.10     [Reserved].....................................................................................42
         8.11     Intellectual Property..........................................................................42
         8.12     Subsidiaries; Affiliates; Capitalization.......................................................42
         8.13     Labor Disputes.................................................................................43
         8.14     [Reserved].....................................................................................43
         8.15     [Reserved].....................................................................................43
         8.16     Payable Practices..............................................................................43
         8.17     Accuracy and Completeness of Information.......................................................43
         8.18     Consent of Affiliates..........................................................................43
         8.19     Epic Note......................................................................................43
         8.20     Survival of Warranties; Cumulative.............................................................44

SECTION 9.        AFFIRMATIVE AND NEGATIVE COVENANTS.............................................................44

         9.1      Maintenance of Existence.......................................................................44
         9.2      New Collateral Locations.......................................................................44
         9.3      Compliance with Laws, Regulations, Etc.........................................................45
         9.4      Payment of Taxes and Claims....................................................................45
         9.5      Insurance......................................................................................45
         9.6      Financial Statements and Other Information.....................................................46
         9.7      Sale of Assets, Consolidation, Merger, Dissolution, Etc........................................47
         9.8      Encumbrances...................................................................................48
         9.9      Indebtedness...................................................................................49
         9.10     Loans, Investments, Guarantees, Etc............................................................50
         9.11     Dividends and Redemptions......................................................................50
         9.12     Transactions with Affiliates...................................................................50
         9.13     Working Capital................................................................................51
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                                      (ii)

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<S>               <C>                                                                                           <C>
         9.14     Adjusted Net Worth.............................................................................51
         9.15     Costs and Expenses.............................................................................51
         9.16     Further Assurances.............................................................................52
         9.17     Certain Permitted Transactions.................................................................52

SECTION 10.       EVENTS OF DEFAULT AND REMEDIES.................................................................55

         10.1     Events of Default..............................................................................55
         10.2     Remedies.......................................................................................57

SECTION 11.       JURY TRIAL WAIVER; OTHER WAIVERS AND CONSENTS; GOVERNING LAW...................................60

         11.1     Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver..........................60
         11.2     Waiver of Notices..............................................................................61
         11.3     Amendments and Waivers.........................................................................61
         11.4     Waiver of Counterclaims........................................................................61
         11.5     Indemnification................................................................................62

SECTION 12.       TERM OF AGREEMENT; MISCELLANEOUS...............................................................62

         12.1     Term...........................................................................................62
         12.2     Notices........................................................................................63
         12.3     Interpretative Provisions......................................................................63
         12.4     Partial Invalidity.............................................................................65
         12.5     Successors.....................................................................................65
         12.6     Participant's Right of Setoff..................................................................65
         12.7     Confidentiality................................................................................65
         12.8     Entire Agreement...............................................................................66

SECTION 13.       ACKNOWLEDGMENT AND RESTATEMENT.................................................................67

         13.1     Existing Obligations...........................................................................67
         13.2     Acknowledgment of Security Interest............................................................67
         13.3     Existing Agreements............................................................................67
         13.4     Restatement....................................................................................67
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                                     (iii)

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                                    INDEX TO
                             EXHIBITS AND SCHEDULES

                    Exhibit A        Information Certificate

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                AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

         This Amended and Restated Loan and Security Agreement dated as of April
14, 2004 is entered into by and between Congress Financial Corporation, a
Delaware corporation ("Lender"), Liggett Group Inc., a Delaware corporation
("Borrower"), 100 Maple LLC, a Delaware limited liability company ("Maple") and
Epic Holdings Inc., a Delaware corporation (this "Agreement").

                              W I T N E S S E T H:

         WHEREAS, Borrower and Lender are parties to that certain Loan and
Security Agreement dated March 8, 1994 (as amended, the "Existing Loan
Agreement") pursuant to which Lender loans and makes certain financial
accommodations to Borrower;

         WHEREAS, Borrower and Lender wish to amend and restate the Existing
Loan Agreement to incorporate various amendments thereto and to extend the term
thereof, without amending or altering the effect of any of the consents,
approvals or waivers granted by Lender prior to the date hereof; and

         WHEREAS, Lender is willing to enter into this Agreement on the terms
set forth herein.

         NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth herein, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

SECTION 1. DEFINITIONS

         For purposes of this Agreement, the following terms shall have the
respective meanings given to them below:

         1.1 "Accounts" shall mean all present and future rights of Borrower to
payment of a monetary obligation, whether or not earned by performance, which is
not evidenced by chattel paper or an instrument, (a) for property that has been
or is to be sold, leased, licensed, assigned, or otherwise disposed of, (b) for
services rendered or to be rendered, (c) for a secondary obligation incurred or
to be incurred, or (d) arising out of the use of a credit or charge card or
information contained on or for use with the card.

         1.2 "Adjusted Eurodollar Rate" shall mean, with respect to each
Interest Period for any Eurodollar Rate Loan, the rate per annum (rounded
upwards, if necessary, to the next one-thousandth (1/1000) of one (1%) percent)
determined by dividing (a) the Eurodollar Rate for such Interest Period by (b) a
percentage equal to: (i) one (1) minus (ii) the Reserve Percentage. For purposes
hereof, "Reserve Percentage" shall mean the reserve percentage, expressed as a
decimal, prescribed by any United States or foreign banking authority for
determining the reserve requirement which is or would be applicable to deposits
of United States dollars in a non-United States or an international banking
office of Reference Bank used to fund a Eurodollar Rate Loan or any Eurodollar
Rate Loan made with the proceeds of such deposit, whether or not the Reference
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Bank actually holds or has made any such deposits or loans. The Adjusted
Eurodollar Rate shall be adjusted on and as of the effective day of any change
in the Reserve Percentage.

         1.3 "Adjusted Net Worth" shall mean as to any Person, at any time, in
accordance with GAAP (except as otherwise specifically set forth below), on a
consolidated basis for such Person and its subsidiaries (if any), the amount
equal to: (a) the difference between: (i) the aggregate net book value of all
assets of such Person and its subsidiaries, calculating the book value of
inventory for this purpose on a first-in-first-out basis (with the exception of
leaf tobacco inventory which shall be calculated on an average cost basis),
after deducting from such book values all appropriate reserves in accordance
with GAAP (including all reserves for doubtful receivables, obsolescence,
depreciation and amortization) and (ii) the aggregate amount of the indebtedness
and other liabilities of such Person and its subsidiaries (including tax and
other proper accruals) PLUS (b) indebtedness of such Person and its subsidiaries
which is subordinated in right of payment to the full and final payment of all
of the Obligations on terms and conditions acceptable to Lender.

         1.4 "Affiliate" shall mean, with respect to a specified Person, any
other Person that directly or indirectly through one or more intermediaries
controls or is controlled by or is under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

         1.5 "April 2003 Amendment" shall mean the Amendment to Financing
Agreements executed by and between Borrower and Lender on or about April 15,
2003.

         1.6 "Availability Reserves" shall mean as of any date of determination,
such amounts as Lender may from time to time establish and revise in good faith
reducing the amount of Loans and Letter of Credit Accommodations which would
otherwise be available to Borrower under the lending formula(s) provided for
herein: (a) to reflect events, conditions, contingencies or risks which, as
determined by Lender in good faith, do or may adversely affect either (i) the
Collateral or its value, or (ii) the assets, business or prospects of Borrower
or Obligor or (iii) the security interests and other rights of Lender in the
Collateral (including the enforceability, perfection and priority thereof) or
(b) to reflect Lender's good faith belief that any collateral report or
financial information furnished by or on behalf of Borrower or Obligor to Lender
is or may have been incomplete, inaccurate or misleading in any material respect
or (c) to reflect outstanding Letter of Credit Accommodations as provided in
Section 2.2 hereof or (d) in respect of any state of facts which Lender
determines in good faith constitutes a Default or an Event of Default.

         1.7 "Blocked Accounts" shall have the meaning set forth in Section 6.3
hereof.

         1.8 "Borrowing Base Block" shall mean (a) during the period commencing
on January 1 and continuing through and including April 14 of each year,
$4,000,000, (b) during the period commencing on April 15 and continuing through

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and including June 15 of each year, $2,500,000, (c) during the period commencing
on June 16 and continuing through and including July 15 of each year, $3,000,000
and (d) during the period commencing on July 16 and continuing through and
including December 31 of each year, $4,000,000.

         1.9 "Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks are authorized or required to close under
the laws of the State of New York or the State of North Carolina, and a day on
which Lender is open for the transaction of business, except that if a
determination of a Business Day shall relate to any Eurodollar Rate Loans, the
term Business Day shall also exclude any day on which banks are closed for
dealings in dollar deposits in the London interbank market or other applicable
Eurodollar Rate market.

         1.10 "Capital Stock" shall mean, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated)
of such Person's capital stock or partnership, limited liability company or
other equity interests at any time outstanding, and any and all rights, warrants
or options exchangeable for or convertible into such capital stock or other
interests (but excluding any debt security that is exchangeable for or
convertible into such capital stock).

         1.11 "Cash Collateral" shall have the meaning ascribed to such term in
any Cash Collateral Agreement.

         1.12 "Cash Collateral Agreement" shall mean any Cash Collateral Pledge
Agreement between Guarantor and Lender, as from time to time delivered to
Lender, substantially in the form of the Cash Collateral Agreement delivered by
Guarantor to Lender pursuant to the April 2003 Amendment, as any such agreement
may be from time to time amended, supplemented, renewed, restated, extended or
replaced.

         1.13 "Class B Interest" shall mean the "Class B Redeemable Nonvoting
Interest" as such term is defined in the Philip Morris Agreement.

         1.14 "Class B Option" shall have the meaning assigned to it in the
Philip Morris Agreement.

         1.15 "Code" shall mean the Internal Revenue Code of 1986, as the same
now exists or may from time to time hereafter be amended, modified, recodified
or supplemented, together with all rules, regulations and interpretations
thereunder or related thereto.

         1.16 "Collateral" shall have the meaning set forth in Section 5 hereof.

         1.17 "Collected Credit Balance" shall have the meaning assigned to it
in Section 6.8(a) hereof.

         1.18 "Deed of Trust" shall have the meaning assigned to it in the
Mebane Note.

         1.19 "Deposit Account Control Agreement" shall mean an agreement in
writing, in form and substance satisfactory to Lender, by and among Lender,
Borrower and any bank at which any deposit account of Borrower is at any time
maintained which provides that such bank will comply with instructions
originated by Lender directing disposition of the funds in the

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deposit account without further consent by Borrower and such other terms and
conditions as Lender may require.

         1.20 "Designated Percentage" shall mean the amount (to be expressed as
a percentage) determined from time to time by multiplying 0.85 by the following
quotient: (a) the net orderly liquidation value of Eligible Inventory consisting
of leaf tobacco as indicated by the most recent appraisal report thereof
rendered from time to time pursuant to Section 7.3(d) hereof DIVIDED BY (b)
Borrower's Eligible Cost (as that term is used and reported in the most recent
appraisal report rendered from time to time pursuant to Section 7.3(d) hereof;
it being understood that for purposes hereof, "Eligible Cost" shall have the
meaning set forth in, and shall be calculated using the method of calculation
thereof that is employed, in the appraisal reports delivered prior to the date
of this Agreement) of Eligible Inventory consisting of leaf tobacco as reflected
on the books and records of Borrower maintained by Borrower in good faith;
provided that as of the date of this Agreement, the Designated Percentage shall
be sixty percent (60%).

         1.21 "Eligible Accounts" shall mean Accounts created by Borrower
which are and continue to be acceptable to Lender based on the criteria set
forth below. In general, Accounts shall be Eligible Accounts if:

                  (a) such Accounts arise from the actual and bona fide sale and
shipment of goods by Borrower or rendition of services by Borrower in the
ordinary course of its business which sale and shipment are completed in all
material respects in accordance with the terms and provisions contained in any
documents related thereto;

                  (b) such Accounts, other than those set forth in Section
1.19(k) below, are not unpaid more than the earlier of ninety (90) days after
the invoice date or forty-five (45) days after the due date of the original
invoice for them;

                  (c) such Accounts comply with the terms and conditions
contained in Section 7.2(c) of this Agreement;

                  (d) such Accounts do not arise from sales on consignment, sale
and return, sale on approval, or other terms under which payment by the account
debtor may be conditional or contingent (it being understood that the right of
an account debtor to return goods to Borrower in the ordinary course of
Borrower's business consistent with past practices shall not constitute
"consignment, sale and return, sale on approval, or other terms under which
payment by the account debtor may be conditional or contingent");

                  (e) the chief executive office of the account debtor with
respect to such Accounts is located in the United States of America, or, at
Lender's option, if either: (i) the account debtor has delivered to Borrower an
irrevocable letter of credit issued or confirmed by a bank satisfactory to
Lender, sufficient to cover such Account, in form and substance satisfactory to
Lender and, if required by Lender, the original of such letter of credit has
been delivered to Lender or Lender's agent and the issuer thereof notified of
the assignment of the proceeds of such letter of credit to Lender, or (ii) such

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Account is subject to credit insurance payable to Lender issued by an insurer
and on terms and in an amount acceptable to Lender, or (iii) such Account is
otherwise acceptable in all respects to Lender (subject to such lending formula
with respect thereto as Lender may determine);

                  (f) such Accounts do not consist of progress billings, bill
and hold invoices or retainage invoices, except as to bill and hold invoices, if
Lender shall have received an agreement in writing from the account debtor, in
form and substance satisfactory to Lender, confirming the unconditional
obligation of the account debtor to take the goods related thereto and pay such
invoice;

                  (g) the account debtor with respect to such Accounts has not
asserted a counterclaim, defense or dispute and does not have, and does not
engage in transactions which may give rise to, any right of setoff against such
Accounts (but the portion of the Accounts not affected by such counterclaim,
defense, dispute or right of setoff may still be deemed Eligible Accounts);

                  (h) there are no facts, events or occurrences which would
impair the validity, enforceability or collectability of such Accounts or reduce
the amount payable or delay payment thereunder;

                  (i) such Accounts are subject to the first priority, valid and
perfected security interest of Lender and any goods giving rise thereto are not,
and were not at the time of the sale thereof, subject to any liens except those
permitted in this Agreement;

                  (j) neither the account debtor nor any officer or employee of
the account debtor with respect to such Accounts is an officer, employee, agent,
family member or Affiliate of Borrower;

                  (k) the account debtors with respect to such Accounts are not
any foreign government, the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, unless, if the
account debtor is the United States of America, any State, political
subdivision, department, agency or instrumentality thereof, (i) such Account
results from sales in the ordinary course of business to the United States
military which arise from only military purchase orders or, in any other case,
upon Lender's request, the Federal Assignment of Claims Act of 1940, as amended
or any similar State or local law, if applicable, has been complied with in a
manner satisfactory to Lender and (ii) such Accounts are not unpaid more than
one hundred twenty (120) days after the date of the original invoice for them;

                  (l) there are no proceedings or actions which are threatened
or pending against the account debtors with respect to such Accounts which are
reasonably likely to result in any material adverse change in any such account
debtor's financial condition;

                  (m) such Accounts of a single account debtor or its Affiliates
do not constitute more than twenty (20%) percent of all otherwise Eligible
Accounts (but the portion of the Accounts not in excess of such percentage may
be deemed Eligible Accounts);

                  (n) such Accounts are not owed by an account debtor who has
Accounts unpaid more than forty-five (45) days after the due date of the
original invoice for them which constitute more than fifty (50%) percent of the
total Accounts of such account debtor;

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                  (o) such Accounts are owed by account debtors whose total
indebtedness to Borrower does not exceed the credit limit with respect to such
account debtors as determined in good faith by Lender from time to time after
Lender has given notice thereof to Borrower (but the portion of the Accounts in
excess of such credit limit arising prior to such notice or not in excess of
such credit limit may still be deemed Eligible Accounts); and

                  (p) such Accounts are owed by account debtors deemed
creditworthy at all times by Lender, as determined by Lender in good faith (and
Lender agrees to use its best efforts to give notice to Borrower of any account
debtor so deemed not to be creditworthy).

General criteria for Eligible Accounts may be established and revised from time
to time by Lender in good faith on ten (10) days prior notice by Lender to
Borrower. Any Accounts which are not Eligible Accounts shall nevertheless be
part of the Collateral.

         1.22 "Eligible Inventory" shall mean Inventory consisting of finished
goods (including any such goods which are reflected in Borrower's books and
records, in accordance with its accounting practices in effect on the date
hereof, as finished goods and manufactured stock) held for resale in the
ordinary course of the business of Borrower and raw materials for such finished
goods (including, without limitation, leaf tobacco) which are acceptable to
Lender based on the criteria set forth below. In general, Eligible Inventory
shall not include (a) work-in-process; (b) spare parts for equipment; (c)
packaging and shipping materials; (d) supplies used or consumed in Borrower's
business; (e) Inventory at premises other than those owned and controlled by
Borrower, except if Lender shall have received an agreement in writing from the
person in possession of such Inventory and/or the owner or operator of such
premises in form and substance satisfactory to Lender acknowledging Lender's
first priority security interest in the Inventory, waiving security interests
and claims by such person against the Inventory and permitting Lender access to,
and the right to remain on, the premises so as to exercise Lender's rights and
remedies and otherwise deal with the Collateral; (f) Inventory subject to a
security interest or lien in favor of any person other than Lender except those
permitted in this Agreement; (g) bill and hold goods; (h) unserviceable,
obsolete or slow moving Inventory; (i) Inventory which is not subject to the
first priority, valid and perfected security interest of Lender; (j) returned,
damaged and/or defective Inventory; and (k) Inventory purchased or sold on
consignment. In addition, Eligible Inventory shall not include any Inventory
which bears the brand-names "Chesterfield", "Lark" or "L&M" (including any
variation or product line extension thereof and any derivative pertaining
thereto) and any Inventory consisting of leaf tobacco used exclusively in
connection with the manufacture by Borrower of finished goods for Vector Tobacco
Inc. together with any finished goods manufactured by Borrower for Vector
Tobacco Inc. General criteria for Eligible Inventory may be established and
revised from time to time by Lender in good faith on ten (10) days prior notice
by Lender to Borrower. Any Inventory which is not Eligible Inventory shall
nevertheless be part of the Collateral.

         1.23 "Environmental Laws" shall mean all foreign, Federal, State and
local laws (including common law), legislation, rules, codes, licenses, permits
(including any conditions imposed therein), authorizations, judicial or
administrative decisions, injunctions or agreements between any Borrower or
Obligor and any Governmental Authority, (a) relating to pollution and the
protection, preservation or restoration of the environment (including air, water
vapor, surface water, ground water, drinking water, drinking water supply,
surface land, subsurface land, plant

                                      -6-
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and animal life or any other natural resource), or to human health or safety,
(b) relating to the exposure to, or the use, storage, recycling, treatment,
generation, manufacture, processing, distribution, transportation, handling,
labeling, production, release or disposal, or threatened release, of Hazardous
Materials, or (c) relating to all laws with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials. The term "Environmental Laws" includes (i) the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Federal
Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Water Act, the Federal Clean Air Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the
Federal Toxic Substances Control Act, the Federal Insecticide, Fungicide and
Rodenticide Act, and the Federal Safe Drinking Water Act of 1974, (ii)
applicable state counterparts to such laws and (iii) any common law or equitable
doctrine that may impose liability or obligations for injuries or damages due
to, or threatened as a result of, the presence of or exposure to any Hazardous
Materials.

         1.24 "Epic" shall mean Epic Holdings Inc., a Delaware corporation, and
its successors and assigns.

         1.25 "Epic Loan" shall mean, collectively, the loans in the aggregate
outstanding principal amount of $190,459,767 made by Epic to Borrower on or
about May 24, 1999.

         1.26 "Epic Note" shall mean the 13.34% Subordinated Promissory Note due
2009 in the original principal amount of $340,459,767 of Borrower payable to
Epic consolidating, restating and evidencing the $150,000,000 remaining
outstanding principal balance of the loans made by Eve to Borrower, which loans
have been transferred by Eve to Epic, and the Epic Loan, dated on or about May
24, 1999.

         1.27 "Equipment" shall mean all of Borrower's now owned and hereafter
acquired equipment, wherever located, including machinery, data processing and
computer equipment and computer hardware and software, whether owned or
licensed, and including embedded software, vehicles, tools, furniture, fixtures,
all attachments, accessions and property now or hereafter affixed thereto or
used in connection therewith, and substitutions and replacements thereof,
wherever located.

         1.28 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, together with all rules, regulations and interpretations thereunder or
related thereto.

         1.29 "ERISA Affiliate" shall mean any person required to be aggregated
with any Borrower, any Obligor or any of its or their respective Subsidiaries
under Sections 414(b), 414(c), 414(m) or 414(o) of the Code.

         1.30 "ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043(c) of ERISA or the regulations issued thereunder, with respect to a
Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section 307
of ERISA; (c) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA),

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whether or not waived; (d) the filing pursuant to Section 412 of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum funding
standard with respect to any Plan; (e) the occurrence of a "prohibited
transaction" with respect to which any Borrower, Guarantor or any of its or
their respective Subsidiaries is a "disqualified person" (within the meaning of
Section 4975 of the Code) or with respect to which any Borrower, Guarantor or
any of its or their respective Subsidiaries could otherwise be liable; (f) a
complete or partial withdrawal by any Borrower, Guarantor or any ERISA Affiliate
from a Multiemployer Plan or a cessation of operations which is treated as such
a withdrawal or notification that a Multiemployer Plan is in reorganization; (g)
the filing of a notice of intent to terminate, the treatment of a Plan amendment
as a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the Pension Benefit Guaranty Corporation to terminate a Plan; (h)
an event or condition which might reasonably be expected to constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any Plan; (i) the imposition of any liability under Title
IV of ERISA, other than the Pension Benefit Guaranty Corporation premiums due
but not delinquent under Section 4007 of ERISA, upon any Borrower, Guarantor or
any ERISA Affiliate in excess of $100,000 and (j) any other event or condition
with respect to a Plan including any Plan subject to Title IV of ERISA
maintained, or contributed to, by any ERISA Affiliate that could reasonably be
expected to result in liability of any Borrower in excess of $100,000.

         1.31 "Eurodollar Rate" shall mean with respect to the Interest Period
for a Eurodollar Rate Loan, the interest rate per annum equal to the arithmetic
average of the rates of interest per annum (rounded upwards, if necessary, to
the next one-thousandth (1/1000th) of one (1%) percent) at which Reference Bank
is offered deposits of United States dollars in the London interbank market (or
other Eurodollar Rate market selected by Borrower and approved by Lender) on or
about 9:00 a.m. (New York time) two (2) Business Days prior to the commencement
of such Interest Period in amounts substantially equal to the principal amount
of the Eurodollar Rate Loans requested by and available to Borrower in
accordance with this Agreement, with a maturity of comparable duration to the
Interest Period selected by or on behalf of Borrower.

         1.32 "Eurodollar Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Adjusted Eurodollar Rate in accordance
with the terms hereof.

         1.33 "Eve" shall mean Eve Holdings Inc., a Delaware corporation, and
its successors and assigns.

         1.34 "Eve Sub" shall mean a wholly-owned special purpose Subsidiary of
Eve.

         1.35 "Event of Default" shall mean the occurrence or existence of any
event or condition described in Section 10.1 hereof.

         1.36 "Excess Availability" shall mean the amount, as determined by
Lender, calculated at any time, equal to: (a) the lesser of (i) the amount of
the Loans available to Borrower as of such time based on the applicable lending
formulas multiplied by the Net Amount of Eligible Accounts and the Value of
Eligible Inventory, as determined by Lender, and subject to the sublimits and
Availability Reserves from time to time established by Lender hereunder and (ii)

                                      -8-
<PAGE>

the Maximum Credit, MINUS (b) the sum of: (i) the amount of all then outstanding
and unpaid Obligations, PLUS (ii) the aggregate amount of all trade payables
owed to suppliers of Borrower which are more than sixty (60) days past due as of
such time.

         1.37 "Existing Loan Agreement" shall have the meaning assigned to it in
the Recitals hereof.

         1.38 "Existing Term Loan" shall mean the term loan under the Mebane
Note.

         1.39 "Financing Agreements" shall mean, collectively, this Agreement,
the Deed of Trust and all notes, guarantees, security agreements, deposit
account control agreements, investment property control agreements, mortgages,
deeds of trust, intercreditor agreements, and all other agreements, documents
and instruments now or at any time hereafter executed and/or delivered by
Borrower or any Obligor in connection with this Agreement.

         1.40 "Funding Bank" shall have the meaning set forth in Section 3.5(a)
hereof.

         1.41 "GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time as set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and pronouncements
of the Financial Accounting Standards Boards which are applicable to the
circumstances as of the date of determination consistently applied, except that,
for purposes of Sections 9.13 and 9.14 hereof, GAAP shall be determined on the
basis of such principles in effect on the date hereof and consistent with those
used in the preparation of the audited financial statements delivered to Lender
prior to the date hereof.

         1.42 "G.D. Sale/Leaseback" shall mean the sale by Borrower of its G.D.
X2 NV Packing Machine having Serial Number 931171610 to VGR Holding Inc.
(formerly BGLS Inc.), the assumption by VGR Holding Inc. (formerly BGLS Inc.) of
all obligations of Borrower to the vendor of such machine and the simultaneous
lease of such machine by VGR Holding Inc. (formerly BGLS Inc.) to Borrower for
an initial term of three years, as extended from time to time, at a monthly rent
not to exceed $50,000 during the term of the lease.

         1.43 "Governmental Authority" shall mean any nation or government, any
state, province, or other political subdivision thereof, any central bank (or
similar monetary or regulatory authority) thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

         1.44 "Hazardous Materials" shall mean any hazardous, toxic or dangerous
substances, materials and wastes, including hydrocarbons (including naturally
occurring or man-made petroleum and hydrocarbons), flammable explosives,
asbestos, urea formaldehyde insulation, radioactive materials, biological
substances, polychlorinated biphenyls, pesticides, herbicides and any other kind
and/or type of pollutants or contaminants (including materials which include
hazardous constituents), sewage, sludge, industrial slag, solvents and/or any
other similar substances, materials, or wastes and including any other
substances, materials or wastes that are or become regulated under any
Environmental Law (including any that are or become classified as hazardous or
toxic under any Environmental Law).

                                      -9-
<PAGE>

         1.45 "Indenture" shall mean the Indenture, dated as of February 14,
1992, among Borrower, the "Guarantors" named therein and Bankers Trust Company,
as Trustee, as the same may be amended, supplemented or otherwise modified from
time to time.

         1.46 "Information Certificate" shall mean the Information Certificate
of Borrower constituting Exhibit A hereto, as such Information Certificate may
be amended, modified or supplemented from time to time.

         1.47 "Intellectual Property" shall mean all of Borrower's now owned and
hereafter arising or acquired: patents, patent rights, patent applications,
copyrights, works which are the subject matter of copyrights, copyright
applications, copyright registrations, trademarks, trade names, trade styles,
trademark and service mark applications, and licenses and rights to use any of
the foregoing; all extensions, renewals, reissues, divisions, continuations, and
continuations-in-part of any of the foregoing; all rights to sue for past,
present and future infringement of any of the foregoing; inventions, trade
secrets, formulae, processes, compounds, drawings, designs, blueprints, surveys,
reports, manuals, and operating standards; goodwill (including any goodwill
associated with any trademark or the license of any trademark); customer and
other lists in whatever form maintained; trade secret rights, copyright rights,
rights in works of authorship, domain names and domain name registration;
software and contract rights relating to computer software programs, in whatever
form created or maintained.

         1.48 "Interest Equivalent" shall have the meaning assigned to it in
Section 6.8(a) hereof.

         1.49 "Interest Period" shall mean for any Eurodollar Rate Loan, a
period of approximately one (1), two (2), or three (3) months duration as
Borrower may elect, the exact duration to be determined in accordance with the
customary practice in the applicable Eurodollar Rate market; provided, that,
Borrower may not elect an Interest Period which will end after the last day of
the then-current term of this Agreement.

         1.50 "Interest Rate" shall mean,

                  (a) Subject to clause (b) of this definition below:

                           (i) as to Prime Rate Loans, a rate equal to one (1%)
percent per annum in excess of the Prime Rate,

                           (ii) as to Eurodollar Rate Loans, a rate equal to
three and one-half (3.50%) percent per annum in excess of the Adjusted
Eurodollar Rate (in each case, based on the Eurodollar Rate applicable for the
Interest Period selected by Borrower, as in effect three (3) Business Days after
the date of receipt by Lender of the request of or on behalf of Borrower for
such Eurodollar Rate Loans in accordance with the terms hereof, whether such
rate is higher or lower than any rate previously quoted to Borrower).

                  (b) Notwithstanding anything to the contrary contained in
clause (a) of this definition, the Interest Rate shall mean the rate of four and
one-half (4.50%) percent per annum in excess of the Prime Rate as to Prime Rate
Loans and the rate of seven (7%) percent per annum in excess of the Adjusted
Eurodollar Rate as to Eurodollar Rate Loans, at Lender's option, without notice,

                                      -10-
<PAGE>

(i) either (A) for the period on and after the date of termination or
non-renewal hereof until such time as all Obligations are indefeasibly paid and
satisfied in full in immediately available funds, or (B) for the period from and
after the date of the occurrence of any Event of Default, and for so long as
such Event of Default is continuing as determined by Lender and (ii) on the
Loans to Borrower at any time outstanding in excess of the lending formulas set
forth in Section 2.1(a) or the Maximum Credit (whether or not such excess(es)
arise or are made with or without Lender's knowledge or consent and whether made
before or after an Event of Default).

         1.51 "Inventory" shall mean all of Borrower's now owned and hereafter
existing or acquired goods, wherever located, which (a) are leased by Borrower
as lessor; (b) are held by Borrower for sale or lease or to be furnished under a
contract of service; (c) are furnished by Borrower under a contract of service;
or (d) consist of raw materials, work-in-process, finished goods or materials
used or consumed in its business.

         1.52 "Investment Property Control Agreement" shall mean an agreement in
writing delivered at Lender's request pursuant to Section 5.2, in form and
substance satisfactory to Lender, by and among Lender, Borrower and any
securities intermediary, commodity intermediary or other person who has custody,
control or possession of any investment property of Borrower acknowledging that
such securities intermediary, commodity intermediary or other person has
custody, control or possession of such investment property on behalf of Lender,
that it will comply with entitlement orders originated by Lender with respect to
such investment property, or other instructions of Lender, and including such
other terms and conditions as Lender may require.

         1.53 "Junior Creditor Agreements" shall have the meaning assigned to it
in the Subordination Agreement.

         1.54 "Junior Creditor Notice" shall have the meaning assigned to it in
the Subordination Agreement.

         1.55 "Leaf Tobacco Sublimit" shall mean Eighteen Million Dollars
($18,000,000), except that (a) during the period beginning on April 15 and
continuing through and including June 15, the Leaf Tobacco Sublimit shall be
Twenty-Five Million Dollars ($25,000,000) and (b) during the period beginning on
June 16 and continuing through and including July 15, the Leaf Tobacco Sublimit
shall be Twenty Million Dollars ($20,000,000).

         1.56 "Lender Payment Account" shall mean account no. 5000000030279 of
Lender at Wachovia Bank, National Association or such other account of Lender as
Lender may from time to time designate to Borrower as the Lender Payment Account
for purposes of this Agreement.

         1.57 "Letter of Credit Accommodations" shall mean the letters of
credit, merchandise purchase or other guaranties which are from time to time
either (a) issued or opened by Lender for the account of Borrower or any Obligor
or (b) with respect to which Lender has agreed to indemnify the issuer or
guaranteed to the issuer the performance by Borrower of its obligations to such
issuer.

         1.58 "Liggett Agreement" shall mean that certain Sales, Marketing and
Distribution Agreement dated September 30, 2002 by and between Borrower and
Liggett Vector Brands Inc.

                                      -11-
<PAGE>

as amended by that certain First Amendment to Sales, Marketing and Distribution
Agreement, dated December 30, 2003 by and between Borrower and Liggett Vector
Brands Inc.

         1.59 "License Agreements" shall have the meaning assigned in Section
9.12 hereof.

         1.60 "Loans" shall mean the loans now or hereafter made by Lender to or
for the benefit of Borrower on a revolving basis (involving advances, repayments
and readvances) as set forth in Section 2.1 hereof.

         1.61 "Maple Guarantee" shall have the meaning assigned to it in Section
9.17(j)(ii) hereof.

         1.62 "Maple Obligations" shall have the meaning assigned to it in
Section 9.17(j)(i) hereof.

         1.63 "Maple Transactions" shall mean, collectively, the organization by
Borrower of 100 Maple, the purchase by Maple of the Mebane Premises, the Mebane
Loan and the Mebane Lease.

         1.64 "Maximum Credit" shall mean the amount of $50,000,000 minus the
outstanding and unpaid principal amount of the loan or loans made by Lender to
Maple.

         1.65 "Mebane Lease" shall mean the lease by Maple to Borrower of the
Mebane Premises.

         1.66 "Mebane Loan" shall mean the borrowing by Maple from Lender of the
sum of $5,040,000 for payment of part of the purchase price paid by Maple for
the Mebane Premises and which is secured by a first mortgage and lien in favor
of Lender on the Mebane Premises.

         1.67 "Mebane Note" shall mean the Amended and Restated Term Promissory
Note dated June 29, 2001 executed by Maple in favor of Lender, as the same may
be amended, supplemented, renewed, extended or replaced from time to time..

         1.68 "Mebane Premises" shall mean the land, buildings, fixtures and
other improvements at 100 Maple Lane, Mebane, North Carolina;

         1.69 "Medallion Guarantee" shall mean the guarantee by Borrower of the
obligations of VGR Acquisition Inc., an affiliate of Borrower, which
subsequently merged into Vector Tobacco Inc., arising under the Medallion
Transaction, as the same may be amended, supplemented, renewed, extended or
replaced from time to time.

         1.70 "Medallion Transaction" shall mean those certain promissory notes
executed and delivered by VGR Acquisition Inc. in connection with the purchase
by VGR Acquisition Inc. of the outstanding capital stock of The Medallion
Company, Inc. and certain assets from Gary Hall.

         1.71 "Multiemployer Plan" shall mean a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by Borrower or
any ERISA Affiliate.

                                      -12-
<PAGE>

         1.72 "Net Amount of Eligible Accounts" shall mean the gross amount of
Eligible Accounts less (a) sales, excise or similar taxes billed to the account
debtor as such and (b) returns, discounts, claims, credits and allowances of any
nature at any time issued, owing, granted, outstanding, available or claimed
with respect thereto, including, without limitation, accrued promotional
reserves (including coupon and sticker programs, if any), shelving accruals,
competitive incentives, profit rebates, and other items representing potential
offsets against Accounts, as determined by Lender in good faith.

         1.73 "Obligations" shall mean any and all Loans, Letter of Credit
Accommodations and all other obligations, liabilities and indebtedness of every
kind, nature and description owing by Borrower to Lender, including principal,
interest, charges, fees, costs and expenses, however evidenced, whether as
principal, surety, endorser, guarantor or otherwise, whether arising under this
Agreement or any of the other Financing Agreements, whether now existing or
hereafter arising, whether arising before. during or after the initial or any
renewal term of this Agreement or after the commencement of any case with
respect to Borrower under the United States Bankruptcy Code or any similar
statute (including, without limitation, the payment of interest and other
amounts which would accrue and become due but for the commencement of such
case), whether direct or indirect. absolute or contingent, joint or several, due
or not due, primary or secondary, liquidated or unliquidated, secured or
unsecured.

         1.74 "Obligor" shall mean any guarantor, endorser, acceptor, surety or
other person liable on or with respect to the Obligations or who is the owner of
any property which is security for the Obligations, other than Borrower.

         1.75 "Order" shall mean the Stipulation and Agreed Order Regarding Stay
of Execution Pending Review and Related Matters entered on May 7, 2001 in Case
No. 94-08273 CA 22 in the Circuit Court of the Eleventh Judicial Circuit in and
for Dade County Florida.

         1.76 "Participant" shall mean any person which at any time participates
with Lender in respect of the Loan, the Letter of Credit Accommodations or other
Obligations or any portion thereof.

         1.77 "Person" or "person" shall mean any individual, sole
proprietorship, partnership, corporation (including, without limitation, any
corporation which elects subchapter S status under the Internal Revenue Code of
1986, as amended), business trust, unincorporated association, joint stock
corporation, trust, joint venture or other entity or any government or any
agency or instrumentality or political subdivision thereof.

         1.78 "Philip Morris" shall mean Philip Morris Incorporated.

         1.79 "Philip Morris Agreement" shall mean the letter agreement dated
November 20, 1998 among Philip Morris, Brooke Group Holding Inc. (formerly known
as Brooke Group Ltd.), Liggett & Myers, Inc. and Borrower and the Definitive
Term Sheet annexed thereto.

         1.80 "Plan" means an employee benefit plan (as defined in Section 3(3)
of ERISA) which Borrower sponsors, maintains, or to which it makes, is making,
or is obligated to make

                                      -13-
<PAGE>

contributions, or in the case of a Multiemployer Plan has made contributions at
any time during the immediately preceding six (6) plan years.

         1.81 "Prime Rate" shall mean the rate from time to time publicly
announced by Wachovia Bank, National Association, or its successors, as its
prime rate, whether or not such announced rate is the best rate available at
such bank.

         1.82 "Prime Rate Loans" shall mean any Loans or portion thereof on
which interest is payable based on the Prime Rate in accordance with the terms
thereof.

         1.83 "Proceeds" shall have the meaning assigned that term under the
Uniform Commercial Code as in effect in any relevant jurisdiction or under other
relevant law and, in any event, shall include, but not be limited to, (i) any
and all proceeds of any insurance, indemnity, warranty or guaranty payable to
Lender or Borrower from time to time with respect to any of the Collateral, (ii)
any and all payments (in any form whatsoever) made or due and payable to
Borrower from time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral by any
governmental authority (or any person acting under color of governmental
authority), and (iii) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral.

         1.84 "Real Property" shall mean all now owned and hereafter acquired
real property of Borrower, including leasehold interests, together with all
buildings, structures, and other improvements located thereon and all licenses,
easements and appurtenances relating thereto, wherever located.

         1.85 "Receivables" shall mean all of the following now owned or
hereafter arising or acquired property of Borrower: (a) all Accounts; (b) all
interest, fees, late charges, penalties, collection fees and other amounts due
or to become due or otherwise payable in connection with any Account; (c) all
payment intangibles of Borrower and other contract rights, chattel paper,
instruments, notes, and other forms of obligations owing to Borrower, whether
from the sale and lease of goods or other property, licensing of any property
(including Intellectual Property or other general intangibles), rendition of
services or from loans or advances by Borrower or to or for the benefit of any
third person (including loans or advances to any Affiliates or Subsidiaries of
Borrower) or otherwise associated with any Accounts or Inventory of Borrower.

         1.86 "Records" shall mean all of Borrower's present and future books of
account of every kind or nature, purchase and sale agreements, invoices, ledger
cards, bills of lading and other shipping evidence, statements, correspondence,
memoranda, credit files and other data, in each case to the extent relating to
the Collateral or any account debtor, together with the tapes, disks, diskettes
and other data and software storage media and devices, file cabinets or
containers in or on which the foregoing are stored (including any rights of
Borrower with respect to the foregoing maintained with or by any other person).

         1.87 "Reference Bank" shall mean Wachovia Bank, National Association or
its successors, or such other bank as Lender may from time to time designate.

         1.88 "Seasonal Period" means the period commencing on April 15 and
continuing through and including June 15 of each year.

                                      -14-
<PAGE>

         1.89 "Subordination Agreement" shall mean that certain subordination
agreement dated as of April 29, 2002 among Lender, The Bank of New York, as
collateral agent for the holders of the 10% Senior Secured Notes due March 31,
2006 of VGR Holding, Inc. (formerly BGLS Inc.) and consented to by Borrower.

         1.90 "Subsidiary" or "subsidiary" shall mean any corporation,
association or organization, active or inactive, as to which more than fifty
(50%) percent of the outstanding voting stock or shares or interests shall now
or hereafter be owned or controlled, directly or indirectly by any Person, any
Subsidiary of such Person, or any Subsidiary of such Subsidiary.

         1.91 "Supplemental Availability Amount" shall mean $0.

         1.92 "Supplemental Availability Limit" shall mean $0.

         1.93 "Twelve Million Dollar VGR Contribution" shall mean the capital
contribution in the amount of twelve million dollars ($12,000,000) made by VGR
Holding Inc. (formerly BGLS Inc.) to Borrower.

         1.94 "Uniform Commercial Code" or "UCC" shall mean the Uniform
Commercial Code as in effect in the State of New York, and any successor
statute, as in effect from time to time (except that terms used herein which are
defined in the Uniform Commercial Code as in effect in the State of New York on
the date hereof shall continue to have the same meaning notwithstanding any
replacement or amendment of such statute except as Lender may otherwise
determine).

         1.95 "Value" shall mean, as determined by Lender in good faith, with
respect to Inventory, the lower of (a) cost computed on a first-in-first-out
basis (except that Inventory consisting of leaf tobacco shall be computed on an
average cost basis) in accordance with GAAP or (b) market value.

         1.96 "Vector Agreements" shall mean, collectively, (a) that certain
Sales, Marketing and Distribution Agreement dated September 30, 2002 by and
between Liggett Vector Brands Inc. and Vector Tobacco Inc., as amended, (b)
Contract Manufacturing Agreement dated as of January 2, 2005 by and between
Borrower and Vector Tobacco Inc., (c) Trademark Assignments dated as of January
1, 2004 by Eve to and in favor of Vector Tobacco Inc., (d) Asset Purchase
Agreement dated as of January 1, 2004 by and between Eve and Vector Tobacco Inc.
and (e) Promissory Note dated January 1, 2004 made by Vector Tobacco Inc. and
payable to Eve.

         1.97 "VGRH Guarantee" shall mean the guarantee by Borrower of the
obligations of VGR Holding Inc. (formerly BGLS Inc.), an affiliate of Borrower,
arising under the VGRH Transaction, as the same may be amended, supplemented,
renewed, extended or replaced from time to time.

         1.98 "VGRH Transaction" shall mean certain financing arrangements
between VGR Holding Inc. (formerly BGLS Inc.), an affiliate of Borrower, and
entities affiliated with Trust Company of the West.

                                      -15-
<PAGE>

         1.99 "Working Capital" shall mean as to any Person, at any time, in
accordance with GAAP, on a consolidated basis for such Person and its
subsidiaries (if any), the amount equal to the difference between: (a) the
aggregate net book value of all current assets of such Person and its
subsidiaries (as determined in accordance with GAAP), excluding deferred taxes,
calculating the book value of inventory for this purpose on a first-in-first-out
basis (except that inventory consisting of leaf tobacco shall be computed on an
average cost basis), and (b) all current liabilities of such Person and its
subsidiaries (as determined in accordance with GAAP); PROVIDED, THAT, as to
Borrower, for purposes of Section 9.13, the following shall not be considered
current liabilities (whether or not classified as current liabilities in
accordance with GAAP): the liabilities of Borrower and its subsidiaries to
Lender under this Agreement.

SECTION 2. CREDIT FACILITIES

         2.1 LOANS.

                  (a) Subject to, and upon the terms and conditions contained
herein, Lender agrees to make Loans to Borrower from time to time in amounts
requested by Borrower up to the amount equal to the sum of:

                           (i) the lesser of: (A) eighty-five percent (85%) of
the Net Amount of Eligible Accounts, or (B) $20,000,000 PLUS

                           (ii) the lesser of: (A) the sum of eighty percent
(80%) (or during the Seasonal Period, 85%) of the Value of Eligible Inventory
consisting of packaged cigarettes (whether reflected in Borrower's books and
records, in accordance with its accounting practices in effect on the date
hereof, as finished goods or manufactured stock) PLUS the lower of the
Designated Percentage of the Value of Eligible Inventory consisting of leaf
tobacco or the Leaf Tobacco Sublimit at such time PLUS zero percent (0%) of the
Value of Eligible Inventory consisting of raw materials, other than leaf
tobacco, for the manufacture of cigarettes, or (B)$40,000,000 (except that
during the Seasonal Period, such amount shall be $45,000,000), LESS

                           (iii) any Availability Reserves; LESS

                           (iv) the Borrowing Base Block; PLUS

                           (v) the Supplemental Availability Amount not to
exceed the Supplemental Availability Limit.

                  (b) Except in Lender's discretion, the aggregate amount of
Loans to be made against the respective categories of Eligible Inventory,
consisting of finished goods (including any such goods which are reflected in
Borrower's books and records, in accordance with its accounting practices in
effect on the date hereof, as finished goods and manufactured stock), leaf
tobacco and other raw materials, pursuant to the lending formulas set forth in
Section 2.l(a)(ii) above, shall not exceed eight-five percent (85%) of the
orderly liquidation values of all such combined categories of Eligible
Inventory, assuming an orderly liquidation sale within ninety (90) days, as
indicated by appraisal reports rendered from time to time pursuant to Section
7.3(d).

                                      -16-
<PAGE>

                  (c) Lender may, in its discretion, from time to time, upon not
less than ten (10) days prior notice to Borrower, (i) reduce the lending formula
with respect to Eligible Accounts to the extent that Lender determines in good
faith that: (A) the dilution with respect to the Accounts for any period (based
on the ratio of (1) the aggregate amount of reductions in Accounts other than as
a result of payments in cash or items which are deducted in determining the Net
Amount of Eligible Accounts to (2) the aggregate amount of total sales) has
increased in any material respect or may be reasonably I anticipated to increase
in any material respect above historical levels, or (B) the general
creditworthiness of account debtors has declined or (ii) reduce the lending
formula(s) with respect to Eligible Inventory to the extent that Lender
determines in good faith that: (A) the number of days of the turnover of the
Inventory for any period has changed in any material respect or (B) the Value of
the Eligible Inventory, or any category thereof, has decreased, or (C) the mix
among Eligible Inventory of premium brands mass sell generic/private label and
military categories of packaged cigarettes has materially changed from that
existing on March 31, 2004 if such change shall be deemed in good faith by
Lender to adversely affect the Collateral, or (D) the nature and quality of the
Inventory has materially deteriorated. In determining whether to reduce the
lending formula(s), Lender may consider events, conditions, contingencies or
risks which are also considered in determining Eligible Accounts, Eligible
Inventory or in establishing Availability Reserves.

                  (d) Except in Lender's discretion, the aggregate amount of the
Loans and the Letter of Credit Accommodations outstanding at any time shall not
exceed the Maximum Credit. In the event that the outstanding amount of any
component of the Loans, or the aggregate amount of the outstanding Loans and
Letter of Credit Accommodations, exceed the amounts available under the lending
formulas, the sublimits for Letter of Credit Accommodations set forth in Section
2.2(d) or the Maximum Credit, as applicable, such event shall not limit, waive
or otherwise affect any rights of Lender in that circumstances or on any future
occasions and Borrower shall, upon demand by Lender, which may be made at any
time or from time to time, immediately repay to Lender the entire amount of any
such excess(es) for which payment is demanded.

         2.2 LETTER OF CREDIT ACCOMMODATIONS.

                  (a) Subject to, and upon the terms and conditions contained
herein, at the request of Borrower, Lender agrees to provide or arrange for
Letter of Credit Accommodations for the account of Borrower containing terms and
conditions acceptable to Lender, Borrower and the issuer thereof. Any payments
made by Lender to any issuer thereof and/or related parties in connection with
the Letter of Credit Accommodations shall constitute additional Loans to
Borrower pursuant to this Section 2.

                  (b) In addition to any charges, fees or expenses charged by
any bank or issuer in connection with the Letter of Credit Accommodations,
Borrower shall pay to Lender a letter of credit fee at a rate equal to two
percent (2%) per annum on the daily outstanding balance of the Letter of Credit
Accommodations for the immediately preceding month (or part thereof), payable in
arrears as of the first day of each succeeding month; provided that if any of
the Letter of Credit Accommodations have expired with any amount remaining
unpaid thereunder, such Letter of Credit Accommodation shall continue to be
included in the daily outstanding balance of the Letter of Credit Accommodations
for purposes of calculating such letter of credit fee until the

                                      -17-
<PAGE>

earlier of (i) the payment under the Letter of Credit Accommodation of all
amounts which were unpaid upon its expiration date or (ii) a period of thirty
(30) days after the stated expiration date of such Letter of Credit
Accommodation. Such letter of credit fee shall be calculated on the basis of a
three hundred sixty (360) day year and actual days elapsed and the obligation of
Borrower to pay such fee shall survive the termination or non-renewal of this
Agreement.

                  (c) Borrower shall give Lender two (2) Business Days' prior
written notice of Borrower's request for the issuance of a Letter of Credit
Accommodation. Such notice shall be irrevocable and shall specify the original
face amount of the Letter of Credit Accommodation requested, the effective date
(which date shall be a Business Day and in no event shall be a date less than
ten (10) days prior to the end of the then current term of this Agreement) of
issuance of such requested Letter of Credit Accommodation, whether such Letter
of Credit Accommodations may be drawn in a single or in partial draws, the date
on which such requested Letter of Credit Accommodation is to expire (which date
shall be a Business Day), the purpose for which such Letter of Credit
Accommodation is to be issued, and the beneficiary of the requested Letter of
Credit Accommodation. Borrower shall attach to such notice the proposed terms of
the Letter of Credit Accommodation.

                  (d) In addition to being subject to the satisfaction of the
applicable conditions precedent contained in Section 4 hereof and the other
terms and conditions contained herein, no Letter of Credit Accommodations shall
be available unless each of the following conditions precedent have been
satisfied in a manner satisfactory to Lender: (i) Borrower shall have delivered
to the proposed issuer of such Letter of Credit Accommodation at such times and
in such manner as such proposed issuer may require, an application, in form and
substance reasonably satisfactory to such proposed issuer and Lender, for the
issuance of the Letter of Credit Accommodation and such other documents as may
be required pursuant to the terms thereof, and the form and terms of the
proposed Letter of Credit Accommodation shall be reasonably satisfactory to
Lender and such proposed issuer, (ii) as of the date of issuance, no order of
any court, arbitrator or other Governmental Authority shall purport by its terms
to enjoin or restrain money center banks generally from issuing letters of
credit of the type and in the amount of the proposed Letter of Credit
Accommodation, and no law, rule or regulation applicable to money center banks
generally and no request or directive (whether or not having the force of law)
from any Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that the proposed issuer of such Letter of
Credit Accommodation refrain from, the issuance of letters of credit generally
or the issuance of such Letters of Credit Accommodation; and (iii) the Excess
Availability, prior to giving effect to any Availability Reserves with respect
to such Letter of Credit Accommodations, on the date of the proposed issuance of
any Letter of Credit Accommodations, shall be equal to or greater than: (A) if
the proposed Letter of Credit Accommodation is for the purpose of purchasing
Eligible Inventory consisting of leaf tobacco Inventory and the documents of
title with respect thereto are consigned to the issuer, the sum of (1) the
percentage equal to one hundred percent (100%) minus the then applicable
percentage with respect to Eligible Inventory consisting of leaf tobacco set
forth in Section 2.1(a) multiplied by the Value of such Eligible Inventory, plus
(2) freight, taxes, duty and other amounts which Lender estimates must be paid
in connection with such Inventory upon arrival and for delivery to one of
Borrower's locations for Eligible Inventory within the United States of America
and (B) if the proposed Letter of Credit Accommodation is for any other purpose
or the documents of title are not consigned to the issuer

                                      -18-
<PAGE>

in connection with a Letter of Credit Accommodation for the purpose of
purchasing Inventory, an amount equal to one hundred percent (100%) of the face
amount thereof and all other commitments and obligations made or incurred by
Lender with respect thereto. Effective on the issuance of each Letter of Credit
Accommodation, an Availability Reserve shall be established in the applicable
amount set forth in Section 2.2(d)(iii)(A) or Section 2.2(d)(iii)(B).

                  (e) Except in Lender's discretion, (i) the amount of all
outstanding Letter of Credit Accommodations and all other commitments and
obligations made or incurred by Lender in connection therewith, shall not at any
time exceed $5,000,000 and (ii) the amount of all outstanding Letter of Credit
Accommodations for the purpose of purchasing Eligible Inventory and all other
commitments and obligations made or incurred by Lender in connection therewith
shall not at any time exceed: (A) $30,000,000 minus (B) the amount of the then
outstanding Loans based on Eligible Inventory pursuant to Section 2.1(a)(ii)
hereof. At any time an Event of Default exists or has occurred and is
continuing, upon Lender's request, Borrower will either furnish cash collateral
to secure the reimbursement obligations to the issuer in connection with any
Letter of Credit Accommodations or furnish cash collateral to Lender for the
Letter of Credit Accommodations, and in either case, the Loans otherwise
available to Borrower shall not be reduced as provided in Section 2.2(d) to the
extent of such cash collateral.

                  (f) Borrower shall indemnify and hold Lender harmless from and
against any and all losses, claims, damages, liabilities, costs and expenses
which Lender may suffer or incur in connection with any Letter of Credit
Accommodations and any documents, drafts or acceptances relating thereto,
including, but not limited to, any losses, claims, damages, liabilities, costs
and expenses due to any action taken by any issuer or correspondent with respect
to any Letter of Credit Accommodation, other than any such loss, claim, damage,
liability, cost or expense resulting only from the gross negligence or willful
misconduct of Lender. Borrower assumes all risks with respect to the acts or
omissions of the drawer under or beneficiary of any Letter of Credit
Accommodation and for such purposes the drawer or beneficiary shall be deemed
Borrower's agent Borrower assumes all risks for, and agrees to pay, all foreign,
Federal, State and local taxes, duties and levies relating to any good subject
to any Letter of Credit Accommodations or any documents, drafts or acceptances
thereunder. Borrower hereby releases and holds Lender harmless from and against
any acts, waivers, errors, delays or omissions, whether caused by Borrower, by
any issuer or correspondent or otherwise with respect to or relating to any
Letter of Credit Accommodation. The provisions of this Section 2.2(f) shall
survive the payment of Obligations and the termination or non-renewal of this
Agreement.

                  (g) In connection with Inventory purchased pursuant to Letter
of Credit Accommodations, Borrower shall, at Lender's request, instruct all
suppliers, carriers, forwarders, customs brokers, warehouses or others receiving
or holding cash, checks, Inventory, documents or instruments in which Lender
holds a security interest to deliver them to Lender and/or subject to Lender's
order, and if they shall come into Borrower's possession, to deliver them, upon
Lender's request, to Lender in their original form. Borrower shall also, at
Lender's request, designate Lender as the consignee on all bills of lading and
other negotiable and non-negotiable documents.

                  (h) So long as no Event of Default exists or has occurred and
is continuing, Borrower may (i) approve or resolve any questions of
non-compliance of documents, (ii) give

                                      -19-
<PAGE>

any instructions as to acceptance or rejection of any documents or goods, (iii)
execute any and all applications for steamship or airway guaranties, indemnities
or delivery orders, and (iv) with Lender's consent, grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents, and agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letter of Credit Accommodations, or documents, drafts or
acceptances thereunder or any letters of credit included in the Collateral.

                  (i) Borrower hereby irrevocably authorizes and directs any
issuer of a Letter of Credit Accommodation to name Borrower as the account party
therein and to deliver to Lender all instruments, documents and other writings
and property received by issuer pursuant to the Letter of Credit Accommodations
and to accept and rely upon Lender's instructions and agreements with respect to
all matters arising in connection with the Letter of Credit Accommodations or
the applications therefor. Nothing contained herein shall be deemed or construed
to grant Borrower any right or authority to pledge the credit of Lender in any
manner. Lender shall have no liability of any kind with respect to any Letter of
Credit Accommodation provided by an issuer other than Lender unless Lender has
duly executed and delivered to such issuer the application or a guarantee or
indemnification in writing with respect to such Letter of Credit Accommodation.
Borrower shall be bound by any reasonable interpretation made in good faith by
Lender, or any other issuer or correspondent under or in connection with any
Letter of Credit Accommodation or any documents, drafts or acceptances
thereunder, notwithstanding that such interpretation may be inconsistent with
any instructions of Borrower.

                  (j) At any time an Event of Default exists or has occurred and
is continuing, Lender shall have the right and authority to, and Borrower shall
not, without the prior written consent of Lender, (i) approve or resolve any
questions of non-compliance of documents, (ii) give any instructions as to
acceptance or rejection of any documents or goods, (iii) execute any and all
applications for steamship or airway guaranties, indemnities or delivery orders,
(iv) grant any extensions of the maturity of, time of payments for, or time of
presentation of, any drafts, acceptances, or documents, and (v) agree to any
amendments, renewals, extensions, modifications, changes or cancellations of any
of the terms or conditions of any of the applications, Letter of Credit
Accommodations, or documents, drafts or acceptances thereunder or any letters of
credit included in the Collateral. Lender may take such actions either in its
own name or in Borrower's name.

                  (k) Any rights, remedies, duties or obligations granted or
undertaken by Borrower to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement in favor of any issuer or
correspondent relating to any Letter of Credit Accommodation, shall be deemed to
have been granted or undertaken by Borrower to Lender. Any duties or obligations
undertaken by Lender to any issuer or correspondent in any application for any
Letter of Credit Accommodation, or any other agreement by Lender in favor of any
issuer or correspondent to the extent relating to any Letter of Credit
Accommodation, shall be deemed to have been undertaken by Borrower to Lender and
to apply in all respects to Borrower.

         2.3 AVAILABILITY RESERVES. All Loans otherwise available to Borrower
pursuant to the lending formulas and subject to the Maximum Credit and other

                                      -20-
<PAGE>

applicable limits hereunder shall be subject to Lender's continuing right to
establish and revise Availability Reserves.

         2.4 MEBANE LOAN. Lender has made the Mebane Loan to Maple, which loan
is secured by a first mortgage and lien in favor of Lender on the Mebane
Premises and all guarantees, security agreements and other agreements, documents
and instruments now or at any time hereafter executed and/or delivered by
Borrower, Maple or any other party in connection therewith, and is entitled to
all of the benefits and rights of this Agreement, which loan shall be repaid
according to the terms of the Mebane Note. From and after March 1, 2004, Maple
shall be required to make the regularly scheduled principal installments as set
forth in the Mebane Note commencing with March 1, 2004. Any regularly scheduled
principal installments not made during the period commencing on September 1,
2002 and continuing through and including March 1, 2004 shall be repaid with the
final principal installment due under the Mebane Note. Nothing contained herein
shall be deemed to be a waiver or discharge of any indebtedness due under the
Mebane Note and notwithstanding the foregoing, all regularly scheduled payments
of interest shall be due and payable under the Mebane Note in accordance with
its terms as of September 1, 2002. Upon the occurrence of an Event of Default or
if this Agreement shall be terminated or not renewed for any reason whatsoever,
then and in any such event, in addition to all rights and remedies of Lender
hereunder, applicable law or otherwise, all such rights and remedies being
cumulative, not exclusive and enforceable alternatively, successively and
concurrently, Lender may, at its option, declare all amounts owing under the
Mebane Note to be due and payable, whereupon the then unpaid balance of the
Mebane Note, together with all interest accrued thereon, shall forthwith become
due and payable, together with interest accruing thereafter at the then
applicable interest rate set forth in the Mebane Note until the indebtedness
evidenced by the Mebane Note is paid in full, plus the costs and expenses of
collection of the Mebane Note, including but not limited to, attorneys' fees and
legal expenses.

         2.5 EXISTING LOAN. All outstanding Loans under the Existing Loan
Agreement as of the date hereof shall be deemed to be outstanding hereunder as
of the date hereof.

SECTION 3. INTEREST AND FEES

         3.1 INTEREST.

                  (a) Borrower shall pay to Lender interest on the outstanding
principal amount of the Loans at the Interest Rate. All interest accruing
hereunder on and after the date of any Event of Default or termination hereof
shall be payable on demand.

                  (b) Borrower may from time to time request Eurodollar Rate
Loans or may request that Prime Rate Loans be converted to Eurodollar Rate Loans
or that any existing Eurodollar Rate Loans continue for an additional Interest
Period. Such request from Borrower shall specify the amount of the Eurodollar
Rate Loans or the amount of the Prime Rate Loans to be converted to Eurodollar
Rate Loans or the amount of the Eurodollar Rate Loans to be continued (subject
to the limits set forth below) and the Interest Period to be applicable to such
Eurodollar Rate Loans. Subject to the terms and conditions contained herein,
three (3) Business Days after receipt by Lender of such a request from Borrower,
such Eurodollar Rate Loans shall be made or Prime Rate Loans shall be converted
to Eurodollar Rate Loans or such Eurodollar

                                      -21-
<PAGE>

Rate Loans shall continue, as the case may be, provided, that, (i) no Default or
Event of Default shall exist or have occurred and be continuing, (ii) no party
hereto shall have sent any notice of termination of this Agreement, Borrower
shall have complied with such customary procedures as are established by Lender
and specified by Lender to Borrower from time to time for requests by Borrower
for Eurodollar Rate Loans, (iii) no more than four (4) Interest Periods may be
in effect at any one time, (iv) the aggregate amount of the Eurodollar Rate
Loans must be in an amount not less than $1,000,000 or an integral multiple of
$500,000 in excess thereof, (v) the maximum amount of the Eurodollar Rate Loans
in the aggregate at any time requested by Borrower shall not exceed the amount
equal to ninety (90%) percent of the lowest principal amount of the Loans which
it is anticipated will be outstanding during the applicable Interest Period, in
each case as determined by Lender in good faith (but with no obligation of
Lender to make such Loans), and (vi) Lender shall have determined that the
Interest Period or Adjusted Eurodollar Rate is available to Lender and can be
readily determined as of the date of the request for such Eurodollar Rate Loan
by Borrower. Any request by or on behalf of Borrower for Eurodollar Rate Loans
or to convert Prime Rate Loans to Eurodollar Rate Loans or to continue any
existing Eurodollar Rate Loans shall be irrevocable. Notwithstanding anything to
the contrary contained herein, Lender shall not be required to purchase United
States Dollar deposits in the London interbank market or other applicable
Eurodollar Rate market to fund any Eurodollar Rate Loans, but the provisions
hereof shall be deemed to apply as if Lender had purchased such deposits to fund
the Eurodollar Rate Loans.

                  (c) Any Eurodollar Rate Loans shall automatically convert to
Prime Rate Loans upon the last day of the applicable Interest Period, unless
Lender has received and approved a request to continue such Eurodollar Rate Loan
at least three (3) Business Days prior to such last day in accordance with the
terms hereof. Any Eurodollar Rate Loans shall, at Lender's option, upon notice
by Lender to Borrower, be subsequently converted to Prime Rate Loans in the
event that this Agreement shall terminate or not be renewed. Borrower shall pay
to Lender, upon demand by Lender (or Lender may, at its option, charge any loan
account of Borrower) any amounts required to compensate Lender or Participant
for any loss (including loss of anticipated profits), cost or expense incurred
by such person, as a result of the conversion of Eurodollar Rate Loans to Prime
Rate Loans pursuant to any of the foregoing.

                  (d) Interest shall be payable by Borrower to Lender monthly in
arrears not later than the first day of each calendar month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed. The interest rate on non-contingent Obligations (other than Eurodollar
Rate Loans) shall increase or decrease by an amount equal to each increase or
decrease in the Prime Rate effective on the first day of the month after any
change in such Prime Rate is announced based on the Prime Rate in effect on the
last day of the month in which any such change occurs. In no event shall charges
constituting interest payable by Borrower to Lender exceed the maximum amount or
the rate permitted under any applicable law or regulation, and if any such part
or provision of this Agreement is in contravention of any such law or
regulation, such part or provision shall be deemed amended to conform thereto.

         3.2 CLOSING FEE. Borrower shall pay to Lender as a closing fee the
amount of $500,000, which shall be fully earned as of the date hereof. The
closing fee shall be paid in five (5) installments of $100,000 each to be made

                                      -22-
<PAGE>

on (a) the date hereof, (b) 6 months after the date hereof, (c) 12 months after
the date hereof, (d) 18 months after the date hereof and (e) 24 months after the
date hereof.

         3.3 SERVICING FEE. Borrower shall pay to Lender monthly a servicing fee
in an amount equal to $10,000 in respect of Lender's services for each month (or
part thereof) while this Agreement remains in effect and for so long thereafter
as any of the Obligations are outstanding, which fee shall be fully earned as of
and payable in advance on the date hereof and on the first day of each month
hereafter.

         3.4 UNUSED LINE FEE. Borrower shall pay to Lender monthly an unused
line fee at a rate equal to one-quarter of one percent (.25%) per annum
calculated upon the amount by which the Maximum Credit exceeds the average daily
principal balance of the outstanding Loans and Letter of Credit Accommodations
during the immediately preceding month (or part thereof) while this Agreement is
in effect and for so long thereafter as any of the Obligations are outstanding,
which fee shall be payable on the first day of each month in arrears.

         3.5 CHANGES IN LAWS AND INCREASED COSTS OF LOANS.

                  (a) If after the date hereof, either (i) any change in, or in
the interpretation of, any law or regulation is introduced, including, without
limitation, with respect to reserve requirements, applicable to Lender or any
banking or financial institution from whom Lender borrows funds or obtains
credit (a "Funding Bank"), or (ii) a Funding Bank or Lender complies with any
future guideline or request from any central bank or other Governmental
Authority or (iii) a Funding Bank or Lender determines that the adoption of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, 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 has or would have the effect described
below, or a Funding Bank or Lender complies with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, and in the case of any event set
forth in this clause (iii), such adoption, change or compliance has or would
have the direct or indirect effect of reducing the rate of return on Lender's
capital as a consequence of its obligations hereunder to a level below that
which Lender could have achieved but for such adoption, change or compliance
(taking into consideration the Funding Bank's or Lender's policies with respect
to capital adequacy) by an amount deemed by Lender to be material, and the
result of any of the foregoing events described in clauses (i), (ii) or (iii) is
or results in an increase in the cost to Lender of funding or maintaining the
Loans or the Letter of Credit Accommodations, then Borrower shall from time to
time upon demand by Lender pay to Lender additional amounts sufficient to
indemnify Lender against such increased cost on an after-tax basis (after taking
into account applicable deductions and credits in respect of the amount
indemnified). A certificate as to the amount of such increased cost shall be
submitted to Borrower by Lender and shall be conclusive, absent manifest error.

                  (b) If prior to the first day of any Interest Period, (i)
Lender shall have determined in good faith (which determination shall be
conclusive and binding upon Borrower) that, by reason of circumstances affecting
the relevant market, adequate and reasonable means do not exist for ascertaining
the Eurodollar Rate for such Interest Period, (ii) the Eurodollar Rate

                                      -23-
<PAGE>

determined or to be determined for such Interest Period will not adequately and
fairly reflect the cost to Lender of making or maintaining Eurodollar Rate Loans
during such Interest Period, or (iii) Dollar deposits in the principal amounts
of the Eurodollar Rate Loans to which such Interest Period is to be applicable
are not generally available in the London interbank market, Lender shall give
telecopy or telephonic notice thereof to Borrower as soon as practicable
thereafter, and will also give prompt written notice to Borrower when such
conditions no longer exist. If such notice is given (A) any Eurodollar Rate
Loans requested to be made on the first day of such Interest Period shall be
made as Prime Rate Loans, (B) any Loans that were to have been converted on the
first day of such Interest Period to or continued as Eurodollar Rate Loans shall
be converted to or continued as Prime Rate Loans and (C) each outstanding
Eurodollar Rate Loan shall be converted, on the last day of the then-current
Interest Period thereof, to Prime Rate Loans. Until such notice has been
withdrawn by Lender, no further Eurodollar Rate Loans shall be made or continued
as such, nor shall Borrower have the right to convert Prime Rate Loans to
Eurodollar Rate Loans.

                  (c) Notwithstanding any other provision herein, if the
adoption of or any change in any law, treaty, rule or regulation or final,
non-appealable determination of an arbitrator or a court or other Governmental
Authority or in the interpretation or application thereof occurring after the
date hereof shall make it unlawful for Lender to make or maintain Eurodollar
Rate Loans as contemplated by this Agreement, (i) Lender shall promptly give
written notice of such circumstances to Borrower (which notice shall be
withdrawn whenever such circumstances no longer exist), (ii) the commitment of
Lender hereunder to make Eurodollar Rate Loans, continue Eurodollar Rate Loans
as such and convert Prime Rate Loans to Eurodollar Rate Loans shall forthwith be
canceled and, until such time as it shall no longer be unlawful for Lender to
make or maintain Eurodollar Rate Loans, Lender shall then have a commitment only
to make a Prime Rate Loan when a Eurodollar Rate Loan is requested and (iii)
Lender's Loans then outstanding as Eurodollar Rate Loans, if any, shall be
converted automatically to Prime Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Rate Loan
occurs on a day which is not the last day of the then current Interest Period
with respect thereto, Borrower shall pay to Lender such amounts, if any, as may
be required pursuant to Section 3.3(d) below.

                  (d) Borrower shall indemnify Lender and to hold Lender
harmless from any loss or expense which Lender may sustain or incur as a
consequence of (i) default by Borrower in making a borrowing of, conversion into
or extension of Eurodollar Rate Loans after Borrower has given a notice
requesting the same in accordance with the provisions of this Agreement, (ii)
default by Borrower in making any prepayment of a Eurodollar Rate Loan after
Borrower has given a notice thereof in accordance with the provisions of this
Agreement, and (iii) the making of a prepayment of Eurodollar Rate Loans on a
day which is not the last day of an Interest Period with respect thereto. With
respect to Eurodollar Rate Loans, such indemnification may include an amount
equal to the excess, if any, of (A) the amount of interest which would have
accrued on the amount so prepaid, or not so borrowed, converted or extended, for
the period from the date of such prepayment or of such failure to borrow,
convert or extend to the last day of the applicable Interest Period (or, in the
case of a failure to borrow, convert or extend, the Interest Period that would
have commenced on the date of such failure) in each case at the applicable rate
of interest for such Eurodollar Rate Loans provided for herein over (B) the

                                      -24-
<PAGE>

amount of interest (as determined by Lender) which would have accrued to Lender
on such amount by placing such amount on deposit for a comparable period with
leading banks in the interbank Eurodollar market. This covenant shall survive
the termination or non-renewal of this Agreement and the payment of the
Obligations.

SECTION 4. CONDITIONS PRECEDENT TO THIS AGREEMENT

         4.1 CONDITIONS PRECEDENT TO EFFECTIVENESS OF THIS AGREEMENT. Each of
the following is a condition precedent to Lender entering into this Agreement:

                  (a) All requisite corporate action and proceedings in
connection with this Agreement and the other Financing Agreements shall be
satisfactory in form and substance to Lender, and Lender shall have received all
information and copies of all documents, including, without limitation, records
of requisite corporate action and proceedings which Lender may have requested in
connection therewith, such documents where requested by Lender or its counsel to
be certified by appropriate corporate officers or governmental authorities;

                  (b) Lender shall have received payment of that portion of the
closing fee that is required to be paid on the date hereof pursuant to Section
3.2; and

                  (c) The other Financing Agreements and all instruments and
documents hereunder and thereunder shall have been duly executed and delivered
to Lender, in form and substance satisfactory to Lender.

         4.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTER OF CREDIT
ACCOMMODATIONS. Each of the following is an additional condition precedent to
Lender making any future Loans and/or providing Letter of Credit Accommodations
to Borrower:

                  (a) all representations and warranties contained herein and in
the other Financing Agreements shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of the making of each such Loan or providing
each such Letter of Credit Accommodation and after giving effect thereto (except
as to those representations and warranties expressly made as of a specified
earlier date, in which case they shall be true and correct as of such earlier
date); and

                  (b) no Event of Default, and no event or condition which, with
notice or passage of time or both, would constitute an Event of Default, shall
exist or have occurred and be continuing, on and as of the date of the making of
such Loan or providing each such Letter of Credit Accommodation and after giving
effect thereto.

SECTION 5. GRANT AND PERFECTION OF SECURITY INTEREST

         5.1 GRANT OF SECURITY INTEREST. To secure payment and performance of
all Obligations, Borrower hereby grants to Lender, and confirms, reaffirms and
restates its prior grant to Lender of, a continuing security interest in, a lien
upon, and a right of set off against, and hereby assigns to Lender as security,
all personal and real property and fixtures and interests in property and
fixtures of Borrower, whether now owned or hereafter acquired or existing, and

                                      -25-
<PAGE>

wherever located (together with all other collateral security for the
Obligations at any time granted to or held or acquired by Lender, collectively,
the "Collateral"), including:

                  (a) all Accounts arising from the sale or other disposition of
Inventory;

                  (b) all general intangibles, including, without limitation,
Intellectual Property, owned, arising in connection with, relating to, or
constituting identifiable proceeds of, any of the Accounts that constitute
Collateral, any of the Inventory or any of the other Collateral;

                  (c) all Inventory;

                  (d) all chattel paper (including all tangible and electronic
chattel paper), in each case arising in connection with or related to, or
constituting identifiable proceeds of, any of the Accounts that constitute
Collateral, any Inventory or any of the other Collateral;

                  (e) all instruments (including all promissory notes), in each
case arising in connection with or related to, or constituting identifiable
proceeds of, any of the Accounts that constitute Collateral, any Inventory or
any of the other Collateral;

                  (f) all documents arising in connection with or related to, or
constituting identifiable proceeds of, any of the Accounts that constitute
Collateral, any Inventory or any of the other Collateral;

                  (g) all deposit accounts;

                  (h) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights, in each case arising in
connection with or related to, or constituting identifiable proceeds of, any of
the Accounts that constitute Collateral, any Inventory or any of the other
Collateral;

                  (i) all supporting obligations and all present and future
liens, security interests, rights, remedies, title and interest in, to and in
respect of Receivables arising from the sale or other disposition of Inventory
or any of the other Collateral, including (i) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (ii) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (iii) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables arising from the sale or other disposition of
Inventory or any of the other Collateral, including returned, repossessed and
reclaimed goods, and (iv) deposits by and property of account debtors or other
persons securing the obligations of account debtors;

                  (j) all (i) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts), in each case arising in connection
with or related to, or constituting identifiable proceeds of any Collateral and
(ii) monies, credit balances, deposits and other property of Borrower now or
hereafter held or received by or in transit to Lender or its Affiliates or at
any other depository or other institution from or for the account of Borrower,

                                      -26-
<PAGE>

whether for safekeeping, pledge, custody, transmission, collection or otherwise
(including, without limitation, any Cash Collateral at any time held by Lender);

                  (k) all commercial tort claims, including, without limitation,
those identified in the Information Certificate, in each case arising in
connection with or related to, or constituting identifiable proceeds of, any of
the Accounts that constitute Collateral, any Inventory or any of the other
Collateral;

                  (l) to the extent not otherwise described above, all
Receivables arising from the sale or other disposition of Inventory or of any
other Collateral;

                  (m) all Records; and

                  (n) all products and proceeds of the foregoing, in any form,
including insurance proceeds and all claims against third parties for loss or
damage to or destruction of or other involuntary conversion of any kind or
nature of any or all of the other Collateral.

         As used herein, "Collateral" shall not include (i) any of Borrower's
Real Property other than the Mebane Premises, (ii) any of Borrower's Equipment,
(iii) any of Borrower's Intellectual Property, or (iv) any proceeds of such
assets and property that are excluded from Collateral.

         Notwithstanding anything to the contrary contained in this Section 5.1,
effective upon the occurrence and during the continuance of an Event of Default,
Borrower shall be deemed to have granted to Lender, and Lender shall at all
times have, the non-exclusive right and license to use all of Borrower's
Intellectual Property in connection with Lender's exercise of any of its rights
and remedies with respect to such Event of Default, including, without
limitation, the right to use such Intellectual Property in connection with the
conversion of any raw materials and work-in-process into finished Inventory and
the sale of any and all Inventory, in each case without the consent of Borrower
and without any obligation of Lender to pay royalties or other compensation to
Borrower in connection with any such use of Borrower's Intellectual Property.

         5.2 PERFECTION OF SECURITY INTERESTS.

                  (a) Borrower irrevocably and unconditionally authorizes Lender
(or its agent) to file at any time and from time to time such financing
statements with respect to the Collateral naming Lender or its designee as the
secured party and Borrower as debtor, as Lender may require, and including any
other information with respect to Borrower or otherwise required by part 5 of
Article 9 of the Uniform Commercial Code of such jurisdiction as Lender may
determine, together with any amendment and continuations with respect thereto,
which authorization shall apply to all financing statements filed on, prior to
or after the date hereof. Borrower hereby ratifies and approves all financing
statements naming Lender or its designee as secured party and Borrower as debtor
with respect to the Collateral (and any amendments with respect to such
financing statements) filed by or on behalf of Lender prior to the date hereof
and ratifies and confirms the authorization of Lender to file such financing
statements (and amendments, if any). Borrower hereby authorizes Lender to adopt
on behalf of Borrower any symbol required for authenticating any electronic
filing. In the event that the description of the collateral in any financing
statement naming Lender or its designee as the secured party and Borrower as
debtor includes assets and properties of Borrower that do not at any time

                                      -27-
<PAGE>

constitute Collateral, whether hereunder, under any of the other Financing
Agreements or otherwise, the filing of such financing statement shall
nonetheless be deemed authorized by Borrower to the extent of the Collateral
included in such description and it shall not render the financing statement
ineffective as to any of the Collateral or otherwise affect the financing
statement as it applies to any of the Collateral. Except as permitted by the
Uniform Commercial Code, in no event shall Borrower at any time file, or permit
or cause to be filed, any correction statement or termination statement with
respect to any financing statement (or amendment or continuation with respect
thereto) naming Lender or its designee as secured party and Borrower as debtor.

                  (b) In the event that Borrower shall be entitled to or shall
receive any chattel paper or instrument after the date hereof that constitutes
Collateral, Borrower shall promptly notify Lender thereof in writing. Promptly
upon the receipt thereof by or on behalf of Borrower (including by any agent or
representative), Borrower shall deliver, or cause to be delivered to Lender, all
tangible chattel paper and instruments that constitute Collateral that Borrower
may at any time acquire, accompanied by such instruments of transfer or
assignment duly executed in blank as Lender may from time to time specify, in
each case except as Lender may otherwise agree. At Lender's option, Borrower
shall, or Lender may at any time on behalf of Borrower, cause the original of
any such instrument or chattel paper to be conspicuously marked in a form and
manner acceptable to Lender with the following legend referring to chattel paper
or instruments as applicable: "This [chattel paper][instrument] is subject to
the security interest of Congress Financial Corporation and any sale, transfer,
assignment or encumbrance of this [chattel paper][instrument] violates the
rights of such secured party."

                  (c) In the event that Borrower shall at any time hold or
acquire an interest in any electronic chattel paper or any "transferable record"
(as such term is defined in Section 201 of the Federal Electronic Signatures in
Global and National Commerce Act or in Section 16 of the Uniform Electronic
Transactions Act as in effect in any relevant jurisdiction) that constitutes
Collateral, Borrower shall promptly notify Lender thereof in writing. Promptly
upon Lender's request, Borrower shall take, or cause to be taken, such actions
as Lender may reasonably request to give Lender control of such electronic
chattel paper under Section 9-105 of the UCC and control of such transferable
record under Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or, as the case may be, Section 16 of the Uniform
Electronic Transactions Act, as in effect in such jurisdiction.

                  (d) Borrower does not have any deposit accounts as of the date
hereof, except as set forth on Schedule 5.2 of the Information Certificate.
Borrower shall not, directly or indirectly, after the date hereof open,
establish or maintain any deposit account unless each of the following
conditions is satisfied: (i) Lender shall have received not less than five (5)
Business Days prior written notice of the intention of Borrower to open or
establish such account which notice shall specify in reasonable detail and
specificity acceptable to Lender the name of the account, the owner of the
account, the name and address of the bank at which such account is to be opened
or established, the individual at such bank with whom Borrower is dealing and
the purpose of the account, (ii) the bank where such account is opened or
maintained shall be acceptable to Lender, and (iii) on or before the opening of
such deposit account, Borrower shall as Lender may specify either (A) deliver to
Lender a Deposit Account Control Agreement with respect to such deposit account
duly authorized, executed and delivered by Borrower and the bank at which such
deposit account is opened and maintained or (B) arrange for Lender to become the

                                      -28-
<PAGE>

customer of the bank with respect to the deposit account on terms and conditions
acceptable to Lender. The terms of this subsection (d) shall not apply to
deposit accounts specifically and exclusively used for payroll, payroll taxes
and other employee wage and benefit payments to or for the benefit of Borrower's
salaried employees.

                  (e) Borrower does not own or hold, directly or indirectly,
beneficially or as record owner or both, any investment property that
constitutes Collateral, as of the date hereof, or have any investment account,
securities account, commodity account or other similar account with any bank or
other financial institution or other securities intermediary or commodity
intermediary as of the date hereof that constitutes Collateral, in each case
except as set forth in the Information Certificate.

                           (i) In the event that Borrower shall be entitled to
or shall at any time after the date hereof hold or acquire any certificated
securities that constitute Collateral, Borrower shall promptly endorse, assign
and deliver the same to Lender, accompanied by such instruments of transfer or
assignment duly executed in blank as Lender may from time to time specify. If
any securities that constitute Collateral, now or hereafter acquired by
Borrower, are uncertificated and are issued to Borrower or its nominee directly
by the issuer thereof, Borrower shall immediately notify Lender thereof and
shall as Lender may specify, either (A) cause the issuer to agree to comply with
instructions from Lender as to such securities, without further consent of
Borrower or such nominee, or (B) arrange for Lender to become the registered
owner of the securities.

                           (ii) Borrower shall not, directly or indirectly,
after the date hereof open, establish or maintain any investment account,
securities account, commodity account or any other similar account (other than a
deposit account) with any securities intermediary or commodity intermediary, if
any investment property constituting Collateral has been credited or will be
credited to, or is or will be on deposit, in such account, unless each of the
following conditions is satisfied: (A) Lender shall have received not less than
five (5) Business Days prior written notice of the intention of Borrower to open
or establish such account which notice shall specify in reasonable detail and
specificity acceptable to Lender the name of the account, the owner of the
account, the name and address of the securities intermediary or commodity
intermediary at which such account is to be opened or established, the
individual at such intermediary with whom Borrower is dealing and the purpose of
the account, (B) the securities intermediary or commodity intermediary (as the
case may be) where such account is opened or maintained shall be acceptable to
Lender, and (C) on or before the opening of such investment account, securities
account or other similar account with a securities intermediary or commodity
intermediary, Borrower shall as Lender may specify either (1) execute and
deliver, and cause to be executed and delivered to Lender, an Investment
Property Control Agreement with respect thereto duly authorized, executed and
delivered by Borrower and such securities intermediary or commodity intermediary
or (2) arrange for Lender to become the entitlement holder with respect to such
investment property on terms and conditions acceptable to Lender.

                  (f) Borrower is not the beneficiary or otherwise entitled to
any right to payment under any letter of credit, banker's acceptance or similar
instrument that constitutes Collateral as of the date hereof, except as set
forth in the Information Certificate. In the event that Borrower shall be
entitled to or shall receive any right to payment under any letter of credit,

                                      -29-
<PAGE>

banker's acceptance or any similar instrument that constitutes Collateral,
whether as beneficiary thereof or otherwise after the date hereof, Borrower
shall promptly notify Lender thereof in writing. Borrower shall immediately, as
Lender may specify, either (i) deliver, or cause to be delivered to Lender, with
respect to any such letter of credit, banker's acceptance or similar instrument,
the written agreement of the issuer and any other nominated person obligated to
make any payment in respect thereof (including any confirming or negotiating
bank), in form and substance satisfactory to Lender, consenting to the
assignment of the proceeds of the letter of credit to Lender by Borrower and
agreeing to make all payments thereon directly to Lender or as Lender may
otherwise direct or (ii) cause Lender to become, at Borrower's expense, the
transferee beneficiary of the letter of credit, banker's acceptance or similar
instrument (as the case may be).

                  (g) Borrower has no commercial tort claims that constitute
Collateral as of the date hereof, except as set forth in the Information
Certificate. In the event that Borrower shall at any time after the date hereof
have any commercial tort claims that constitute Collateral, Borrower shall
promptly notify Lender thereof in writing, which notice shall (i) set forth in
reasonable detail the basis for and nature of such commercial tort claim and
(ii) include the express grant by Borrower to Lender of a security interest in
such commercial tort claim (and the proceeds thereof). In the event that such
notice does not include such grant of a security interest, the sending thereof
by Borrower to Lender shall be deemed to constitute such grant to Lender. Upon
the sending of such notice, any such commercial tort claim described therein
that constitutes Collateral shall constitute part of the Collateral and shall be
deemed included therein. Without limiting the authorization of Lender provided
in Section 5.2(a) hereof or otherwise arising by the execution by Borrower of
this Agreement or any of the other Financing Agreements, Lender is hereby
irrevocably authorized from time to time and at any time to file such financing
statements naming Lender or its designee as secured party and Borrower as
debtor, or any amendments to any financing statements, covering any such
commercial tort claim that constitutes a part of the Collateral. In addition,
Borrower shall promptly upon Lender's request, execute and deliver, or cause to
be executed and delivered, to Lender such other agreements, documents and
instruments as Lender may require in connection with such commercial tort claim.

                  (h) Borrower does not have any goods or documents of title
that constitute Collateral or other Collateral in the custody, control or
possession of a third party as of the date hereof, except as set forth in the
Information Certificate and except for goods located in the United States in
transit to a location of Borrower permitted herein in the ordinary course of
business of Borrower in the possession of the carrier transporting such goods.
In the event that any goods, documents of title or other Collateral are at any
time after the date hereof in the custody, control or possession of any other
person not referred to in the Information Certificate or such carriers (except
for goods or documents of title that constitute Collateral or other tangible
Collateral located in the United States in transit to a location of Borrower
permitted herein in the ordinary course of business of Borrower in the
possession of the carrier transporting such goods or other Collateral), Borrower
shall promptly notify Lender thereof in writing. Promptly upon Lender's request,
Borrower shall deliver to Lender a Collateral Access Agreement duly authorized,
executed and delivered by such person and Borrower.

                                      -30-
<PAGE>

                  (i) Borrower shall take any other actions reasonably requested
by Lender from time to time to cause the attachment, perfection and first
priority of, and the ability of Lender to enforce, the security interest of
Lender in any and all of the Collateral, including, without limitation, (i)
executing, delivering and, where appropriate, filing financing statements and
amendments relating thereto under the UCC or other applicable law, to the
extent, if any, that Borrower's signature thereon is required therefor, (ii)
causing Lender's name to be noted as secured party on any certificate of title
for a titled good if such notation is a condition to attachment, perfection or
priority of, or ability of Lender to enforce, the security interest of Lender in
such Collateral, (iii) complying with any provision of any statute, regulation
or treaty of the United States as to any Collateral if compliance with such
provision is a condition to attachment, perfection or priority of, or ability of
Lender to enforce, the security interest of Lender in such Collateral, and (iv)
obtaining the consents and approvals of any Governmental Authority or third
party, including, without limitation, any consent of any licensor, lessor or
other person obligated on Collateral, and taking all actions required by any
earlier versions of the UCC or by other law, as applicable in any relevant
jurisdiction.

SECTION 6. COLLECTION AND ADMINISTRATION

         6.1 BORROWER'S LOAN ACCOUNT. Lender shall maintain one or more loan
account(s) on its books in which shall be recorded (a) all Loans, Letter of
Credit Accommodations and other Obligations and the Collateral, (b) all payments
made by or on behalf of Borrower and (c) all other appropriate debits and
credits as provided in this Agreement, including, without limitation, fees,
charges, costs, expenses and interest. All entries in the loan account(s) shall
be made in accordance with Lender's customary practices as in effect from time
to time.

         6.2 STATEMENTS. Lender shall render to Borrower each month a statement
setting forth the balance in Borrower's loan account(s) maintained by Lender for
Borrower pursuant to the provisions of this Agreement, including principal,
interest, fees, costs and expenses. Each such statement shall be subject to
subsequent adjustment by Lender but shall, absent manifest errors or omissions,
be considered correct and deemed accepted by Borrower and conclusively binding
upon Borrower as an account stated except to the extent that Lender receives a
written notice from Borrower of any specific exceptions of Borrower thereto
within thirty (30) days after the date such statement has been mailed by Lender.
Until such time as Lender shall have rendered to Borrower a written statement as
provided above, the balance in Borrower's loan account(s) shall be presumptive
evidence of the amounts due and owing to Lender by Borrower.

         6.3 COLLECTION OF ACCOUNTS

                  (a) Borrower shall establish and maintain, at its expense,
blocked accounts or lockboxes and related blocked accounts (in either case,
"Blocked Accounts"), as Lender may specify, with such banks as are acceptable to
Lender into which Borrower shall promptly deposit and direct its account debtors
to directly remit all payments on Receivables that constitute Collateral and all
payments constituting proceeds of Inventory or other Collateral in the identical
form in which such payments are made, whether by cash, check or other manner. At
Lender's option, Borrower shall deliver, or cause to be delivered to Lender, a
Depository Account Control

                                      -31-
<PAGE>

Agreement duly authorized, executed and delivered by each bank where a Blocked
Account is maintained as provided in Section 5.2 hereof or at any time and from
time to time Lender may become bank's customer with respect to the Blocked
Accounts and promptly upon Lender's request, Borrower shall execute and deliver
such agreements or documents as Lender may require in connection therewith.
Borrower shall cause all funds received or deposited into the Blocked Accounts
to be transferred each Business Day to the Lender Payment Account. Borrower
agrees that all payments made to such Blocked Accounts or other funds received
and collected by Lender, whether in respect of the Receivables that constitute
Collateral, as proceeds of Inventory or other Collateral or otherwise shall be
treated as payments to Lender in respect of the Obligations and therefore shall
constitute the property of Lender to the extent of the then outstanding
Obligations. Notwithstanding anything to the contrary contained in this Section
6.3(a), Lender agrees that, in the event Lender and Borrower are unable to agree
with Reference Bank, within thirty (30) days subsequent to the date hereof,
regarding the terms and conditions of a new Depository Account Control Agreement
with respect to Borrower's Blocked Accounts located at Reference Bank, to
replace the existing blocked account agreement previously executed with respect
to such Blocked Accounts among Reference Bank , Lender and Borrower, then Lender
shall accept such existing blocked account agreement for purposes of this
Section 6.3(a) with respect to Borrower's Blocked Accounts at Reference Bank.

                  (b) For purposes of calculating interest on the Obligations,
such payments or other funds received will be applied (conditional upon final
collection) to the Obligations one (1) Business Day following the date of
receipt of immediately available funds by Lender in the Lender Payment Account.
For purposes of calculating the amount of the Loans available to Borrower such
payments will be applied (conditional upon final collection) to the Obligations
on the Business Day of receipt by Lender in the Lender Payment Account. if such
payments are received within sufficient time (in accordance with Lender's usual
and customary practices as in effect from time to time) to credit Borrower's
loan account on such day, and if not. then on the next Business Day.

                  (c) Borrower and all of its affiliates, subsidiaries,
shareholders, directors, employees or agents shall, acting as trustee for
Lender, receive, as the property of Lender, any monies, checks, notes, drafts or
any other payment relating to and/or proceeds of Accounts or other Collateral
which come into their possession or under their control and immediately upon
receipt thereof, shall deposit or cause the same to be deposited in the Blocked
Accounts, or remit the same or cause the same to be remitted, in kind, to
Lender. In no event shall the same be commingled with Borrower's own funds.
Borrower agrees to reimburse Lender on demand for any amounts owed or paid to
any bank at which a Blocked Account is established or any other bank or person
involved in the transfer of funds to or from the Blocked Accounts arising out of
Lender's payments to or indemnification of such bank or person. The obligation
of Borrower to reimburse Lender for such amounts pursuant to this Section 6.3
shall survive the termination or non-renewal of this Agreement.

         6.4 PAYMENTS.

                  (a) All Obligations shall be payable to the Lender Payment
Account as provided in Section 6.3 or such other place as Lender may designate
from time to time. Subject to the other terms and conditions contained herein,
Lender shall apply payments received or

                                      -32-
<PAGE>

collected from Borrower or for the account of Borrower (including the monetary
proceeds of collections or of realization upon any Collateral) as follows:
first, to pay any fees, indemnities or expense reimbursements then due to Lender
from Borrower; second, to pay interest due in respect of any Loans; third, to
pay principal then due in respect of the Loans; fourth, to pay or prepay any
other Obligations whether or not then due, in such order and manner as Lender
determines. Notwithstanding anything to the contrary contained in this
Agreement, (i) unless so directed by Borrower, or unless a Default or an Event
of Default shall exist or have occurred and be continuing, Lender shall not
apply any payments which it receives to any Eurodollar Rate Loans, except (A) on
the expiration date of the Interest Period applicable to any such Eurodollar
Rate Loans or (B) in the event that there are no outstanding Prime Rate Loans
and (ii) to the extent Borrower uses any proceeds of the Loans or Letter of
Credit Accommodations to acquire rights in or the use of any Collateral or to
repay any Indebtedness used to acquire rights in or the use of any Collateral,
payments in respect of the Obligations shall be deemed applied first to the
Obligations arising from Loans and Letter of Credit Accommodations that were not
used for such purposes and second to the Obligations arising from Loans and
Letter of Credit Accommodations the proceeds of which were used to acquire
rights in or the use of any Collateral in the chronological order in which
Borrower acquired such rights in or the use of such Collateral.

                  (b) At Lender's option, all principal, interest, fees, costs,
expenses and other charges provided for in this Agreement or the other Financing
Agreements may be charged directly to the loan account(s) of Borrower maintained
by Lender. Borrower shall make all payments to Lender on the Obligations free
and clear of, and without deduction or withholding for or on account of, any
setoff, counterclaim, defense, duties, taxes, levies, imposts, fees, deductions,
withholding, restrictions or conditions of any kind. If after receipt of any
payment of, or proceeds of Collateral applied to the payment of, any of the
Obligations, Lender is required to surrender or return such payment or proceeds
to any Person for any reason, then the Obligations intended to be satisfied by
such payment or proceeds shall be reinstated and continue and this Agreement
shall continue in full force and effect as if such payment or proceeds had not
been received by Lender. Borrower shall be liable to pay to Lender, and do
hereby indemnify and hold Lender harmless for the amount of any payments or
proceeds surrendered or returned. This Section 6.4(b) shall remain effective
notwithstanding any contrary action which may be taken by Lender in reliance
upon such payment or proceeds. This Section 6.4 shall survive the payment of the
Obligations and the termination of this Agreement.

         6.5 AUTHORIZATION TO MAKE LOANS. Lender is authorized to make the Loans
and provide the Letter of Credit Accommodations based upon telephonic or other
instructions received from anyone reasonably believed by Lender to be an
approved officer of Borrower or other person authorized to act on behalf of
Borrower pursuant to this Agreement or, at the discretion of Lender, if such
Loans are necessary to satisfy any Obligations. All requests for Loans or Letter
of Credit Accommodations hereunder shall specify the date on which the requested
advance is to be made or Letter of Credit Accommodations established (which day
shall be a Business Day) and the amount of the requested Loan. Requests received
after 11:00 a.m. New York City time on any day shall be deemed to have been made
as of the opening of business on the immediately following Business Day. All
Loans and Letter of Credit Accommodations under this Agreement shall be
conclusively presumed to have been made to, and at the request of and for the
benefit of, Borrower when deposited to the credit of Borrower or otherwise

                                      -33-
<PAGE>

disbursed or established in accordance with the instructions of Borrower or in
accordance with the terms and conditions of this Agreement

         6.6 USE OF PROCEEDS. On the effective date of this Agreement, Lender is
authorized and directed to fund an amount of the Loans to pay all costs,
expenses and fees in connection with the preparation, negotiation, execution and
delivery of this Agreement and the other Financing Agreements. All other Loans
made or Letter of Credit Accommodations provided by Lender to Borrower pursuant
to the provisions hereof shall be used by Borrower only for general operating,
working capital and other proper corporate purposes of Borrower not otherwise
prohibited by the terms hereof. None of the proceeds will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security or for
the purposes of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Loans to be considered a "purpose credit" within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System,
as amended.

         6.7 GRANT OF IRREVOCABLE LICENSE. At any time or times that an Event of
Default exists or has occurred and is continuing, Lender shall have an
irrevocable license to have access to and use all media, computers, computer
peripherals, storage units, file cabinets and other containers in which the
books, records and other information relating to the Collateral may be stored or
compiled and such irrevocable license shall continue without charge for as long
as Lender deems reasonably necessary.

         6.8 COLLECTED CREDIT BALANCES.

                  (a) In connection with the financing arrangements between
Lender and Borrower, Borrower may from time to time maintain a credit balance in
its loan account with Lender. To the extent of the outstanding daily amount of
such credit balance received by Lender in immediately available funds and then
held by Lender (a "Collected Credit Balance"), Lender shall credit the loan
account of Borrower as hereafter provided in an amount equal to three and
one-half (3 1/2%) percent per annum less than the Prime Rate on such Collected
Credit Balance (the "Interest Equivalent"); PROVIDED, THAT, no such credit to
Borrower's loan account will be made by Lender in respect of the amount of such
Collected Credit Balance in excess of $10,000,000.

                  (b) Such Interest Equivalent on the Collected Credit Balance
shall be credited thereto monthly on the first day of each month and shall be
calculated on the basis of a three hundred sixty (360) day year and actual days
elapsed, so long as no Event of Default shall exist or have occurred. The Prime
Rate used to calculate such Interest Equivalent shall increase or decrease by an
amount equal to such increase or decrease in such Prime Rate effective on the
first day of the month after any change in such Prime Rate is announced, based
on the Prime Rate in effect on the last day of the month in which any such
change occurs.

                  (c) Notwithstanding anything to the contrary set forth in
Section 6.3(b) hereof, for each day on which Borrower maintains a Collected
Credit Balance, all payments and other funds for which Lender has received
immediately available funds in the Lender Payment Account prior to 2:00 P.M.,
New York City time on such date will be applied (conditional upon final

                                      -34-
<PAGE>

collection) on such date, or on the next Business Day if not received at or
before such time, for purposes of calculating Interest Equivalent on the
Collected Credit Balance.

SECTION 7. COLLATERAL REPORTING AND COVENANTS

         7.1 COLLATERAL REPORTING. Borrower shall provide Lender with the
following documents in a form satisfactory to Lender: (a) on a regular basis as
required by Lender, a schedule of Accounts and sales reports; (b) on a monthly
basis or more frequently as Lender may request, (i) actual inventory reports,
(ii) inventory reports by category and (iii) agings of accounts payable, (c)
upon Lender's request, (i) copies of customer statements and credit memos,
remittance advices and reports, and copies of deposit slips and bank statements,
(ii) copies of shipping and delivery documents, and (iii) copies of purchase
orders, invoices and delivery documents for Inventory acquired by Borrower; (d)
agings of accounts receivable on a weekly basis or more frequently as Lender may
request; and (e) such other reports as to the Collateral as Lender shall request
from time to time. If any of Borrower's records or reports of the Collateral are
prepared or maintained by an accounting service, contractor, shipper or other
agent, Borrower hereby irrevocably authorizes such service, contractor, shipper
or agent to deliver such records, reports, and related documents to Lender and
to follow Lender's instructions with respect to further services at any time
that an Event of Default exists or has occurred and is continuing.

         7.2 ACCOUNTS COVENANTS.

                  (a) Borrower shall notify Lender promptly of: (i) any material
delay in Borrower's performance of any of its obligations to any account debtor
or the assertion of any claims, offsets, defenses or counterclaims in excess of
$250,000 by any account debtor, or any disputes involving amounts in excess of
$250,000 with an account debtor, or any settlement, adjustment or compromise
thereof, (ii) all material adverse information relating to the financial
condition of any account debtor and (iii) any event or circumstance which, to
Borrower's knowledge would cause Lender to consider any then existing Accounts
as no longer constituting Eligible Accounts. No credit, discount, allowance or
extension or agreement for any of the foregoing shall be granted to any account
debtor without Lender's consent, except in the ordinary course of Borrower's
business in accordance with its practices and policies. So long as no Event of
Default exists or has occurred and is continuing, Borrower shall have the right
to settle, adjust or compromise any claim, offset, counterclaim or dispute with
any account debtor. At any time that an Event of Default exists or has occurred
and is continuing, Lender shall, at its option. have the exclusive right to
settle, adjust or compromise any claim, offset, counterclaim or dispute with
account debtors or grant any credits, discounts or allowances.

                  (b) Borrower shall promptly report to Lender any return of
Inventory by an account debtor having a sales price in excess of $250,000. At
any time that Inventory is returned, reclaimed or repossessed, the related
Account (or portion thereof relating specifically to such return) shall not be
deemed an Eligible Account In the event any account debtor returns Inventory
when an Event of Default exists or has occurred and is continuing, Borrower
shall, upon Lender's request, (i) hold the returned Inventory in trust for
Lender; (ii) segregate all returned Inventory from all of its other property;
(iii) dispose of the returned Inventory solely

                                      -35-
<PAGE>

according to Lender's instructions; and (iv) not issue any credits, discounts or
allowances with respect thereto without Lender's prior written consent.

                  (c) With respect to each Account: (i) the amounts shown on any
invoice delivered to Lender or schedule thereof delivered to Lender shall be
true and complete, (ii) no payments shall be made thereon except payments
immediately delivered to Lender pursuant to the terms of this Agreement, (iii)
no credit, discount, allowance or extension or agreement for any of the
foregoing shall be granted to any account debtor except as reported to Lender in
accordance with this Agreement and except for credits, discounts, allowances or
extensions made or given in the ordinary course of Borrower's business in
accordance with its practices and policies, (iv) there shall be no setoffs,
deductions, contras, defenses, counterclaims or disputes existing or asserted
with respect thereto except as reported to Lender in accordance with the terms
of this Agreement, (v) none of the transactions giving rise thereto will violate
any applicable State or Federal laws or regulations, all documentation relating
thereto will be legally sufficient under such laws and regulations and all such
documentation will be legally enforceable in accordance with its terms.

                  (d) Lender shall have the right at any time or times, in
Lender's name or in the name of a nominee of Lender, to verify the validity,
amount or any other matter relating to any Account or other Collateral, by mail,
telephone, facsimile transmission or otherwise.

                  (e) Borrower shall deliver or cause to be delivered to Lender,
with appropriate endorsement and assignment, with full recourse to Borrower, all
chattel paper and instruments which Borrower now owns or may at any time acquire
immediately upon Borrower's receipt thereof, except as Lender may otherwise
agree.

                  (f) Lender may, at any time or times that an Event of Default
exists or has occurred and is continuing, (i) notify any or all account debtors
that the Accounts have been assigned to Lender and that Lender has a security
interest therein and Lender may direct any or all accounts debtors to make
payment of Accounts directly to Lender, (ii) extend the time of payment of,
compromise, settle or adjust for cash, credit, return of merchandise or
otherwise, and upon any terms or conditions, any and all Accounts or other
obligations included in the Collateral and thereby discharge or release the
account debtor or any other party or parties in any way liable for payment
thereof without affecting any of the Obligations (other than to the extent that
any proceeds in respect of such compromise, settlement or adjustment are applied
to the payment of the Obligations), (iii) demand, collect or enforce payment of
any Accounts or such other obligations, but without any duty to do so, and
Lender shall not be liable for its failure to collect or enforce the payment
thereof nor for the negligence of its agents or attorneys with respect thereto
and (iv) take whatever other action Lender may deem necessary or desirable for
the protection of its interests. At any time that an Event of Default exists or
has occurred and is continuing, at Lender's request, all invoices and statements
sent to any account debtor shall state that the Accounts and such other
obligations have been assigned to Lender and are payable directly and only to
Lender and Borrower shall deliver to Lender such originals of documents
evidencing the sale and delivery of goods or the performance of services giving
rise to any Accounts as Lender may require.

                                      -36-
<PAGE>

         7.3 INVENTORY COVENANTS. With respect to the Inventory: (a) Borrower
shall at all times maintain inventory records reasonably satisfactory to Lender,
keeping correct and accurate records itemizing and describing the kind, type,
and quantity of Inventory. Borrower's cost therefor and daily withdrawals
therefrom and additions thereto; (b) Borrower shall conduct a physical count of
the Inventory at least once each year, but at any time or times as Lender may
request on or after an Event of Default, and promptly following such physical
inventory shall supply Lender with a report in the form and with such
specificity as may be reasonably satisfactory to Lender concerning such physical
count; (c) Borrower shall not remove any Inventory from the locations set forth
or permitted herein, without the prior written consent of Lender, except for
sales of Inventory in the ordinary course of Borrower's business and except to
move Inventory directly from one location set forth or permitted herein to
another such location; (d) upon Lender's request, Borrower shall, at its
expense, no more than twice in any calendar year (but any time or times as
Lender may request on or after an Event of Default), deliver or cause to be
delivered to Lender written reports or appraisals as to the Inventory in form,
scope and methodology acceptable to Lender and by Daley-Hodkin Appraisal
Corporation or other appraiser acceptable to Lender, addressed to Lender or upon
which Lender is expressly permitted to rely; (e) Borrower shall produce, use,
store and maintain the Inventory, with all reasonable care and caution and in
accordance with applicable standards of any insurance and in conformity with
applicable laws (including, but not limited to, the requirements of the Federal
Fair Labor Standards Act of 1938, as amended and all rules, regulations and
orders related thereto); (f) Borrower assumes all responsibility and liability
arising from or relating to the production, use, sale or other disposition of
the Inventory; (g) Borrower shall keep the Inventory in good and marketable
condition; and (h) Borrower shall not, without prior written notice to Lender,
acquire or accept any Inventory on consignment.

         7.4 EQUIPMENT COVENANTS. With respect to the Equipment: (a) Borrower
will, and will cause each Subsidiary to, keep all of the Equipment that is
useful and necessary in its business in good working order and condition
(ordinary wear and tear excepted), (b) Borrower will, and will cause each
Subsidiary to, maintain or cause to be maintained with responsible insurance
companies such insurance coverage with respect to its properties and business
against such casualties and contingencies and of such types and in such amounts
as is customary in the case of similar businesses and will, upon request of
Lender, furnish to Lender at reasonable intervals a certificate of an authorized
officer on behalf of Borrower setting forth the nature and extent of all
insurance maintained by Borrower and its Subsidiaries in accordance with this
Section 7.4 and Section 9.5 hereof; and (c) Borrower shall not sell or remove
any Equipment from the locations set forth or permitted herein, which sale or
removal would have a material adverse affect on the manufacturing operations of
Borrower.

         7.5 POWER OF ATTORNEY. Borrower hereby irrevocably designates and
appoints Lender (and all persons designated by Lender) as Borrower's true and
lawful attorney-in-fact, and authorizes Lender, in Borrower's or Lender's name,
to: (a) at any time an Event of Default has occurred and is continuing (i)
demand payment on Accounts or other proceeds of Inventory or other Collateral,
(ii) enforce payment of Accounts by legal proceedings or otherwise, (iii)
exercise all of Borrower's rights and remedies to collect any Account or other
Collateral, (iv) sell or assign any Account upon such terms, for such amount and
at such time or times as the Lender deems advisable, (v) settle, adjust,
compromise, extend or renew an Account, (vi) discharge and release any Account,
(vii) prepare, file and sign Borrower's name on any proof of claim in bankruptcy

                                      -37-
<PAGE>

or other similar document against an account debtor, (viii) notify the post
office authorities to change the address for delivery of Borrower's mail to an
address designated by Lender, and open and dispose of all mail addressed to
Borrower; PROVIDED, THAT, Borrower will be notified by Lender and Borrower, at
its option, may be present at any time that Lender exercises its right to open
mail as provided herein and Lender shall return any mail to Borrower which does
not include a payment or other collection or otherwise relate to the Collateral,
and (ix) do all acts and things which are necessary, in Lender's determination,
to fulfill Borrower's obligations under this Agreement and the other Financing
Agreements and (b) at any time to (i) take control in any manner of any item of
payment relating to the Collateral or Proceeds, (ii) have access to any lockbox
or postal box into which Borrower's mail is deposited, (iii) endorse Borrower's
name upon any items of payment relating to the Collateral or Proceeds thereof
and deposit the same in the Lender's account for application to the Obligations,
(iv) endorse Borrower's name upon any chattel paper, document, instrument,
invoice, or similar document or agreement relating to any Account or any goods
pertaining thereto or any other Collateral, (v) sign Borrower's name on any
verification of Accounts and notices thereof to account debtors and (vi) execute
in Borrower's name and file any UCC financing statements or amendments thereto
relating to the Collateral. Borrower hereby releases Lender and its officers,
employees and designees from any liabilities arising from any act or acts under
this power of attorney and in furtherance thereof, whether of omission or
commission, except as a result of Lender's own gross negligence or willful
misconduct as determined pursuant to a final non-appealable order of a court of
competent jurisdiction.

         7.6 RIGHT TO CURE. If in Lender's good faith judgment, Lender deems it
necessary or appropriate to preserve, protect, insure or maintain the Collateral
and the rights of Lender with respect thereto, Lender may, at its option, (a)
cure any default by Borrower under any agreement with a third party or pay or
bond on appeal any judgment entered against Borrower relating to the Collateral,
(b) discharge taxes, liens, security interests or other encumbrances at any time
levied on or existing with respect to the Collateral and (c) pay any amount,
incur any expense or perform any other act related to the foregoing. Lender may
add any amounts so expended to the Obligations and charge Borrower's account
therefor, such amounts to be repayable by Borrower on demand. Lender shall be
under no obligation to effect such cure, payment or bonding and shall not, by
doing so, be deemed to have assumed any obligation or liability of Borrower. Any
payment made or other action taken by Lender under this Section shall be without
prejudice to any right to assert an Event of Default hereunder and to proceed
accordingly.

         7.7 ACCESS TO PREMISES. From time to time as requested by Lender, at
the cost and expense of Borrower, (a) Lender or its designee shall have complete
access to all of Borrower's premises during normal business hours and after
notice to Borrower, or at any time and without notice to Borrower if an Event of
Default exists or has occurred and is continuing, for the purposes of
inspecting, verifying and auditing the Collateral and all of Borrower's books
and records, (b) Borrower shall promptly furnish to Lender such copies of such
books and records or extracts therefrom as Lender may request, and (c) Lender
may use during normal business hours such of Borrower's personnel, equipment,
supplies and premises as may be reasonably necessary for the foregoing and if an
Event of Default exists or has occurred and is continuing for the collection of
Accounts and realization of other Collateral.

                                      -38-
<PAGE>

SECTION 8. REPRESENTATIONS AND WARRANTIES

         Borrower hereby represents and warrants to Lender the following (which
shall survive the execution and delivery of this Agreement), the truth and
accuracy of which are a continuing condition of the making of Loans and
providing Letter of Credit Accommodations by Lender to Borrower:

         8.1 CORPORATE EXISTENCE; POWER AND AUTHORITY. Borrower is a corporation
duly organized and in good standing under the laws of its state of incorporation
and is duly qualified as a foreign corporation and in good standing in all
states or other jurisdictions where the nature and extent of the business
transacted by it or the ownership of assets makes such qualification necessary,
except for those jurisdictions in which the failure to so qualify would not have
a material adverse effect on Borrower's financial condition, results of
operation or business or the rights of Lender in or to any of the Collateral.
The execution, delivery and performance of this Agreement, the other Financing
Agreements and the transactions contemplated hereunder and thereunder (a) are
all within Borrower's corporate powers, (b) have been duly authorized, (c) are
not in contravention of law or the terms of Borrower's certificate of
incorporation, by-laws, or other organizational documentation, or any indenture,
agreement or undertaking to which Borrower is a party or by which Borrower or
its property are bound and (d) will not result in the creation or imposition of,
or require or give rise to any obligation to grant, any lien, security interest,
charge or other encumbrance upon any property of Borrower, except as created or
otherwise permitted by this Agreement. This Agreement and the other Financing
Agreements constitute legal, valid and binding obligations of Borrower
enforceable in accordance with their respective terms, except to the extent that
enforcement of certain rights and remedies may be limited by the provisions of
the United States Bankruptcy Code, as amended from time to time, or other laws
affecting the rights of creditors generally.

         8.2 NAME; STATE OF ORGANIZATION; CHIEF EXECUTIVE OFFICE; COLLATERAL
LOCATIONS.

                  (a) The exact legal name of Borrower is as set forth on the
signature page of this Agreement. Borrower has not, during the five years
immediately prior to the date of this Agreement, been known by or used any other
corporate or fictitious name or been a party to any merger or consolidation, or
acquired all or substantially all of the assets of any Person, or acquired any
of its property or assets out of the ordinary course of business, except as set
forth in the Information Certificate.

                  (b) Borrower is an organization of the type and organized in
the jurisdiction set forth in the Information Certificate. The Information
Certificate accurately sets forth the organizational identification number of
Borrower or accurately states that Borrower has none and accurately sets forth
the federal employer identification number of Borrower.

                  (c) The chief executive office and mailing address of Borrower
and Borrower's Records concerning Accounts are located only at the address
identified as such in Schedule 8.2 in the Information Certificate and its only
other places of business and the only other locations of Collateral, if any, are
the addresses set forth in Schedule 8.2 in the Information

                                      -39-
<PAGE>

Certificate. Such Schedule 8.2 correctly identifies any of such locations which
are not owned by Borrower and sets forth the owners and/or operators thereof.

         8.3 FINANCIAL STATEMENTS; NO MATERIAL ADVERSE CHANGE. All financial
statements relating to Borrower which have been or may hereafter be delivered by
Borrower to Lender have been prepared in accordance with GAAP (except as to any
interim financial statements, to the extent such statements are subject to
normal year-end adjustments and do not include any notes) and fairly present the
financial condition and the results of operation of Borrower as at the dates and
for the periods set forth therein. Except as disclosed in any interim financial
statements furnished by Borrower to Lender prior to the date of this Agreement,
there has been no material adverse change in the assets, liabilities, properties
and condition, financial or otherwise, of Borrower, since the date of the most
recent audited financial statements furnished by Borrower to Lender prior to the
date of this Agreement.

         8.4 PRIORITY OF LIENS; TITLE TO PROPERTIES. The security interests and
liens granted to Lender under this Agreement and the other Financing Agreements
constitute valid and perfected first priority liens and security interests in
and upon the Collateral subject only to the liens indicated on Schedule 8.4 in
the Information Certificate and the other liens permitted under Section 9.8
hereof. Borrower has good and marketable fee simple title to or valid leasehold
interests in all of its Real Property and good, valid and merchantable title to
all of its other properties and assets subject to no liens, mortgages, pledges,
security interests, encumbrances or charges of any kind, except those granted to
Lender and such others as are specifically listed on Schedule 8.4 in the
Information Certificate or permitted under Section 9.8 hereof.

         8.5 TAX RETURNS. Borrower has filed, or caused to be filed, in a timely
manner (or extended by Borrower in good faith) all Federal, State and local
income tax, withholding tax, excise tax and other material tax returns, reports
and declarations which are required to be filed by it. All information in such
tax returns, reports and declarations is complete and accurate in all material
respects. Borrower has paid or caused to be paid all Federal, State and local
income tax, withholding tax, excise tax and other material taxes due and payable
or claimed due and payable in any assessment received by it, except taxes the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to Borrower and with respect to which, to the
extent required by GAAP, adequate reserves have been set aside on its books and
such taxes are not a lien on the Collateral. Adequate provision has been made
for the payment of all accrued and unpaid Federal, State, county, local, foreign
and other taxes whether or not yet due and payable and whether or not disputed.

         8.6 LITIGATION. Except as set forth in Schedule 8.6 in the Information
Certificate, there is no present investigation by any Governmental Authority
pending, or to the best of Borrower's knowledge threatened, against or affecting
Borrower, its assets or business and there is no action, suit, proceeding or
claim by any Person pending, or to the best of Borrower's knowledge threatened,
against Borrower or its assets or goodwill, or against or affecting any
transactions contemplated by this Agreement, which, in the case of any of the
foregoing, is reasonably likely to be adversely determined against Borrower and
is reasonably likely to result in a material adverse change in the assets,
business or prospects of Borrower or is reasonably likely to impair the ability
of Borrower to perform its obligations hereunder or under any of the other

                                      -40-
<PAGE>

Financing Agreements to which it is a party or of Lender to enforce any
Obligations or realize upon any Collateral.

         8.7 COMPLIANCE WITH OTHER AGREEMENTS AND APPLICABLE LAWS. Borrower is
not in default in any material respect under, or in violation in any material
respect of any of the terms of, any material agreement, contract, instrument,
lease or other commitment to which it is a party or by which it or any of its
assets are bound and Borrower is in compliance in all material respects with all
applicable provisions of laws, rules, regulations, licenses, permits, approvals
and orders of any foreign, Federal, State or local Governmental Authority.

         8.8 ENVIRONMENTAL COMPLIANCE.

                  (a) Except as set forth on Schedule 8.8 in the Information
Certificate, Borrower has not generated, used, stored, treated, transported,
manufactured, handled, produced or disposed of any Hazardous Materials, on or
off its premises (whether or not owned by it) in any manner which at any time
violates in any material respect any applicable Environmental Law or any
license, permit, certificate, approval or similar authorization thereunder and
the operations of Borrower comply in all material respects with all
Environmental Laws and all licenses, permits, certificates, approvals and
similar authorizations thereunder.

                  (b) Except as set forth on Schedule 8.8 in the Information
Certificate, there has been no investigation, proceeding, complaint, order,
directive, claim, citation or notice by any Governmental Authority or any other
person nor is any pending or to the best of Borrower's knowledge threatened,
with respect to any non-compliance with or violation of the requirements of any
Environmental Law by Borrower or the release, spill or discharge, threatened or
actual, of any Hazardous Material or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials or any other environmental, health or safety matter, which affects, in
any material respect, Borrower or its business, operations or assets or any
properties at which Borrower has transported, stored or disposed of any
Hazardous Materials.

                  (c) Borrower has no material liability (contingent or
otherwise) in connection with a release, spill or discharge, threatened or
actual, of any Hazardous Materials or the generation, use, storage, treatment,
transportation, manufacture, handling, production or disposal of any Hazardous
Materials.

                  (d) Borrower has all material licenses, permits, certificates,
approvals or similar authorizations required to be obtained or filed in
connection with the operations of Borrower under any Environmental Law and all
of such licenses, permits, certificates, approvals or similar authorizations are
valid and in full force and effect.

         8.9 EMPLOYEE BENEFITS.

                  (a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter or has a pending request for a
favorable determination letter from the Internal Revenue Service and to the best
of Borrower's knowledge, nothing has occurred which would cause the loss of such

                                      -41-
<PAGE>

qualification. Borrower and its ERISA Affiliates have made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.

                  (b) There are no pending or, to the best of Borrower's
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan, which is reasonably likely to be adversely
determined against Borrower and is reasonably likely to result in a material
adverse change in the assets, business or prospects of Borrower or would impair
the ability of Borrower to perform its obligations hereunder or under any of the
other Financing Agreements to which it is a party or of Lender to enforce any
Obligations or realize upon any Collateral. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan.

                  (c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) the current value of each Plan's assets (determined in accordance
with the assumptions used for funding such Plan pursuant to Section 412 of the
Code) are not less than such Plan's liabilities under Section 4001(a)(16) of
ERISA; (iii) Borrower and its ERISA Affiliates have not incurred and do not
reasonably expect to incur, any liability under Title IV of ERISA with respect
to any Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) Borrower and its ERISA Affiliates have not incurred and do not
reasonably expect to incur, any liability (and no event has occurred which, with
the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) Borrower and its ERISA Affiliates have not engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.

         8.10 [RESERVED].

         8.11 INTELLECTUAL PROPERTY. Borrower owns or licenses or otherwise has
the right to use all Intellectual Property necessary for the operation of its
business as presently conducted or proposed to be conducted.

         8.12 SUBSIDIARIES; AFFILIATES; CAPITALIZATION.

                  (a) Borrower does not have any direct or indirect Subsidiaries
and is not engaged in any joint venture or partnership except as set forth in
Schedule 8.12 in the Information Certificate.

                  (b) Borrower is the record and beneficial owner of all of the
issued and outstanding shares of Capital Stock of each of the Subsidiaries
listed on Schedule 8.12 in the Information Certificate as being owned by
Borrower and there are no proxies, irrevocable or otherwise, with respect to
such shares and no equity securities of any of the Subsidiaries are or may
become required to be issued by reason of any options, warrants, rights to
subscribe to, calls or commitments of any kind or nature and there are no
contracts, commitments, understandings or arrangements by which any Subsidiary
is or may become bound to issue additional shares of it Capital Stock or
securities convertible into or exchangeable for such shares.

                                      -42-
<PAGE>

                  (c) The issued and outstanding shares of Capital Stock of
Borrower are directly and beneficially owned and held by the persons listed on
Schedule 8.12 in the Information Certificate, and in each case all of such
shares have been duly authorized and are fully paid and non-assessable, free and
clear of all claims, liens, pledges and encumbrances of any kind, except as
disclosed in writing to Lender prior to the date hereof.

         8.13 LABOR DISPUTES.

                  (a) Set forth on Schedule 8.13 in the Information Certificate
is a list (including dates of termination) of all collective bargaining or
similar agreements between or applicable to Borrower and any union, labor
organization or other bargaining agent in respect of the employees of Borrower
on the date hereof.

                  (b) There is (i) no significant unfair labor practice
complaint pending against Borrower or, to the best of Borrower's knowledge,
threatened against it, before the National Labor Relations Board, and no
significant grievance or significant arbitration proceeding arising out of or
under any collective bargaining agreement is pending on the date hereof against
Borrower or, to best of Borrower's knowledge, threatened against it, and (ii) no
significant strike, labor dispute, slowdown or stoppage is pending against
Borrower or, to the best of Borrower's knowledge, threatened against Borrower,
in each case that has resulted in, or could reasonably be expected to result in,
a material adverse change with respect to Borrower.

         8.14 [RESERVED].

         8.15 [RESERVED].

         8.16 PAYABLE PRACTICES. Borrower has not made any material change in
the historical accounts payable practices from those in effect immediately prior
to the date hereof.

         8.17 ACCURACY AND COMPLETENESS OF INFORMATION. All information
furnished by or on behalf of Borrower in writing to Lender in connection with
this Agreement or any of the other Financing Agreements or any transaction
contemplated hereby or thereby, including all information in the Information
Certificate, is true and correct in all material respects on the date as of
which such information is dated or certified and does not omit any material fact
necessary in order to make such information not misleading. No event or
circumstance has occurred which has had or could reasonably be expected to have
a material adverse affect on the business, assets or prospects of Borrower,
which has not been fully and accurately disclosed to Lender in writing prior to
the date hereof.

         8.18 CONSENT OF AFFILIATES. The provisions of Section 9.17 hereof and
the other Sections of this Agreement referred to therein do not conflict with
any agreement between Borrower and any Affiliate, including, without limitation,
VGR Holding Inc. (formerly BGLS Inc.), and do not require the consent of any
Affiliate in order to be valid.

         8.19 EPIC NOTE. No principal payments are due and payable under the
Epic Note prior to May 24, 2009.

                                      -43-
<PAGE>

         8.20 SURVIVAL OF WARRANTIES; CUMULATIVE. All representations and
warranties contained in this Agreement or any of the other Financing Agreements
shall survive the execution and delivery of this Agreement and shall be deemed
to have been made again to Lender on the date of each additional borrowing or
other credit accommodation hereunder and shall be conclusively presumed to have
been relied on by Lender regardless of any investigation made or information
possessed by Lender. The representations and warranties set forth herein shall
be cumulative and in addition to any other representations or warranties which
Borrower shall now or hereafter give, or cause to be given, to Lender.

SECTION 9. AFFIRMATIVE AND NEGATIVE COVENANTS

         9.1 MAINTENANCE OF EXISTENCE.

                  (a) Borrower shall at all times preserve, renew and keep in
full force and effect its corporate existence and rights and franchises with
respect thereto and maintain in full force and effect all permits, licenses,
trademarks, tradenames, approvals, authorizations, leases and contracts
necessary to carry on the business as presently or proposed to be conducted;
PROVIDED, HOWEVER, that Borrower shall not be required to preserve, renew or
keep in full force and effect any such right, franchise, permit, license,
trademark, tradename, approval authorization, lease or contract, or the
corporate existence of any Subsidiary (other than an Obligor), if in the
judgment of the board of directors of Borrower, (i) such preservation or
existence is not desirable in the conduct of business of Borrower and the
Subsidiaries taken as a whole and (ii) the loss thereof or the dissolution of
such Subsidiary is not adverse in any material respect to Lender or the
Collateral.

                  (b) Borrower shall not change its name unless each of the
following conditions is satisfied: (i) Lender shall have received not less than
thirty (30) days prior written notice from Borrower of such proposed change in
its corporate name, which notice shall accurately set forth the new name; and
(ii) Lender shall have received a copy of the amendment to the Certificate of
Incorporation of Borrower providing for the name change certified by the
Secretary of State of the jurisdiction of incorporation or organization of
Borrower as soon as it is available. Any change made pursuant to this Section
9.1(b) shall be deemed an amendment to the Information Certificate.

                  (c) Borrower shall not change its chief executive office or
its mailing address or organizational identification number (or if it does not
have one, shall not acquire one) unless Lender shall have received not less than
thirty (30) days' prior written notice from Borrower of such proposed change,
which notice shall set forth such information with respect thereto as Lender may
require and Lender shall have received such agreements as Lender may reasonably
require in connection therewith. Borrower shall not change its type of
organization, jurisdiction of organization or other legal structure. Any change
made pursuant to this Section 9.1(c) shall be deemed an amendment to the
Information Certificate.

         9.2 NEW COLLATERAL LOCATIONS. Borrower may open any new location within
the continental United States provided Borrower (a) gives Lender thirty (30)
days prior written notice of the intended opening of any such new location and
(b) executes and delivers, or causes to be executed and delivered, to Lender
such agreements, documents, and instruments as Lender

                                      -44-
<PAGE>

may deem reasonably necessary or desirable to protect its interests in the
Collateral at such location, including, without limitation, UCC financing
statements. Any change made pursuant to this Section 9.2 shall be deemed an
amendment to the Information Certificate.

         9.3 COMPLIANCE WITH LAWS, REGULATIONS, ETC. Borrower shall and shall
cause each of its Subsidiaries to, at all times, comply in all material respects
with all laws, rules, regulations, licenses, permits, approvals and orders of
any Federal State or local governmental authority applicable to it.

         9.4 PAYMENT OF TAXES AND CLAIMS. Borrower shall and shall cause each of
its Subsidiaries to, duly pay and discharge all Federal State and local income
taxes, withholding taxes, excise taxes and other material taxes, assessments,
contributions and governmental charges upon or against it or its properties or
assets, except for taxes, assessments, contributions and governmental charges
the validity of which are being contested in good faith by appropriate
proceedings diligently pursued and available to Borrower and with respect to
which, to the extent required by GAAP, adequate reserves have been set aside on
its books and such taxes are not a lien upon the Collateral. Borrower shall
provide Lender with evidence, upon Lender's request, immediately upon payment or
filing thereof and in any event on or prior to the due date thereof, that all
Federal, State and local excise and ad valorem taxes on or with respect to its
Inventory or the sale, transfer, withdrawal, movement or other event or
condition giving rise to any such tax, have been paid and all required returns
and reports duly filed when due. Borrower shall be liable for any tax or
penalties imposed on Lender as a result of the financing arrangements provided
for herein and Borrower agrees to indemnify and hold Lender harmless with
respect to the foregoing, and to repay to Lender on demand the amount thereof,
and until paid by Borrower such amount shall be added and deemed part of the
Loans, PROVIDED, THAT, nothing contained herein shall be construed to require
Borrower to pay any income or franchise taxes attributable to the income of
Lender from any amounts charged or paid hereunder to Lender. The foregoing
indemnity shall survive the payment of the Obligations and the termination or
non-renewal of this Agreement.

         9.5 INSURANCE. Borrower shall, and shall cause each of its Subsidiaries
to, at all times, maintain with financially sound and reputable insurers
insurance with respect to the Collateral against loss or damage and all other
insurance of the kinds and in the amounts customarily insured against or carried
by corporations of established reputation engaged in the same or similar
businesses and similarly situated. Said policies of insurance shall be
satisfactory to Lender as to form, amount and insurer. Borrower shall furnish
certificates, policies or endorsements to Lender as Lender shall require as
proof of such insurance, and, if Borrower fails to do so, Lender is authorized,
but not required, to obtain such insurance at the expense of Borrower. All
policies shall provide for at least thirty (30) days prior written notice to
Lender of any cancellation or reduction of coverage and that Lender may act as
attorney for Borrower in obtaining, and at any time an Event of Default exists
or has occurred and is continuing, adjusting, settling, amending and canceling
such insurance. Borrower shall cause Lender to be named as a loss payee and an
additional insured (but without any liability for any premiums) under such
insurance policies and Borrower shall obtain non-contributory lender's loss
payable endorsements to all insurance policies in form and substance
satisfactory to Lender. Such lender's loss payable endorsements shall specify
that the proceeds of such insurance shall be payable to Lender as its interests
may appear and further specify that Lender shall be paid

                                      -45-
<PAGE>

regardless of any act or omission by Borrower or any of its affiliates. At its
option, Lender may apply any insurance proceeds received by Lender at any time
to the cost of repairs or replacement of Collateral and/or to payment of the
Obligations, whether or not then due, in any order and in such manner as Lender
may determine or hold such proceeds as cash collateral for the Obligations.

         9.6 FINANCIAL STATEMENTS AND OTHER INFORMATION.

                  (a) Borrower shall keep proper books and records in which true
and complete entries shall be made of all dealings or transactions of or in
relation to the Collateral and the business of Borrower and its subsidiaries (if
any) in accordance with GAAP and Borrower shall furnish or cause to be furnished
to Lender: (i) within thirty (30) days after the end of each fiscal month,
monthly unaudited financial statements and, if Borrower has any subsidiaries,
unaudited consolidating financial statements (including in each case balance
sheets, statements of income and loss and statements of shareholders' equity),
all in reasonable detail, fairly presenting the financial position and the
results of the operations of Borrower and its subsidiaries as of the end of and
through such fiscal month and (ii) within one hundred five (l05) days after the
end of each fiscal year, audited consolidated financial statements and, if
Borrower has any subsidiaries, unaudited consolidating financial statements of
Borrower and its subsidiaries (including in each case balance sheets, statements
of income and loss, statements of cash flow and statements of shareholders'
equity), and the accompanying notes thereto, all in reasonable detail, fairly
presenting the financial position and the results of the operations of Borrower
and its subsidiaries as of the end of and for such fiscal year, together with
the opinion of independent certified public accountants, which accountants shall
be PricewaterhouseCoopers LLP or any other of the four largest independent
accounting firms in the United States selected by Borrower that such financial
statements have been prepared in accordance with GAAP, and present fairly the
results of operations and financial condition of Borrower and its subsidiaries
as of the end of and for the fiscal year then ended. Concurrently with the
delivery of the financial statements referred to in Section 9.6(a)(i), Borrower
shall deliver to Lender any amendments, modifications or supplements to
Schedules 5.2, 8.2, 8.12 and 8.13 of the Information Certificate.

                  (b) Borrower shall promptly notify Lender in writing of the
details of (i) any loss, damage, investigation, action, suit, proceeding or
claim relating to the Collateral or any other property which is security for the
Obligations or which would result in any material adverse change in Borrower's
business, properties, assets, goodwill or condition, financial or otherwise and
(ii) the occurrence of any Event of Default or event which, with the passage of
time or giving of notice or both, would constitute an Event of Default.

                  (c) Borrower shall promptly after the sending or filing
thereof furnish to Lender copies of all reports which Borrower sends to its
public stockholders generally, if any, and copies of all reports and
registration statements which Borrower files with the Securities and Exchange
Commission, any national securities exchange or the National Association of
Securities Dealers, Inc. Borrower shall use its best efforts to promptly cause
to be furnished to Lender copies of any such reports or registration statements
which are sent or filed by Borrower's direct or indirect parent.

                                      -46-
<PAGE>

                  (d) Borrower shall furnish or cause to be furnished to Lender
such budgets, forecasts, projections and other information respecting the
Collateral and the business of Borrower, as Lender may, from time to time,
reasonably request. To the extent consistent with the provisions of Section 12.6
hereof, Lender is hereby authorized to deliver a copy of any financial statement
or any other information relating to the business of Borrower to any court or
other government agency or to any participant or assignee or prospective
participant or assignee. Borrower hereby irrevocably authorizes and directs all
accountants or auditors to deliver to Lender, at Borrower's expense, copies of
the financial statements of Borrower and any reports or management letters
prepared by such accountants or auditors on behalf of Borrower and to disclose
to Lender such information as they may have regarding the business of Borrower.
Any documents, schedules, invoices or other papers delivered to Lender may be
destroyed or otherwise disposed of by Lender one (1) year after the same are
delivered to Lender, except as otherwise designated by Borrower to Lender in
writing.

                  (e) In addition and not in limitation of any of the financial
reports required to be delivered to Lender under Section 7.1 hereof or Lender's
right to request such other reports and information from time to time, Borrower
shall deliver to Lender, on or prior to the 10th day of the first month of each
fiscal quarter, a certificate that all payments required to be made under the
Junior Creditor Agreements have been made and that no default or event of
default exists under the Junior Creditor Agreements.

                  (f) In addition to and not in limitation of any of the
financial reports required to be delivered to Lender under Section 7.1 hereof or
Lender's right to request such other reports and information from time to time:
(i) if Borrower has Excess Availability equal to or greater than $20,000,000,
Borrower shall deliver to Lender, on or prior to the third (3rd) Business Day of
each week, schedules of sales made, credits issued and cash received together
with a roll forward and appropriate supporting documentation relating thereto
(including, without limitation, at Lender's request, copies of customer
statements and credit memos, remittance advices and reports, copies of deposit
slips and bank statements, copies of shipping and delivery documents, and copies
of purchase orders, invoices and delivery documents for Inventory and Equipment
acquired by Borrower); and on or prior to the 10th day of each month, reports on
the Borrower's inventory and accounts, together with appropriate supporting
documentation relating thereto; and (ii) if Borrower has Excess Availability of
less than $20,000,000, Borrower shall deliver to Lender, on a daily basis,
schedules of sales made, credits issued and cash received together with a roll
forward and appropriate supporting documentation relating thereto (including,
without limitation, at Lender's request, copies of customer statements and
credit memos, remittance advices and reports, copies of deposit slips and bank
statements, copies of shipping and delivery documents, and copies of purchase
orders, invoices and delivery documents for Inventory and Equipment acquired by
Borrower); and on or prior to the 3rd Business Day of each week, reports on the
Borrower's inventory and accounts, together with appropriate supporting
documentation relating thereto. Upon the occurrence and during the continuance
of an Event of Default, each of the financial reports, schedules and information
required to be delivered under this Section 9.6(f) shall be delivered more
frequently as Lender shall elect.

         9.7 SALE OF ASSETS, CONSOLIDATION, MERGER, DISSOLUTION, ETC. Borrower
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly, (a) merge into or with or consolidate with any other Person or
permit any other Person to merge into or with or

                                      -47-
<PAGE>

consolidate with it, or (b) sell, assign, lease, transfer, abandon or otherwise
dispose of any Collateral or its or their other material property that is useful
and necessary in its or their business to any other Person (except for sales of
Inventory in the ordinary course of business) or (c) form or acquire any
subsidiaries, or (d) wind up, liquidate or dissolve or (e) agree to do any of
the foregoing.

         9.8 ENCUMBRANCES. Borrower shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any security interest,
mortgage, pledge, lien, charge or other encumbrance of any nature whatsoever on
any of its assets or properties, including, without limitation, the Collateral,
or file or permit the filing of, or permit to remain in effect, any financing
statement or other similar notice of any security interest or lien with respect
to any such assets or properties, EXCEPT: (a) liens and security interests of
Lender; (b) liens securing the payment of taxes, either not yet overdue or the
validity of which are being contested in good faith by appropriate proceedings
diligently pursued and available to Borrower or its Subsidiaries and with
respect to which adequate reserves have been set aside on its books; (c)
non-consensual statutory liens (other than liens securing the payment of taxes)
arising in the ordinary course of Borrower's or in Subsidiaries' business to the
extent: (i) such liens secure obligations which are not overdue or (ii) such
liens secure claims or liabilities which are fully insured and being defended at
the sole cost and expense and at the sole risk of the insurer or being contested
in good faith by appropriate proceedings diligently pursued and available to
Borrower or its Subsidiaries, in each case prior to the commencement of
foreclosure or other similar proceedings and with respect to which adequate
reserves have been set aside on its books; (d) zoning restrictions, easements,
licenses, covenants and other restrictions affecting the use of real property
which do not interfere in any material respect with the use of such real
property or ordinary conduct of the business of Borrower or its Subsidiaries as
presently conducted thereon or materially impair the value of the real property
which may be subject thereto; (e) purchase money security interests in Equipment
(including capital leases) and purchase money mortgages on real estate, in
either case securing the cost of the acquisition or improvement thereon, so long
as such security interests and mortgages do not apply to any property of
Borrower or its Subsidiaries other than the Equipment or real estate so acquired
or improved, and the indebtedness secured thereby does not exceed the cost of
the acquisition or improvement of such Equipment or real estate, as the case may
be; (f) liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, performance and
return-of-money bond and other similar obligations (exclusive of obligations for
the payment of borrowed money); (g) liens and security interests on any asset
acquired by Borrower or any of its Subsidiaries after the date hereof if (i)
such lien or security interest exists at the time of such acquisition, (ii) such
lien or security interest was not created in contemplation of such acquisition,
and (iii) such lien or security interest does not extend to or cover any
property other than the assets acquired and improvements to such assets; (h) any
extension, renewal or replacement, in whole or in part, of any lien, security
interest or other encumbrance described in clauses (a), (e), and (g) herein, so
long as the amount of collateral or the principal amount of indebtedness so
secured is not increased thereby; and (i) the security interests and liens set
forth on Schedule 8.4 in the Information Certificate.

                                      -48-
<PAGE>

         9.9 INDEBTEDNESS. Borrower shall not, and shall not permit any of its
Subsidiaries to, incur, create, assume, become or be liable in any manner with
respect to, or permit to exist, any obligations or indebtedness, except:

                  (a) the Obligations;

                  (b) trade obligations and normal accruals in the ordinary
course of business not yet due and payable, or with respect to which Borrower or
any of its Subsidiaries is contesting in good faith the amount or validity
thereof by appropriate proceedings diligently pursued and available to Borrower
or any of its Subsidiaries and with respect to which adequate reserves have been
set aside on its books;

                  (c) purchase money indebtedness (including capital leases) to
the extent not incurred or secured by liens (including capital leases) in
violation of any other provision of this Agreement;

                  (d) rental and other payments under operating leases which are
not sale and leaseback transactions;

                  (e) subordinated and unsecured indebtedness of Borrower to
Epic, which indebtedness as of the date hereof is in the principal amount of
$339,031,848, which indebtedness is evidenced by the Epic Note; PROVIDED, THAT:

                           (i) Borrower and Epic will not, directly or
indirectly, until all of the Obligations are finally paid and performed in full
and this Agreement is terminated, make any principal, interest or other payments
in respect of such indebtedness, including, but not limited to, any prepayments
or other non-mandatory payments or any payments pursuant to the purported
acceleration thereof, except that Borrower and Epic may make regularly scheduled
quarterly payments of interest on the Epic Note in an amount not to exceed
$11,310,000 per quarter, PROVIDED, that all such interest payments are made
pursuant to the terms of the Epic Note as in effect on the date hereof, on an
unaccelerated basis and PROVIDED, FURTHER, that no Event of Default or an event
which with notice or passage of time or both would constitute an Event of
Default has occurred or exists or would occur or exist after giving effect to
such payment;

                           (ii) Borrower and Epic will not, directly or
indirectly, until all of the Obligations are finally paid and performed in full
and this Agreement is terminated, (A) redeem, retire, defease, purchase or
otherwise acquire such indebtedness, or set aside or otherwise deposit or invest
any sums for such purpose, or (B) amend, modify, alter or change terms of such
indebtedness or any agreement or instrument related thereto;

                           (iii) Borrower will furnish to Lender all notices,
demands or other materials concerning such indebtedness, either received by it
in connection therewith promptly after receipt thereof, or sent by it in
connection therewith concurrently with the sending thereof, as the case may be;

                           (iv) The Epic Loan shall be subordinated to the Loans
hereunder pursuant to the terms and conditions of the Subordination Agreement
dated May 24, 1999 executed by Epic in favor of Lender; and

                                      -49-
<PAGE>

                           (v) Borrower shall cause all monies received by
Trademarks LLC from the sale of the Class B Interest and each mandatory annual
distribution of $500,000 made by Trademarks LLC in respect of the Class B
Interest, to the extent of legally available funds therefor, to be distributed
to Eve or Eve Sub, as the case may be, in respect of its interest in Trademarks
LLC and thereafter by Eve Sub and/or Eve to Borrower, directly and/or through
successive distributions, as the case may be. In addition, Borrower shall not
after the date hereof allow Eve, Eve Sub or any other Subsidiary of Borrower to,
directly or indirectly, loan, advance, transfer, contribute or invest any
additional money or property to or in Eve Sub or Trademarks LLC; and

                  (f) indebtedness described on Schedule 9.9 to the Information
Certificate.

         9.10 LOANS, INVESTMENTS, GUARANTEES, ETC. Borrower shall not, and shall
not permit any of its Subsidiaries to, directly or indirectly, make any loans or
advance money or property to any person, or invest in (by capital contribution,
dividend or otherwise) or purchase or repurchase the stock or indebtedness or
all or a substantial part of the assets or property of any person, or guarantee,
assume, endorse, or otherwise become responsible for (directly or indirectly)
the indebtedness, performance obligations or dividends of any Person or agree to
do any of the foregoing, EXCEPT: (a) the endorsement of instruments for
collection or deposit in the ordinary course of business; (b) investments in:
(i) short-term direct obligations of the United States Government, (ii)
negotiable certificates of deposit issued by any bank satisfactory to Lender,
payable to the order of Borrower or any of its Subsidiaries being the owner
thereof or to bearer, and (iii) commercial paper rated A1 or P1; and (c) loans
by any Subsidiary of Borrower to Borrower, including, without limitation, loans
by Epic to Borrower as provided in Section 9.12(b) below.

         9.11 DIVIDENDS AND REDEMPTIONS. Borrower may declare and pay cash
dividends to Brooke Group Holding Inc. on account of any shares of Borrower's
common stock, provided that (a) Excess Availability for each of the immediately
preceding thirty (30) consecutive days shall have been not less than $5,000,000,
(b) as of the date of such payment and after giving effect thereto, Excess
Availability shall be not less than $5,000,000 and (c) as of the date of such
payment and after giving effect thereto, no Event of Default, or act, condition
or event which with notice or passage of time or both would constitute an Event
of Default shall exist or have occurred.

         9.12 TRANSACTIONS WITH AFFILIATES. Subject to Section 9.17 below,
Borrower shall not, and shall not permit any of its Subsidiaries to, enter into
any transaction for the purchase, sale or exchange of property or the rendering
of any service to or by any Affiliate, except (a) Borrower may pay royalties to
Eve for the use by Borrower of trademarks owned by Eve in accordance with the
License Agreement, dated June 30, 1990, between Borrower (formerly known as
Liggett & Myers Tobacco Company) and Eve (the "License Agreement") as in effect
on March 8, 1994, (b) Borrower may make payments of interest in respect of
indebtedness then due and owing to Epic as permitted under Section 9.9(e)
hereof; and (c) Borrower may make payments required pursuant to the Tax Sharing
Agreement, dated June 29, 1990, between Brooke Group Holding Inc. (formerly
known as Liggett Group Inc.), Borrower (formerly known as Liggett & Myers
Tobacco Company), Eve, Harrington Holdings, Inc., Sky Box International Inc.
(formerly known as Impel Marketing Inc.), Chesterfield Assets Inc. and BGI

                                      -50-
<PAGE>

Subsidiary Corp., as in effect on March 8, 1994; PROVIDED, THAT, Borrower shall
cause Eve to declare and pay a dividend to Borrower (i) no later than ten (10)
days after the receipt by Eve of all payments by Borrower to Eve pursuant to the
License Agreement, in an amount equal to all such payments minus the aggregate
amount of up to $250,000 per calendar year for operating expenses of Eve
actually incurred and paid by Eve and (ii) within ten (10) days after the end of
each fiscal quarter of Eve, in an amount equal to all of Eve's other earnings
and profits, if any, for such fiscal quarter not previously dividended to
Borrower; and, FURTHER PROVIDED, THAT Borrower and Epic agree that Borrower
shall cause Epic to declare and pay a dividend to Borrower (A) no later than ten
(10) days after the receipt by Epic of all payments by Borrower to Epic pursuant
to the Epic Note, in an amount equal to all such payments minus the aggregate
amount of up to $250,000 per calendar year for operating expenses of Epic
actually incurred and paid by Epic and (B) within ten (10) days after the end of
each fiscal quarter of Epic, in an amount equal to all of Epic's other earnings
and profits, if any, for such fiscal quarter not previously dividended to
Borrower. In addition to the foregoing, no later than ten (10) days after the
receipt by Eve, and/or any wholly-owned Subsidiary of Eve, of each distribution
in respect of its respective interests in the limited liability company formed
pursuant to the Philip Morris Agreement, the Borrower shall cause Eve and/or
such wholly-owned Subsidiary of Eve, as the case may be, to declare and pay, to
the extent of legally available funds therefor, a dividend, directly and/or
through successive dividends, to Borrower in an amount equal to such
distribution.

         9.13 WORKING CAPITAL. Borrower shall, at all times, maintain Working
Capital which is not less than the negative amount of $17,000,000.

         9.14 ADJUSTED NET WORTH. Borrower shall, at all times, maintain
Adjusted Net Worth of not less than Eight Million Dollars ($8,000,000). For the
purposes of the calculation of Adjusted Net Worth, any sums included in Adjusted
Net Worth under GAAP related to any pension plans of Borrower or any Affiliate
shall be excluded from the calculation of Adjusted Net Worth under this Section
9.14.

         9.15 COSTS AND EXPENSES. Borrower shall pay to Lender on demand all
costs, expenses, filing fees and taxes paid or payable in connection with the
preparation, negotiation, execution, delivery, recording, administration,
collection, liquidation, enforcement and defense of the Obligations, Lender's
rights in the Collateral, this Agreement, the other Financing Agreements and all
other documents related hereto or thereto, including any amendments, supplements
or consents which may hereafter be contemplated (whether or not executed) or
entered into in respect hereof and thereof, including but not limited to: (a)
all costs and expenses of filing or recording (including Uniform Commercial Code
financing statement filing taxes and fees, documentary taxes, intangibles taxes
and mortgage reordering taxes and fees, if applicable); (b) all title insurance
and other insurance premiums, appraisal fees and search fees; (c) costs and
expenses of remitting loan proceeds, collecting checks and other items of
payment, and establishing and maintaining the Blocked Accounts, together with
Lender's customary charges and fees with respect thereto; (d) charges, fees or
expenses charged by any bank or issuer in connection with the Letter of Credit
Accommodations; (e) costs and expenses of preserving and protecting the
Collateral; (f) costs and expenses paid or incurred in connection with obtaining
payment of the Obligations, enforcing the security interests and liens of
Lender, selling or otherwise realizing upon the Collateral, and otherwise
enforcing the provisions of this

                                      -51-
<PAGE>

Agreement and the other Financing Agreements or defending any claims made or
threatened against Lender arising out of the transactions contemplated hereby
and thereby (including, without limitation, preparation for and consultation
concerning any such matters); (g) all out-of-pocket expenses and costs
heretofore and from time to time hereafter incurred by Lender during the course
of periodic field examinations of the Collateral and Borrower's operations, plus
a per diem charge at the rate of $750 per person per day for Lender's examiners
in the field and office; and (h) the reasonable fees and disbursements of
counsel (including legal assistants) to Lender in connection with any of the
foregoing.

         9.16 FURTHER ASSURANCES. At the request of Lender at any time and from
time to time, Borrower shall, at its expense, duly execute and deliver, or cause
to be duly executed and delivered, such further agreements, documents and
instruments, and do or cause to be done such further acts as may be necessary or
proper to evidence, perfect, maintain and enforce the security interests and the
priority thereof in the Collateral and to otherwise effectuate the provision or
purposes of this Agreement or any of the other Financing Agreements. Lender may
at any time and from time to time request a certificate from an officer of
Borrower representing that all conditions precedent to the making of Loans and
providing Letter of Credit Accommodations contained herein are satisfied. In the
event of such request by Lender, Lender may, at its option, cease to make any
further loans or provide any further Letter of Credit Accommodations until
Lender has received such certificate and, in addition, Lender has determined
that such conditions are satisfied Where permitted by law, Borrower hereby
authorizes Lender to execute and file one or more UCC financing statements
signed only by Lender.

         9.17 CERTAIN PERMITTED TRANSACTIONS. Notwithstanding anything to the
contrary contained in Sections 9.7, 9.9, 9.10, 9.11 and 9.12 above, Lender
agrees that or consents to, as applicable:

                  (a) Borrower may make dividend payments to Brooke Group
Holding Inc. (formerly known as Brooke Group Ltd.) to the extent permitted under
Section 9.11 or Section 9.17(d) hereof;

                  (b) Borrower may make payments and engage in the transactions
permitted under clauses (i) and (v) of Section 4.09 of the Indenture, as in
effect on March 8, 1994; PROVIDED, THAT at the time of each such payment
permitted by the exception contained in clause (i) of Section 4.09 of the
Indenture, such payments do not exceed $4,400,000 in the aggregate during any
consecutive twelve month period, plus the five (5%) percent per annum increase
on the fees of $2,600,000 per annum payable under the Corporate Services
Agreement, dated as of January 1, 1992 between Borrower and VGR Holding Inc.
(formerly BGLS Inc.) to the extent paid in any such twelve (12) month period by
Borrower to VGR Holding Inc. (formerly BGLS Inc.) under said agreement;

                  (c) Borrower may make payments and engage in the transactions
permitted under the first paragraph of Section 4.09 of the Indenture, as in
effect on March 8, 1994; PROVIDED, that (i) each such transaction is in
Borrower's ordinary course of business on prices and terms no less favorable
than would have been obtained in an arm's length transaction with a Person not
an Affiliate, (ii) Borrower shall provide Lender with written reports, on the
tenth (10th) day of each month setting forth the nature and amount of each such
transaction for the

                                      -52-
<PAGE>

immediately prior month, including, without limitation, all payments with
respect thereto and outstanding indebtedness owed thereunder, (iii) the
aggregate indebtedness owed to Borrower in connection with all such transactions
outstanding at any time does not exceed $500,000, and (iv) such transaction or
series of related transactions does not involve payments or delivery of goods or
services by Borrower having a value in excess of $500,000 in each case;

                  (d) Borrower may, on or prior to May 31, 2006, make
distributions or pay dividends to VGR Holding, Inc. (formerly BGLS Inc.) in an
aggregate amount not to exceed the Twelve Million Dollar VGR Contribution
PROVIDED that, with respect to any payment or distribution (i) Lender receives
five (5) days prior written notice of any such intended distribution or payment
and such written notice specifically designates such payment as a payment in
respect of the Twelve Million Dollar VGR Contribution, and (ii) as of the date
of such distribution or payment, no Event of Default exists, Borrower is in
compliance with all financial covenants as set forth herein and after given
effect to each such payment or distribution, Borrower has Excess Availability
greater than $0;

                  (e) Borrower may make payments for the purpose of complying
with the terms of the Order, PROVIDED THAT the aggregate principal amount of
such payments, which shall be used to purchase the bond required to be posted,
and fund the escrow payment required to be made, by Borrower under the Order,
shall not exceed Nine Million Seven Hundred Twenty Three Thousand Seventy-Seven
Dollars ($9,723,077);

                  (f) The VGRH Guarantee, subject to the Subordination
Agreement; PROVIDED that in the event that Lender receives a Junior Creditor
Notice under the VGRH Guarantee, in addition to Lender's right to establish
reserves, from time to time, hereunder, Lender shall have the right, in its sole
discretion, to establish a reserve in the amount of $10,000,000;

                  (g) The Medallion Guarantee, subject to the Subordination
Agreement, dated April 1, 2002, between Lender, Gary L. Hall, Gary L. Hall
Retained Annuity Trust I and Hall Family Trust;

                  (h) Borrower having (i) merged L&M Club Inc., Chesterfield
Club, Inc., Gary Tobacco Company, Liggett & Myers Export Company, Inc. and
Liggett & Myers International Corporation, with and into Liggett & Myers, Inc.,
(ii) dissolved Liggett Group International Corp. and Cigarette Exporting Company
of America, Ltd. and (iii) merged Carolina Tobacco Express Company into
Borrower;

                  (i) Borrower having entered into the G.D. Sale/Leaseback.
Without limiting the foregoing, Lender agrees that for purposes of Section
9.17(c)(ii) hereof, this consent constitutes the only notice required in respect
of the G.D. Sale/Leaseback. In addition, Lender hereby consents, notwithstanding
Section 9.17(c)(iv) hereof, to the rent payable by Borrower to VGR Holding Inc.
(formerly BGLS Inc.) pursuant to the G.D. Sale/Leaseback during the period
beginning on April 6, 1994 and ending on the termination date of such lease. VGR
Holding Inc. (formerly BGLS Inc.) agrees to give Lender not less than one
hundred and twenty (120) days prior written notice of any termination of the
G.D. Sale/Leaseback (other than the expiration thereof in accordance with its
terms) by VGR Holding Inc. (formerly BGLS Inc.) to Borrower

                                      -53-
<PAGE>

prior to March 31, 1997 or, if the date of such termination is extended by
Borrower and VGR Holding Inc. (formerly BGLS Inc.), prior to any later
termination date;

                  (j) the Maple Transactions subject to compliance to Lender's
satisfaction with the following terms and conditions:

                           (i) Borrower shall have guaranteed payment in full to
Lender of the Mebane Loan and all other indebtedness now or hereafter owed by
Maple to Lender, including without limitation, principal, interest, fees and
expenses (collectively, the "Maple Obligations"), and such guarantee by Borrower
in favor of Lender shall be in form and substance satisfactory to Lender.

                           (ii) Maple shall have guaranteed payment in full to
Lender of all of the Obligations, and such guarantee by Maple shall be in form
and substance satisfactory to Lender (the "Maple Guarantee").

                           (iii) The first mortgage and lien granted by Maple to
Lender on the Mebane Premises and in the Mebane Lease shall secure all of the
Maple Obligations, including, without limitation, the Maple Guarantee.

                           (iv) The Mebane Lease (A) shall be for a period of
not less than seven (7) years with a monthly rental at least equal to the
monthly payment of principal and interest due on the Mebane Loan, and (B) shall
not be amended, modified or terminated in any material respect without the prior
written consent of Lender.

                           (v) The term "Obligor" shall include, without
limitation, Maple until such time as the later of (A) the obligation evidenced
by the Mebane Note is satisfied in accordance with its terms or (B) the Maple
Guarantee is terminated as provided therein.

                           (vi) The Collateral shall include, without
limitation, Borrower's rights under the Mebane Lease. Lender is authorized (in
its discretion) by Borrower and Maple to charge the monthly rental and other
sums owed by Borrower to Maple under the Mebane Lease, when due and payable,
directly to Borrower's loan account with Lender for the account of Maple and to
apply such monthly rentals in payment of the monthly installments of principal
and interest due in respect of the Mebane Loan.

                           (vii) Borrower shall not (A) make any loans or
capital contributions to, investments in or guarantees of the debt of Maple
except for the loan or capital contribution by Borrower to Maple in an amount
not to exceed $2,600,000 to be utilized by Maple to pay to 3C Alliance LLP a
portion of the purchase price for the Mebane Premises, (B) permit or cause Maple
to amend its Certificate of Formation or its Operating Agreement to allow Maple
to be engaged in any other business except for the ownership of the Mebane
Premises and (C) permit Maple to incur indebtedness (other than the Maple
Obligations) which is other than non-recourse to Maple or Borrower.

                           (viii) Maple shall not (A) distribute any funds to
Borrower, (B) amend its Certificate of Formation or its Operating Agreement to
allow Maple to be engaged in any other business except for the ownership of the

                                      -54-
<PAGE>

Mebane Premises and (C) incur indebtedness (other than the Maple Obligations)
which is other than non-recourse to Maple or Borrower.

                           (ix) In the event of a refinance of the Mebane
Premises, Maple shall deliver, in form reasonably satisfactory to Lender, to (A)
a mortgagee waiver in favor of Lender and (B) a non-disturbance and attornment
agreement in favor of Lender and Borrower;

                  (k) Borrower and Liggett Vector Brands Inc. having entered
into the Liggett Agreement;

                  (l) Liggett Vector Brands Inc. and Vector Tobacco Inc. having
entered into the Vector Agreements; and

                  (m) Borrower having leased equipment to Vector Tobacco Inc. as
provided in the Consent and Amendment to Financing Agreements dated December 20,
2002.

SECTION 10. EVENTS OF DEFAULT AND REMEDIES

         10.1 EVENTS OF DEFAULT. The occurrence or existence of anyone or more
of the following events are referred to herein individually as an "Event of
Default", and collectively as "Events of Default":

                  (a) (i) Borrower fails to pay when due any of the Obligations
or (ii) Borrower or any Obligor fails to perform any of the terms, covenants,
conditions or provisions contained in this Agreement or any of the other
Financing Agreements other than as described in Section 10.1(a)(i) and such
failure shall continue for fifteen (15) consecutive days; PROVIDED, THAT such
fifteen (15) day period shall not apply in the case of: (A) any failure to
observe any such term, covenant, condition or provision which is not capable of
being cured at all or within such fifteen (15) day period or which has been the
subject of a prior failure to perform the same term, covenant, condition or
provision within the immediately prior six (6) month period or (B) an
intentional breach by Borrower or any Obligor of any such term, covenant,
condition or provision, or (C) the failure to observe or perform any of the
covenants or provisions contained in Sections 8.4, 9.1 and 9.5 of this Agreement
or any covenants or agreements covering substantially the same matter as such
sections in any of the Financing Agreements;

                  (b) any representation, warranty or statement of fact made by
Borrower to Lender in this Agreement, the other Financing Agreements or any
other agreement, schedule, confirmatory assignment or otherwise shall when made
or deemed made be false or misleading in any material respect;

                  (c) any Obligor revokes or terminates any guarantee,
endorsement or other agreement of such party in favor of Lender;

                  (d) any judgment for the payment of money is rendered against
Borrower or any Obligor or any Subsidiary of Borrower in excess of $500,000 in
anyone case or in excess of $1,500,000 in the aggregate and shall remain
undischarged or unvacated for a period in excess of thirty (30) days or
execution shall at any time not be effectively stayed, or any material judgment
other than for the payment of money, or injunction, attachment, garnishment or

                                      -55-
<PAGE>

execution is rendered against Borrower or any Obligor or any of their assets
which has a material adverse effect on Borrower, any Obligor or any of the
Collateral;

                  (e) any Obligor (being a natural person or a general partner
of an Obligor which is a partnership) dies or Borrower or any Obligor or any
Subsidiary of Borrower, which is a partnership or corporation, dissolves or
suspends or discontinues doing business;

                  (f) Borrower or any Obligor or any Subsidiary of Borrower
becomes insolvent (however defined or evidenced), makes an assignment for the
benefit of creditors, makes or sends notice of a bulk transfer or admits in
writing its inability to generally pay its debts;

                  (g) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at law or
in equity) is filed against Borrower or any Obligor or any Subsidiary of
Borrower or all or any part of its properties and such petition or application
is not dismissed within thirty (30) days after the date of its filing or
Borrower or any Obligor or any Subsidiary of Borrower shall file any answer
admitting or not contesting such petition or application or indicates its
consent to, acquiescence in or approval of, any such action or proceeding or the
relief requested is granted sooner;

                  (h) a case or proceeding under the bankruptcy laws of the
United States of America now or hereafter in effect or under any insolvency,
reorganization, receivership, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction now or hereafter in effect (whether at a law
or equity) is filed by Borrower or any Obligor or any Subsidiary of Borrower or
for all or any part of its property; or

                  (i) any default by Borrower or any Obligor or any Subsidiary
of Borrower under any agreement, document or instrument relating to any
indebtedness for borrowed money owing to any person other than Lender, or any
capitalized lease obligations, contingent indebtedness in connection with any
guarantee, letter of credit, indemnity or similar type of instrument in favor of
any person other than Lender, in any case in an amount in excess of $500,000,
which default continues for more than the applicable cure period, if any, with
respect thereto, or any default by Borrower or any Obligor or any Subsidiary of
Borrower under any material contract, lease, license or other obligation to any
person other than Lender, which default would have a material adverse effect on
Borrower, any Obligor or the Collateral and continues for more than the
applicable cure period, if any, with respect thereto;

                  (j) any change in the controlling ownership of Borrower or a
"Change of Control" as defined in the Indenture as in effect on March 8, 1994;

                  (k) any change in the chief executive officer or the chief
financial officer of Borrower, except if such new chief executive officer has
substantial operational managerial experience in the tobacco products industry
or such new chief financial officer has substantial financial management
experience or such change is otherwise satisfactory to Lender;

                                      -56-
<PAGE>

                  (l) the (i) indictment or, to Borrower's knowledge, threatened
indictment of Borrower or Obligor or any Subsidiary of Borrower under any
criminal statute, or (ii) commencement of criminal or civil proceedings or, to
Borrower's knowledge, threatened commencement of criminal proceedings against
Borrower or any Obligor or any Subsidiary of Borrower, pursuant to which, (A) as
to any such proceeding by any governmental agency (which term shall not include
for this purpose any Person other than one acting in an official government
capacity), the penalties or remedies sought for the acts or omission of Borrower
which allegedly are the basis thereof would adversely impair the Collateral in
any material respect, including, without limitation, forfeiture of any material
portion of the Collateral, or (B) as to any such proceeding by any other Person,
in Congress' good faith judgment, such proceedings are reasonably likely to be
adversely determined against Borrower and the penalties or remedies sought for
the acts or omissions of Borrower which allegedly are the basis thereof, in
Congress' good faith judgment, would be reasonably likely to adversely impair
the Collateral in any material respect, including without limitation, forfeiture
of any material portion of the Collateral;

                  (m) there shall be an event of default under any of the other
Financing Agreements;

                  (n) Intentionally Omitted;

                  (o) there shall be a default by VGR Holding, Inc. (formerly
BGLS Inc.) or Borrower under the VGRH Transaction;

                  (p) there shall be a default by VGR Acquisition Inc. or
Borrower under the Medallion Transaction; and

                  (q) there shall be a default by Maple under the Mebane Loan.

         10.2 REMEDIES.

                  (a) At any time an Event of Default exists or has occurred and
is continuing Lender shall have all rights and remedies provided in this
Agreement, the other Financing Agreements, the Uniform Commercial Code and other
applicable law, all of which rights and remedies may be exercised without notice
to or consent by Borrower or any Obligor, except as such notice or consent is
expressly provided for hereunder or required by applicable law. All rights,
remedies and powers granted to Lender hereunder, under any of the other
Financing Agreements, the Uniform Commercial Code or other applicable law, are
cumulative, not exclusive and enforceable, in Lender's discretion,
alternatively, successively, or concurrently on any one or more occasions, and
shall include, without limitation, the right to apply to a court of equity for
an injunction to restrain a breach or threatened breach by Borrower of this
Agreement or any of the other Financing Agreements. Lender may, at any time or
times, proceed directly against Borrower or any Obligor to collect the
Obligations without prior recourse to the Collateral.

                  (b) Without limiting the foregoing, at any time an Event of
Default exists or has occurred and is continuing, Lender may, in its discretion
and without limitation, (i) accelerate the payment of all Obligations and demand
immediate payment thereof to Lender PROVIDED, THAT, upon the occurrence of any
Event of Default described in Sections 10.1(g) and 10.1(h), all Obligations

                                      -57-
<PAGE>

shall automatically become immediately due and payable), (ii) with or without
judicial process or the aid or assistance of others, enter upon any premises on
or in which any of the Collateral may be located and take possession of the
Collateral or complete processing, manufacturing and repair of all or any
portion of the Collateral, (iii) require Borrower, at Borrower's expense, to
assemble and make available to Lender any part or all of the Collateral at any
place and time designated by Lender, (iv) collect, foreclose, receive,
appropriate, setoff and realize upon any and all Collateral, (v) remove any or
all of the Collateral from any premises on or in which the same may be located
for the purpose of effecting the sale, foreclosure or other disposition thereof
or for any other purpose, (vi) sell, lease, transfer, assign, deliver or
otherwise dispose of any and all Collateral (including, without limitation,
entering into contracts with respect thereto, public or private sales at any
exchange, broker's board, at any office of Lender or elsewhere) at such prices
or terms as Lender may deem reasonable, for cash, upon credit or for future
delivery, with the Lender having the right to purchase the whole or any part of
the Collateral at any such public sale, all of the foregoing being free from any
right or equity of redemption of Borrower, which right or equity of redemption
is hereby expressly waived and released by Borrower and (vii) terminate this
Agreement If any of the Collateral is sold or leased by Lender upon credit terms
or for future delivery, the Obligations shall not be reduced as a result thereof
until payment therefor is finally collected by Lender. If notice of disposition
of Collateral is required by law, ten (10) days prior notice by Lender to
Borrower designating the time and place of any public sale or the time after
which any private sale or other intended disposition of Collateral is to be
made, shall be deemed to be reasonable notice thereof and Borrower waives any
other notice. In the event Lender institutes an action to recover any Collateral
or seeks recovery of any Collateral by way of prejudgment remedy, Borrower
waives the posting of any bond which might otherwise be required. At any time an
Event of Default exists or has occurred and is continuing, upon Lender's
request, Borrower will either, as Lender shall specify, furnish cash collateral
to the issuer to be used to secure and fund Lender's reimbursement obligations
to the issuer in connection with any Letter of Credit Accommodations or furnish
cash collateral to Lender for the Letter of Credit Accommodations. Such cash
collateral shall be in the amount equal to one hundred ten (110%) percent of the
amount of the Letter of Credit Accommodations plus the amount of any fees and
expenses payable in connection therewith through the end of the expiration of
such Letter of Credit Accommodations.

                  (c) Lender may, at any time or times that an Event of Default
exists or has occurred and is continuing, enforce Borrower's rights against any
account debtor, secondary obligor or other obligor in respect of any of the
Accounts or other Receivables that constitute Collateral. Without limiting the
generality of the foregoing, Lender may at such time or times (i) notify any or
all account debtors, secondary obligors or other obligors in respect thereof
that the Receivables that constitute Collateral have been assigned to Lender and
that Lender has a security interest therein and Lender may direct any or all
account debtors, secondary obligors and other obligors to make payment of
Receivables that constitute Collateral directly to Lender, (ii) extend the time
of payment of, compromise, settle or adjust for cash, credit, return of
merchandise or otherwise, and upon any terms or conditions, any and all
Receivables that constitute Collateral or other obligations included in the
Collateral and thereby discharge or release the account debtor or any secondary
obligors or other obligors in respect thereof without affecting any of the
Obligations, (iii) demand, collect or enforce payment of any Receivables that
constitute Collateral or such other obligations, but without any duty to do so,
and Lender shall not be liable for its failure to collect or enforce the payment
thereof nor for the negligence of its

                                      -58-
<PAGE>

agents or attorneys with respect thereto and (iv) take whatever other action
Lender may deem necessary or desirable for the protection of its interests. At
any time that an Event of Default exists or has occurred and is continuing, at
Lender's request, all invoices and statements sent to any account debtor shall
state that the Accounts and such other obligations have been assigned to Lender
and are payable directly and only to Lender and Borrower shall deliver to Lender
such originals of documents evidencing the sale and delivery of goods or the
performance of services giving rise to any Accounts as Lender may require. In
the event any account debtor returns Inventory when an Event of Default exists
or has occurred and is continuing, Borrower shall, upon Lender's request, hold
the returned Inventory in trust for Lender, segregate all returned Inventory
from all of its other property, dispose of the returned Inventory solely
according to Lender's instructions, and not issue any credits, discounts or
allowances with respect thereto without Lender's prior written consent.

                  (d) To the extent that applicable law imposes duties on Lender
to exercise remedies in a commercially reasonable manner (which duties cannot be
waived under such law), Borrower acknowledges and agrees that it is not
commercially unreasonable for Lender (i) to fail to incur expenses reasonably
deemed significant by Lender to prepare Collateral for disposition or otherwise
to complete raw material or work in process into finished goods or other
finished products for disposition, (ii) to fail to obtain third party consents
for access to Collateral to be disposed of, or to obtain or, if not required by
other law, to fail to obtain consents of any Governmental Authority or other
third party for the collection or disposition of Collateral to be collected or
disposed of, (iii) to fail to exercise collection remedies against account
debtors, secondary obligors or other persons obligated on Collateral or to
remove liens or encumbrances on or any adverse claims against Collateral, (iv)
to exercise collection remedies against account debtors and other persons
obligated on Collateral directly or through the use of collection agencies and
other collection specialists, (v) to advertise dispositions of Collateral
through publications or media of general circulation, whether or not the
Collateral is of a specialized nature, (vi) to contact other persons, whether or
not in the same business as Borrower for expressions of interest in acquiring
all or any portion of the Collateral, (vii) to hire one or more professional
auctioneers to assist in the disposition of Collateral, whether or not the
collateral is of a specialized nature, (viii) to dispose of Collateral by
utilizing Internet sites that provide for the auction of assets of the types
included in the Collateral or that have the reasonable capability of doing so,
or that match buyers and sellers of assets, (ix) to dispose of assets in
wholesale rather than retail markets, (x) to disclaim disposition warranties,
(xi) to purchase insurance or credit enhancements to insure Lender against risks
of loss, collection or disposition of Collateral or to provide to Lender a
guaranteed return from the collection or disposition of Collateral, or (xii) to
the extent deemed appropriate by Lender, to obtain the services of other
brokers, investment bankers, consultants and other professionals to assist
Lender in the collection or disposition of any of the Collateral. Borrower
acknowledges that the purpose of this Section is to provide non-exhaustive
indications of what actions or omissions by Lender would not be commercially
unreasonable in Lender's exercise of remedies against the Collateral and that
other actions or omissions by Lender shall not be deemed commercially
unreasonable solely on account of not being indicated in this Section. Without
limitation of the foregoing, nothing contained in this Section shall be
construed to grant any rights to Borrower or to impose any duties on Lender that
would not have been granted or imposed by this Agreement or by applicable law in
the absence of this Section.

                                      -59-
<PAGE>

SECTION 11. JURY TRIAL WAIVER; OTHER WAIVERS AND
            CONSENTS; GOVERNING LAW

         11.1 GOVERNING LAW; CHOICE OF FORUM; SERVICE OF PROCESS; JURY TRIAL
WAIVER.

                  (a) The validity, interpretation and enforcement of this
Agreement and the other Financing Agreements (other than the Mortgages to the
extent provided therein) and any dispute arising out of the relationship between
the parties hereto, whether in contract, tort, equity or otherwise, shall be
governed by the internal laws of the State of New York but excluding any
principles of conflicts of law or other rule of law that would cause the
application of the law of any jurisdiction other than the laws of the State of
New York.

                  (b) Borrower and Lender irrevocably consent and submit to the
non-exclusive jurisdiction of the Supreme Court of the State of New York, County
of New York, and the United States District Court for the Southern District of
New York and waive any objection based on venue or forum non conveniens with
respect to any action instituted therein arising under this Agreement or any of
the other Financing Agreements or in any way connected with or related or
incidental to the dealings of the parties hereto in respect of this Agreement or
any of the other Financing Agreements or the transactions related hereto or
thereto, in each case whether now existing or hereafter arising, and whether in
contract, tort, equity or otherwise, and agree that any dispute with respect to
any such matters shall be heard only in the courts described above (except that
Lender shall have the right to bring any action or proceeding against Borrower
or its property in the courts of any other jurisdiction which Lender deems
necessary or appropriate in order to realize on the Collateral or to otherwise
enforce its rights against Borrower or its property).

                  (c) Borrower hereby waives personal service of any and all
process upon it and consents that all such service of process may be made by
certified mail (return receipt requested) directed to its address set forth on
the signature pages hereof and service so made shall be deemed to be completed
five (5) days after the same shall have been so deposited in the U.S. mails, or,
at Lender's option, by service upon Borrower in any other manner provided under
the rules of any such courts. Within the longer of (i) thirty (30) days after
such service or (ii) the applicable statutory period of time, Borrower shall
appear in answer to such process, failing which Borrower shall be deemed in
default and judgment may be entered by Lender against Borrower for the amount
(of the claim and other relief requested

                  (d) BORROWER AND LENDER EACH HEREBY WAIVES ANY RIGHT TO TRIAL
BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (i) ARISING UNDER THIS
AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR (ii) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT
OF THIS AGREEMENT OR ANY OF THE OTHER FINANCING AGREEMENTS OR THE TRANSACTIONS
RELATED HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. BORROWER AND LENDER
EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT BORROWER OR

                                      -60-
<PAGE>

LENDER MAY FILE AN ORIGINAL COUNTERPART OF A COPY OF THIS AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.

                  (e) Lender shall not have any liability to Borrower (whether
in tort, contract, equity or otherwise) for losses suffered by Borrower in
connection with, arising out of, or in any way related to the transactions or
relationships contemplated by this Agreement. or any act. omission or event
occurring in connection herewith, unless it is determined by a final and
non-appealable judgment or court order binding on Lender, that the losses were
the result of acts or omissions constituting gross negligence or willful
misconduct In any such litigation, Lender shall be entitled to the benefit of
the rebuttable presumption that it acted in good faith and with the exercise of
ordinary care in the performance by it of the terms of this Agreement. Except as
prohibited by law, Borrower waives any right which it may have to claim or
recover in any litigation with Lender any special, exemplary, punitive or
consequential damages or any damages other than, or in addition to, actual
damages. Borrower: (i) certifies that neither Lender nor any representative,
agent or attorney acting for or on behalf of Lender has represented, expressly
or otherwise, that Lender would not, in the event of litigation, seek to enforce
any of the waivers provided for in this Agreement or any of the other Financing
Agreements and (ii) acknowledges that in entering into this Agreement and the
other Financing Agreements, Lender is relying upon, among other things, the
waivers and certifications set forth in this Section 11.1 and elsewhere herein
and therein.

         11.2 WAIVER OF NOTICES. Borrower hereby expressly waives demand,
presentment, protest and notice of protest and notice of dishonor with respect
to any and all instruments and commercial paper, included in or evidencing any
of the Obligations or the Collateral, and any and all other demands and notices
of any kind or nature whatsoever with respect to the Obligations, the Collateral
and this Agreement, except such as are expressly provided for herein. No notice
to or demand on Borrower which Lender may elect to give shall entitle Borrower
to any other or further notice or demand in the same, similar or other
circumstances.

         11.3 AMENDMENTS AND WAIVERS. Neither this Agreement nor any provision
hereof shall be amended, modified, waived or discharged orally or by course of
conduct, but only by a written agreement signed by an authorized officer of the
party against whom the amendment. modification, waiver or discharge is sought to
be enforced Lender shall not. by any act. delay, omission or otherwise be deemed
to have expressly or impliedly waived any of its rights, powers and/or remedies
unless such waiver shall be in writing and signed by an authorized officer of
Lender. Any such waiver shall be enforceable only to the extent specifically set
forth therein. A waiver by Lender of any right, power and/or remedy on anyone
occasion shall not be construed as a bar to or waiver of any such right, power
and/or remedy which Lender would otherwise have on any future occasion, whether
similar in kind or otherwise.

         11.4 WAIVER OF COUNTERCLAIMS. Borrower waives all rights to interpose
any claims, deductions, setoffs or counterclaims of any nature (other then
compulsory counterclaims) in any action or proceeding with respect to this
Agreement, the Obligations, the Collateral or any matter arising therefrom or
relating hereto or thereto.

                                      -61-
<PAGE>

         11.5 INDEMNIFICATION. Borrower shall indemnify and hold Lender, and its
directors, agents, employees and counsel, harmless from and against any and all
losses, claims, damages, liabilities, costs or expenses imposed on, incurred by
or asserted against any of them in connection with any litigation,
investigation, claim or proceeding commenced or threatened related to the
negotiation, preparation, execution, delivery, enforcement, performance or
administration of this Agreement, any other Financing Agreements, or any
undertaking or proceeding related to any of the transactions contemplated hereby
or any act, omission, event or transaction related or attendant thereto,
including, without limitation, amounts paid in settlement, court costs, and the
fees and expenses of counsel, except as a result of Lender's own gross
negligence or willful misconduct. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in this Section may be unenforceable
because it violates any law or public policy, Borrower shall pay the maximum
portion which it is permitted to pay under applicable law to Lender in
satisfaction of indemnified matters under this Section. The foregoing indemnity
shall survive the payment of the Obligations and the termination or non-renewal
of this Agreement

SECTION 12. TERM OF AGREEMENT; MISCELLANEOUS

         12.1 TERM.

                  (a) This Agreement and the other Financing Agreements shall
become effective as of the date set forth on the first page hereof and shall
continue in full force and effect for a term ending March 8, 2008 (the "Renewal
Date"), and from year to year thereafter, unless sooner terminated pursuant to
the terms hereof. Lender or Borrower may terminate this Agreement and the other
Financing Agreements effective on the Renewal Date or on the anniversary of the
Renewal Date in any year by giving to the other party at least sixty (60) days
prior written notice; provided, that, this Agreement and all other Financing
Agreements must be terminated simultaneously. Upon the effective date of
termination or non-renewal of the Financing Agreements, Borrower shall pay to
Lender, in full, all outstanding and unpaid Obligations and shall furnish cash
collateral to Lender in such amounts as Lender determines are reasonably
necessary to secure Lender from loss, cost, damage or expense, including
attorneys' fees and legal expenses, in connection with any contingent
Obligations, including issued and outstanding Letter of Credit Accommodations
and checks or other payments provisionally credited to the Obligations and/or as
to which Lender has not yet received final and indefeasible payment and any
continuing obligations of Lender to any bank or other financial institution
under or pursuant to any Deposit Account Control Agreement. Such cash collateral
shall be remitted by wire transfer in Federal funds to such bank account of
Lender, as Lender may, in its discretion, designate in writing to Borrower for
such purpose. Interest shall be due until and including the next Business Day,
if the amounts so paid by Borrower to the bank account designated by Lender are
received in such bank account later than 12:00 noon, New York City time.

                  (b) No termination of this Agreement or the other Financing
Agreements shall relieve or discharge Borrower of its respective duties,
obligations and covenants under this Agreement or the other Financing Agreements
until all Obligations have been fully and finally discharged and paid, and
Lenders continuing security interest in the Collateral and the rights and

                                      -62-
<PAGE>

remedies of Lender hereunder, under the other Financing Agreements and
applicable law, shall remain in effect until all such Obligations have been
fully and finally discharged and paid.

                  (c) If for any reason this Agreement is terminated prior to
the Renewal Date, in view of the impracticality and extreme difficulty of
ascertaining actual damages and by mutual agreement of the parties as to a
reasonable calculation of Lender's lost profits as a result thereof, Borrower
agrees to pay to Lenders, upon the effective date of such termination, an early
termination fee in the amount equal to:

                    AMOUNT                           PERIOD
                    ------                           ------

              (i)   $500,000              From the date hereof through and
                                          including March 8, 2006
              (ii)  $250,000              From March 9, 2006 through and
                                          including March 7, 2008

Such early termination fee shall be presumed to be the amount of damages
sustained by Lender as a result of such early termination and Borrower agrees
that it is reasonable under the circumstances currently existing. In addition,
Lender shall be entitled to such early termination fee upon the occurrence of
any Event of Default described in Sections 10.1(g) and 10.1(h) hereof, even if
Lender does not exercise the right to terminate this Agreement, but elect, at
their option, to provide financing to Borrower or permit the use of cash
collateral under the United States Bankruptcy Code. The early termination fee
provided for in this Section 12.1 shall be deemed included in the Obligations.

         12.2 NOTICES. All notices, requests and demands hereunder shall be in
writing and (a) made to Lender at its address set forth below and to Borrower at
its chief executive office set forth below, or to such other address as either
party may designate by written notice to the other in accordance with this
provision, and (b) deemed to have been given or made: if delivered in person,
immediately upon delivered; if by telex, telegram or facsimile transmission,
immediately upon sending and upon confirmation of receipt; if by nationally
recognized overnight courier service with instructions to deliver the next
Business Day, one (1) Business Day after sending; and if by certified mail,
(postage prepaid) return receipt requested, five (5) days after mailing.

         12.3 INTERPRETATIVE PROVISIONS.

                  (a) All terms used herein which are defined in Article 1 or
Article 9 of the UCC shall have the meanings given therein unless otherwise
defined in this Agreement.

                  (b) All references to the plural herein shall also mean the
singular and to the singular shall also mean the plural unless the context
otherwise requires.

                  (c) All references to Borrower and Lender pursuant to the
definitions set forth in the recitals hereto, or to any other person herein,
shall include their respective successors and assigns.

                                      -63-
<PAGE>

                  (d) The words "hereof", "herein", "hereunder", "this
Agreement" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not any particular provision of this Agreement
and as this Agreement now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.

                  (e) The word "including" when used in this Agreement shall
mean "including, without limitation".

                  (f) All references to the term "good faith" used herein when
applicable to Lender shall mean, notwithstanding anything to the contrary
contained herein or in the UCC, honesty in fact in the conduct or transaction
concerned. Borrower shall have the burden of proving any lack of good faith on
the part of Lender alleged by Borrower at any time.

                  (g) An Event of Default shall exist or continue or be
continuing until such Event of Default is waived in accordance with Section 11.3
or is cured in a manner satisfactory to Lender, if such Event of Default is
capable of being cured as determined by Lender.

                  (h) Any accounting term used in this Agreement shall have,
unless otherwise specifically provided herein, the meaning customarily given in
accordance with GAAP, and all financial computations hereunder shall be computed
unless otherwise specifically provided herein, in accordance with GAAP as
consistently applied and using the same method for inventory valuation as used
in the preparation of the financial statements of Borrower most recently
received by Lender prior to the date hereof.

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

                  (j) Unless otherwise expressly provided herein, (i) references
herein to any agreement, document or instrument shall be deemed to include all
subsequent amendments, modifications, supplements, extensions, renewals,
restatements or replacements with respect thereto, but only to the extent the
same are not prohibited by the terms hereof or of any other Financing Agreement,
and (ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, recodifying, supplementing or interpreting the statute or regulation.

                  (k) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.

                  (l) This Agreement and other Financing Agreements may use
several different limitations, tests or measurements to regulate the same or
similar matters. All such limitations, tests and measurements are cumulative and
shall each be performed in accordance with their terms.

                  (m) This Agreement and the other Financing Agreements are the
result of negotiations among and have been reviewed by counsel to Lender and the
other parties, and are the products of all parties. Accordingly, this Agreement
and the other Financing Agreements

                                      -64-
<PAGE>

shall not be construed against Lender merely because of Lender's involvement in
their preparation.

         12.4 PARTIAL INVALIDITY. If any provision of this Agreement is held to
be invalid or unenforceable, such invalidity or unenforceability shall not
invalidate this Agreement as a whole, but this Agreement shall be construed as
though it did not contain the particular provision held to be invalid or
unenforceable and the rights and obligations of the parties shall be construed
and enforced only to such extent as shall be permitted by applicable law.

         12.5 SUCCESSORS. This Agreement, the other Financing Agreements and any
other document referred to herein or therein shall be binding upon and inure to
the benefit of and be enforceable by Lender, Borrower and their respective
successors and assigns, except that Borrower may not assign its rights under
this Agreement, the other Financing Agreements and any other document referred
to herein or therein without the prior written consent of Lender. Lender may,
after notice to Borrower, assign its rights and delegate its obligations under
this Agreement and the other Financing Agreements and further may assign, or
sell participations in, all or any part of the Loans, the Letter of Credit
Accommodations or any other interest herein to another financial institution or
other person, in which event, the assignee or participant shall have, to the
extent of such assignment or participation, the same rights and benefits as it
would have if it were the Lender hereunder, except as otherwise provided by the
terms of such assignment or participation.

         12.6 PARTICIPANT'S RIGHT OF SETOFF. If a Participant shall at any time
participate with Lender in the Loans, Letter of Credit Accommodations or other
Obligations, Borrower hereby grants to such Participant and such Participant
shall have and is hereby given. a continuing right of setoff ill any money,
securities and other property of Borrower in the custody or possession of the
Participant, to the extent of the Participant's participation in the
Obligations, and such Participant shall be deemed to have the same right of
setoff to the extent of its participation in the Obligations, as it would have
if it were a direct lender.

         12.7 CONFIDENTIALITY.

                  (a) Lender shall use all reasonable efforts to keep
confidential, in accordance with its customary procedures for handling
confidential information and safe and sound lending practices, any non-public
information supplied to it by Borrower pursuant to this Agreement which is
clearly and conspicuously marked as confidential at the time such information is
furnished by Borrower to Lender, PROVIDED, THAT, nothing contained herein shall
limit the disclosure of any such information: (i) to the extent required by
statute, rule, regulation, subpoena or court order, (ii) to bank examiners and
other regulators, auditors and/or accountants, (iii) in connection with any
litigation to which Lender is a party, (iv) to any assignee or participant (or
prospective assignee or participant) so long as such assignee or participant (or
prospective assignee or participant) shall have first agreed in writing to treat
such information as confidential in accordance with this Section 12.7, or (v) to
counsel for Lender or any participant or assignee (or prospective participant or
assignee).

                  (b) In no event shall this Section 12.7 or any other provision
of this Agreement or applicable law be deemed: (i) to apply to or restrict

                                      -65-
<PAGE>

disclosure of information that has been or is made public by Borrower or any
third party without breach of this Section 12.7 or otherwise become generally
available to the public other than as a result of a disclosure in violation
hereof, (ii) to apply to or restrict disclosure of information that was or
becomes available to Lender on a non-confidential basis from a person other than
Borrower, (iii) to require Lender to return any materials furnished by Borrower
to Lender or (iv) to prevent Lender from responding to routine informational
requests in accordance with the CODE OF ETHICS FOR THE EXCHANGE OF CREDIT
INFORMATION promulgated by the Robert Morris Associates or other applicable
industry standards relating to the exchange of credit information. The
obligations of Lender under this Section 12.7 shall supersede and replace the
obligations of Lender under any confidentiality letter signed prior to the date
hereof.

                  (c) Notwithstanding anything to the contrary set forth herein
or in any of the other Financing Agreements or any other written or oral
understanding or agreement, any obligations of confidentiality contained herein,
in any of the other Financing Agreements or any such other understanding or
agreement do not apply and have not applied from the commencement of discussions
between the parties to the tax treatment and tax structure of the transactions
contemplated herein (and any related transactions or arrangements), and each
party (and each of its employees, representatives, or other agents) may disclose
to any and all persons the tax treatment and tax structuring of the transactions
contemplated herein and all materials of any kind (including opinions or other
tax analyses) that are provided to such party relating to such tax treatment and
tax structure, all within the meaning of Treasury Regulation Section 1.6011-4;
PROVIDED, THAT, each party recognizes that the privilege that it may, in its
discretion, maintain with respect to the confidentiality of a communication
relating to the transactions contemplated herein, including a confidential
communication with its attorney or a confidential communication with a federally
authorized tax practitioner under Section 7525 of the Internal Revenue Code, is
not intended to be affected by the foregoing. Borrower does not intend to treat
the Loans and related transactions as being a "reportable transaction" (within
the meaning of Treasury Regulation Section 1.6011-4). In the event Borrower
determines to take any action inconsistent with such intention, it will promptly
notify Lender thereof. Borrower acknowledges that Lender may treat the Loans as
part of a transaction that is subject to Treasury Regulation Section 1.6011-4 or
Section 301.6112-1, and Lender may file such IRS forms or maintain such lists
and other records as they may determine is required by such Treasury
Regulations.

         12.8 ENTIRE AGREEMENT. This Agreement, the other Financing Agreements,
any supplements hereto or thereto, and any instruments or documents delivered or
to be delivered in connection herewith or therewith represents the entire
agreement and understanding concerning the subject matter hereof and thereof
between the parties hereto, and supersede all other prior agreements,
understandings, negotiations and discussions, representations, warranties,
commitments, proposals, offers and contracts concerning the subject matter
hereof, whether oral or written; PROVIDED that the parties' entry into and
performance under this Agreement shall not amend or affect in any manner any of
the consents, approvals or waivers granted by either party prior to the date of
this Agreement.

                                      -66-
<PAGE>

SECTION 13. ACKNOWLEDGMENT AND RESTATEMENT

         13.1 EXISTING OBLIGATIONS. Borrower hereby acknowledges, confirms and
agrees that Borrower is indebted to Lender under the Existing Loan Agreement as
of the close of business on April 13, 2004 in the aggregate principal amount of
$5,029,780, which indebtedness, together with all interest accrued and accruing
thereon (to the extent applicable), and all fees, costs, expenses and other
charges relating thereto, all of which are unconditionally owing by Borrower to
Lender, without offset, defense or counterclaim of any kind, nature or
description whatsoever.

         13.2 ACKNOWLEDGMENT OF SECURITY INTEREST. Borrower hereby acknowledges,
confirms and agrees that: Lender has and shall continue to have a security
interest in, and lien upon, the Collateral of Borrower heretofore granted to
Lender pursuant to the Existing Loan Agreement, as well as any Collateral
granted hereunder or under the other Financing Agreements or otherwise granted
to or held by Lender and the liens and security interests of Lender in the
Collateral shall be deemed to be continuously granted and perfected from the
earliest date of the granting and perfection of such liens and security
interests.

         13.3 EXISTING AGREEMENTS. Borrower hereby acknowledges, confirms and
agrees that immediately prior to the effectiveness of this Agreement: the
Existing Loan Agreement has been duly executed and delivered by Borrower and is
in full force and effect as of the date hereof; the agreements and obligations
of Borrower contained in the Existing Loan Agreement constitute the legal, valid
and binding obligations of Borrower, enforceable against it in accordance with
its terms and Borrower has no valid defense to the enforcement of such
obligations except to the extent that enforcement of certain rights and remedies
may be limited by the provisions of the United States Bankruptcy Code, as
amended from time to time, or other laws affecting the rights of creditors
generally; and Lender is entitled to all of the rights, remedies and benefits
provided for in or arising pursuant to the Existing Loan Agreement.

         13.4 RESTATEMENT

                  (a) Except as otherwise stated in Section 13.2 hereof and this
Section 13.4, as of the date hereof, the terms, conditions, agreements,
covenants, representations and warranties set forth in the Existing Loan
Agreement are simultaneously amended and restated in their entirety, and as so
amended and restated, replaced and superseded by the terms, conditions
agreements, covenants, representations and warranties set forth in this
Agreement and the other Financing Agreements executed and/or delivered on or
after the date hereof, EXCEPT THAT nothing herein or in the other Financing
Agreements shall, in any manner, be construed to constitute payment of, or
impair, limit, cancel or extinguish, or constitute a novation in respect of any
of the obligations, liabilities and indebtedness of Borrower and any Obligor
evidenced by or arising under the Existing Loan Agreement or impair or adversely
affect the continuation of the security interests, liens, and other interests in
the Collateral heretofore granted, pledged and/or assigned by Borrower or
Obligor to Lender.

                  (b) All Obligations of Borrower and each Obligor to Lender
that are outstanding and unpaid as of the date hereof pursuant to the Existing

                                      -67-
<PAGE>

Loan Agreement or the other Financing Agreements shall be deemed Obligations of
Borrower and each Obligor pursuant to the terms hereof, and shall constitute and
be deemed Loans hereunder.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -68-
<PAGE>

         IN WITNESS WHEREOF, Lender and Borrower have caused these presents to
be duly executed as of the day and year first above written.

LENDER                                         BORROWER

CONGRESS FINANCIAL CORPORATION                 LIGGETT GROUP INC.

By:      /s/ John Williammee                   By:  /s/ Charles M. Kingan, Jr.
    ---------------------------------             ------------------------------

Title:   Vice President                        Title:   Vice President
      -------------------------------                ---------------------------
Address                                        Chief Executive Office:

1133 Avenue of the Americas                    100 Maple Lane
New York, New York 10036                       Mebane, North Carolina 27302

                                               100 MAPLE LLC

                                               By:   /s/ Charles M. Kingan, Jr.
                                                   -----------------------------

                                               Title:   Manager
                                                     ---------------------------

                                               Chief Executive Office:

                                               100 S.E. Second Street
                                               32nd Floor
                                               Miami, Florida 33131

                                      -69-
<PAGE>

         CONSENTED AND AGREED TO WITH RESPECT TO SECTIONS 9.9(e)(i), 9.9(e)(ii)
AND 9.12 HEREOF:

EPIC HOLDINGS INC.

By:      /s/ Howard M. Lorber
    ------------------------------------

Title:   President
       ---------------------------------

Chief Executive Office:

209A Baynard Building
3411 Silverside Road
Wilmington, Delaware 19810

         CONSENTED AND AGREED TO WITH RESPECT TO SECTION 9.17(i) HEREOF:

VGR HOLDING INC.

By:      /s/ Richard J. Lampen
    ------------------------------------

Title:   Executive Vice President
       ---------------------------------

Chief Executive Office:

100 S.E. Second Street
32nd Floor
Miami, Florida 33134

                                      -70-<PAGE>

                                                                     EXHIBIT 4.2

                                                                  Execution Copy

                                                         [Revolver CUSIP________
                                                          Term Loan A CUSIP_____
                                                          Term Loan B CUSIP____]

================================================================================

                  THIRD AMENDED AND RESTATED CREDIT AGREEMENT

                                     among

                       RADIATION THERAPY SERVICES, INC.,

                           THE LENDERS NAMED HEREIN,

                             BANK OF AMERICA, N.A.,
                            as Administrative Agent

                      WACHOVIA BANK, NATIONAL ASSOCIATION,
                             as Documentation Agent

                      $135,000,000 Senior Credit Facility

                  Co-Lead Arrangers and Book Managers for the
                 Term Loan A Facility and the Revolving Credit
                                    Facility
                         BANC OF AMERICA SECURITIES LLC
                                      and
                           WACHOVIA SECURITIES, INC.

                   CO-LEAD ARRANGERS FOR THE TERM B FACILITY
                         BANC OF AMERICA SECURITIES LLC
                                      AND
                         WACHOVIA CAPITAL MARKETS, LLC

                   SOLE BOOK MANAGER FOR THE TERM B FACILITY
                         WACHOVIA CAPITAL MARKETS, LLC

                           Dated as of March 31, 2004

================================================================================
<PAGE>

<TABLE>
<S>                                                                                 <C>
                                   ARTICLE I
                    Assignment and Allocations; DEFINITIONS

1.1       Amendment and Restatement, Allocations................................     2
1.2       Defined Terms.........................................................     3
1.3       Accounting Terms......................................................    31
1.4       Other Terms; Construction.............................................    32
1.5       Accounting for Derivatives............................................    32

                                  ARTICLE II
              AMOUNT AND TERMS OF THE TERM LOAN A AND TERM LOAN B

2.1       Term Loan A...........................................................    32
2.2       Term Loan B...........................................................    33
2.3       Prepayments...........................................................    34
2.4       Notes.................................................................    38

                                   ARTICLE III
                     AMOUNT AND TERMS OF THE REVOLVING LOANS

3.1       Revolving Credit Commitments..........................................    39
3.2       Borrowings............................................................    39
3.3       Disbursements; Funding Reliance; Domicile of Loans....................    40
3.4       Notes.................................................................    40
3.5       Termination and Reduction of Revolving Credit Commitments.............    41
3.6       Mandatory Payments and Prepayments....................................    41
3.7       Voluntary Prepayments.................................................    43
3.8       Swing Line............................................................    44

                                   ARTICLE IV
                               LETTERS OF CREDIT

4.1       Issuance..............................................................    45
4.2       Notices...............................................................    46
4.3       Participations........................................................    46
4.4       Reimbursement.........................................................    47
4.5       Payment by Revolving Loans............................................    47
4.6       Payment to Lenders....................................................    48
4.7       Obligations Absolute..................................................    48
4.8       Cash Collateral Account...............................................    50
4.9       Effectiveness.........................................................    50

                                   ARTICLE V
                        INTEREST, FEES, USE OF PROCEEDS

5.1       Interest..............................................................    51
5.2       Fees..................................................................    52
5.3       Interest Periods......................................................    53
5.4       Conversions and Continuations.........................................    54
5.5       Method of Payments; Computations......................................    55
5.6       Recovery of Payments..................................................    56
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                 <C>
5.7       Use of Proceeds.......................................................    56
5.8       Pro Rata Treatment....................................................    56
5.9       Increased Costs; Change in Circumstances; Illegality; etc.............    57
5.10      Taxes.................................................................    59
5.11      Compensation..........................................................    61
5.12      Deficiency Advances; Failure to Purchase Participations...............    61
5.13      Intraday Funding......................................................    62

                                   ARTICLE VI
                                    SECURITY

6.1       Security..............................................................    63
6.2       Further Assurances....................................................    64
6.3       Information Regarding Collateral......................................    64

                                  ARTICLE VII
                            CONDITIONS OF BORROWING

7.1       Conditions to Effectiveness...........................................    65
7.2       Conditions of All Borrowings..........................................    68

                                  ARTICLE VIII
                         REPRESENTATIONS AND WARRANTIES

8.1       Corporate Organization and Power......................................    69
8.2       Authorization; Enforceability.........................................    69
8.3       No Violation..........................................................    69
8.4       Governmental and Third-Party Authorization; Permits...................    70
8.5       Litigation............................................................    71
8.6       Taxes.................................................................    71
8.7       Subsidiaries..........................................................    72
8.8       Full Disclosure.......................................................    72
8.9       Margin Stock .........................................................    72
8.10      No Material Adverse Change............................................    72
8.11      Financial Matters.....................................................    72
8.12      Ownership of Properties...............................................    74
8.13      Employee Benefit Plans................................................    74
8.14      Environmental Matters.................................................    75
8.15      Compliance With Laws..................................................    76
8.16      Regulated Industries..................................................    76
8.17      Insurance ............................................................    76
8.18      Material Contracts....................................................    77
8.19      Security Documents....................................................    77
8.20      Labor Relations.......................................................    77
8.21      Intentionally Deleted.................................................    78
8.22      Service Agreements....................................................    78
8.23      Reimbursement.........................................................    78
8.24      Fraud and Abuse.......................................................    78
8.25      Maintenance of Mortgaged Property.....................................    79
8.26      Assets of Borrower....................................................    79
</TABLE>

                                       ii
<PAGE>

<TABLE>
<S>                                                                                <C>
                                   ARTICLE IX
                             AFFIRMATIVE COVENANTS

9.1       Financial Statements..................................................    79
9.2       Other Business and Financial Information..............................    80
9.3       Corporate Existence; Franchises; Maintenance of Properties............    83
9.4       Compliance with Laws..................................................    83
9.5       Payment of Obligations................................................    83
9.6       Insurance.............................................................    84
9.7       Maintenance of Books and Records; Inspection..........................    84
9.8       Managed Practices.....................................................    84
9.9       Permitted Acquisitions................................................    84
9.10      Creation or Acquisition of Subsidiaries...............................    86
9.11      Additional Security...................................................    87
9.12      Designated Excluded Subsidiaries......................................    88
9.13      Employee Benefit Plans................................................    88
9.14      Further Assurances....................................................    89
9.15      Related Hedge Agreements..............................................    89
9.16      Shareholder's Agreement...............................................    89
9.17      Notice of Reportable Transaction......................................    89

                                    ARTICLE X
                               FINANCIAL COVENANTS

10.1      Leverage Ratio........................................................    90
10.2      Fixed Charge Coverage Ratio...........................................    90
10.3      Interest Coverage Ratio...............................................    90
10.4      Consolidated Net Worth................................................    90

                                    ARTICLE XI
                                NEGATIVE COVENANTS

11.1      Merger; Consolidation.................................................    91
11.2      Indebtedness..........................................................    91
11.3      Liens.................................................................    92
11.4      Disposition of Assets.................................................    93
11.5      Investments...........................................................    95
11.6      Restricted Payments...................................................    96
11.7      Transactions with Affiliates..........................................    97
11.8      Lines of Business.....................................................    97
11.9      Revenue...............................................................    97
11.10     Capital Expenditures..................................................    98
11.11     Certain Amendments....................................................    98
11.12     Limitation on Certain Restrictions....................................    98
11.13     No Other Negative Pledges.............................................    98
11.14     Fiscal Year...........................................................    98
11.15     Accounting Changes....................................................    98
11.16     Restriction on Contingent Obligations.................................    99
11.17     Hazardous Substances..................................................    99
</TABLE>

                                       iii
<PAGE>

<TABLE>
<S>                                                                                <C>
11.18     Pledge of Partnerships and Joint Ventures that are not Subsidiaries...   100
11.19     Foreign Subsidiaries..................................................   100
11.20     Compliance with ERISA, the Code and Foreign Benefit Laws..............   100
11.21     Subordinated Indebtedness.............................................   101
11.22     Status of Borrower....................................................   101
11.23     Shareholders' Agreement...............................................   101

                                   ARTICLE XII
                                EVENTS OF DEFAULT

12.1      Events of Default.....................................................   101
12.2      Remedies: Termination of Term Loan A Commitments, Term Loan Be
          Commitments and Revolving Credit Commitments, Acceleration, etc.......   104
12.3      Remedies: Set-Off. ...................................................   105
12.4      Application of Funds..................................................   105

                                   ARTICLE XIII
                             THE ADMINISTRATIVE AGENT

13.1      Appointment and Authorization of Administrative Agent.................   106
13.2      Delegation of Duties..................................................   107
13.3      Liability of Administrative Agent.....................................   107
13.4      Reliance by Administrative Agent......................................   107
13.5      Notice of Default.....................................................   108
13.6      Credit Decision; Disclosure of Information by Administrative Agent....   108
13.7      Indemnification of Administrative Agent...............................   109
13.8      Administrative Agent in Its Individual Capacity.......................   109
13.9      Successor Administrative Agent........................................   109
13.10     Administrative Agent May File Proofs of Claim.........................   110
13.11     Collateral and Guaranty Matters.......................................   111
13.12     Other Agents; Lead Managers...........................................   111

                                   ARTICLE XIV
                                  MISCELLANEOUS

14.1      Fees and Expenses.....................................................   112
14.2      Indemnification; Limitation of Liability..............................   112
14.3      GOVERNING LAW; WAIVER OF JURY TRIAL...................................   113
14.4      Arbitration; Preservation and Limitation of Remedies..................   114
14.5      Notices...............................................................   115
14.6      Amendments, Waivers, etc..............................................   116
14.7      Successors and Assigns................................................   117
14.8      No Waiver.............................................................   120
14.9      Survival..............................................................   121
14.10     Severability..........................................................   121
14.11     Construction..........................................................   121
14.12     Confidentiality.......................................................   121
14.13     Counterparts..........................................................   121
14.14     Disclosure of Information.............................................   122
14.15     Entire Agreement......................................................   122
</TABLE>

                                       iv
<PAGE>

<TABLE>
<S>                                                                                <C>
14.16     USA PATRIOT Act Notice................................................   122
</TABLE>

<TABLE>
<CAPTION>
                                    EXHIBITS
<S>                <C>
Exhibit A- 1       Form of Term Loan A Note
Exhibit A-2        Form of Revolving Note
Exhibit A-3        Form of Swing Line Note
Exhibit A-4        Form of Term Loan B Note
Exhibit B-l        Form of Notice of Borrowing
Exhibit B-2        Form of Notice of Conversion/Continuation
Exhibit B-3        Form of Letter of Credit Notice
Exhibit C          Form of Compliance Certificate
Exhibit D          Form of Assignment and Assumption
Exhibit E          Form of Intercompany Note
Exhibit F          Form of Reaffirmation of Subsidiary Guaranty
Exhibit G          Form of Opinion of Borrower's Counsel
Exhibit H          Form of Designation of Excluded Subsidiary Certificate
Exhibit I          Participation Rights Agreement
</TABLE>

<TABLE>
<CAPTION>
                                   SCHEDULES
<S>                <C>
Schedule 6.3       Information Regarding Collateral
Schedule 7.1       Mortgages
Schedule 8.4       Consents and Approvals
Schedule 8.5       Litigation
Schedule 8.6       Taxes
Schedule 8.7       Subsidiaries
Schedule 8.11      Financial Matters
Schedule 8.12      Ownership of Properties
Schedule 8.14(a)   Environmental Matters
Schedule 8.14(b)   Further Environmental Matters
Schedule 8.17      Insurance
Schedule 8.18      Material Contracts
Schedule 8.19(b)   Real Property Filing Jurisdictions
Schedule 11.2      Indebtedness
Schedule 11.3      Liens
Schedule 11.5      Investments
Schedule 11.7      Transactions with Affiliates
Schedule 11.16     Contingent Obligations
</TABLE>

                                       v
<PAGE>

                           THIRD AMENDED AND RESTATED
                                CREDIT AGREEMENT

         THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 31st
day of March, 2004 (this "Agreement"), is made among RADIATION THERAPY SERVICES,
INC., a Florida corporation with its principal offices in Fort Myers, Florida
(the "Borrower"), the banks and financial institutions listed on the signature
pages hereto or that become parties hereto after the date hereof (collectively,
the "Lenders"), BANK OF AMERICA, N.A. ("Bank of America"), as administrative
agent for the Lenders (in such capacity, the "Administrative Agent") and
WACHOVIA BANK, NATIONAL ASSOCIATION ("Wachovia"), as documentation agent for the
Lenders (in such capacity, the "Documentation Agent").

                                    RECITALS

         A.       The Borrower, the Lenders party thereto and Wachovia, as
successor in interest to First Union National Bank, as administrative agent,
were parties to that certain Credit Agreement, dated as of October 28, 1998, as
amended and restated by that certain First Amended and Restated Credit
Agreement, dated as of October 27, 1999 (collectively, the "Original Credit
Agreement").

         B.       The Borrower, the Lenders party thereto, and Bank of America,
were parties to that certain Second Amended and Restated Credit Agreement dated
as of April 15, 2002, which, among other things, amended and restated the
Original Credit Agreement and provided for the reallocation of certain
commitments, the conversion of certain outstandings to a term loan and a
corresponding decrease in the revolving credit commitments (as amended to but
not including the date hereof, the "Second Amended Credit Agreement").

         C.       In connection with entering into the Second Amended Credit
Agreement, Bank of America was appointed successor administrative agent to
Wachovia pursuant to a certain agency resignation and appointment letter and
related agency succession documents.

         D.       The Borrower has requested that the Second Amended Credit
Agreement be further amended and restated in order to, among other things, add a
term loan B facility, and to make certain other amendments to the Second Amended
Credit Agreement (the "Restatement").

         E.       The Borrower, the Lenders, and the Administrative Agent have
agreed to and desire to amend and restate the Second Amended Credit Agreement on
the terms and conditions set forth in this Agreement to accomplish such
amendments.

                                   AGREEMENT

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

<PAGE>

                                   ARTICLE I

                    ASSIGNMENT AND ALLOCATIONS; DEFINITIONS

         1.1 Amendment and Restatement, Allocations. In order to facilitate the
Restatement and otherwise to effectuate the desires of the Borrower, the
Administrative Agent and the Lenders:

         (a)      The Borrower, each Subsidiary Guarantor, the Administrative
Agent and the Lenders hereby agree that upon the effectiveness of this
Agreement, the terms and provisions of the Second Amended Credit Agreement which
in any manner govern or evidence the Obligations, the rights and interests of
the Administrative Agent and the Lenders and any terms, conditions or matters
related to any thereof, shall be and hereby are amended and restated in their
entirety by the terms, conditions and provisions of this Agreement, and the
terms and provisions of the Second Amended Credit Agreement, except as otherwise
expressly provided herein, shall be superseded by this Agreement.

         (b)      Notwithstanding this amendment and restatement of the Second
Amended Credit Agreement, including anything in this SECTION 1.1, and of any
related "Credit Documents" (as such term is defined in the Second Amended Credit
Agreement and referred to herein, individually or collectively, as the "Prior
Credit Documents"), (i) all of the indebtedness, liabilities and obligations
owing by any Person under the Second Amended Credit Agreement and other Prior
Credit Documents shall continue as Obligations hereunder, and (ii) each of this
Agreement and the Notes and any other Credit Document (as defined herein) that
is amended and restated in connection with this Agreement is given as a
substitution of, and not as a payment of, the indebtedness, liabilities and
obligations of the Borrower and the Subsidiary Guarantors under the Second
Amended Credit Agreement or any Prior Credit Document and neither the execution
and delivery of such documents nor the consummation of any other transaction
contemplated hereunder is intended to constitute a novation of the Second
Amended Credit Agreement or of any of the other Prior Credit Documents or any
obligations thereunder. Upon the effectiveness of this Agreement, all Loans
owing by the Borrower, and outstanding under the Second Amended Credit Agreement
shall continue as Loans hereunder and shall constitute advances hereunder, and
all Letters of Credit outstanding under the Second Amended Credit Agreement and
any of the Prior Credit Documents shall continue as Letters of Credit hereunder.
Base Rate Loans under the Second Amended Credit Agreement shall accrue interest
at the Base Rate hereunder and the parties hereto agree that the Interest
Periods for all LIBOR Loans outstanding under the Second Amended Credit
Agreement on the Effective Date shall remain in effect without renewal,
interruption or extension as LIBOR Loans under this Agreement and accrue
interest at the LIBOR Rate hereunder; provided that on and after the Effective
Date the Applicable Margin Percentage applicable to any Loan or Letter of Credit
hereunder shall be as set forth in the definition of Applicable Margin
Percentage below, without regard to any margin applicable thereto under the
Second Amended Credit Agreement prior to the Effective Date.

         (c)      The parties hereto acknowledge that as of the Effective Date,
the Term Loan A Commitment, Revolving Credit Commitment and Applicable
Commitment Percentage for each of the Revolving Lenders and Term Loan A Lenders
are as follows:

                                       2

<PAGE>

TERM LOAN A FACILITY

<TABLE>
<CAPTION>
                                                            TERM LOAN A        APPLICABLE
                                         TERM LOAN A     OUTSTANDINGS AS OF    COMMITMENT
        TERM LOAN A LENDER               COMMITMENT        EFFECTIVE DATE      PERCENTAGE
<S>                                   <C>                <C>                   <C>
Bank of America, N.A.                 $  7,894,737.00    $     7,105,250.00         31.58%
Wachovia Bank, National Association   $  7,894,737.00    $     7,105,250.00         31.58%
Fifth Third Bank, Florida             $  5,263,158.00    $     4,736,875.00         21.05%
SunTrust Bank                         $  3,947,368.00    $     3,552,625.00         15.79%

Term Loan A Facility Total            $ 25,000,000.00
</TABLE>

REVOLVING LOAN FACILITY

<TABLE>
<CAPTION>
                                                           APPLICABLE
                                      REVOLVING CREDIT     COMMITMENT
        REVOLVING LENDER                 COMMITMENT        PERCENTAGE
<S>                                   <C>                  <C>
Bank of America, N.A.                 $  22,105,263.00          31.58%
Wachovia Bank, National Association   $  22,105,263.00          31.58%
Fifth Third Bank, Florida             $  14,736,842.00          21.05%
SunTrust Bank                         $  11,052,632.00          15.79%

Revolving Credit Facility Total       $  70,000,000.00

TOTAL FACILITIES                      $  95,000,000.00
                                      ================
</TABLE>

         (d)      The parties hereto agree that as of the Effective Date, the
Term Loan B Lenders shall become parties hereto, shall provide the Term Loan B
to the Borrower on the terms and conditions set forth herein, shall have such
applicable Commitment Percentages with respect to the Term Loan B as shall be
set forth on the Register of the Administrative Agent as provided in SECTION
14.7(c), and the Term Loan B Facility shall be secured by the Collateral on a
pari passu basis with the Revolving Credit Facility and the Term Loan A
Facility.

         1.2      Defined Terms. For purposes of this Agreement, in addition to
the terms defined elsewhere herein, the following terms shall have the meanings
set forth below (such meanings to be equally applicable to the singular and
plural forms thereof):

         "Account Designation Letter" shall mean a letter from the Borrower to
the Administrative Agent, duly completed and signed by an Authorized Officer and
in form and substance satisfactory to the Administrative Agent, listing any one
or more accounts to which the Borrower may from time to time request the
Administrative Agent to forward the proceeds of any Loans made hereunder.

         "Acquired EBITDA" shall mean with respect to each Person which is the
subject of a Permitted Acquisition, (a) the aggregate of (i) Consolidated Net
Income of such Person plus (ii) the sum of interest expense, taxes,
depreciation, amortization, and other non-cash expenses or charges of the going
business or assets so acquired (as approved by the Required Lenders) for the
immediately preceding four fiscal quarters (including adjustments made by the
Borrower and satisfactory to the Required Lenders), or (b) at the request of the
Borrower, EBITDA for such

                                       3
<PAGE>

Person for some other period as may be acceptable to the Required Lenders in
their sole discretion.

         "Acquisition" shall mean any transaction or series of related
transactions, consummated on or after the date hereof, by which the Borrower
directly, or indirectly through one or more Subsidiaries, (i) acquires any going
business, all or substantially all of the assets or a certificate of need, of
any Person, whether through purchase of assets, merger or otherwise, or (ii)
acquires securities or other ownership interests of any Person having at least a
majority of combined voting power of the then outstanding securities or other
ownership interests of such Person.

         "Acquisition Amount" shall mean, with respect to any Acquisition, the
sum (without duplication) of (i) the amount of cash paid by the Borrower and its
Subsidiaries in connection with such Acquisition, (ii) the Fair Market Value of
all Capital Stock of the Borrower issued or given in connection with such
Acquisition, (iii) the amount (determined by using the face amount or the amount
payable at maturity, whichever is greater) of all Indebtedness incurred, assumed
or acquired by the Borrower and its Subsidiaries in connection with such
Acquisition, (iv) all additional purchase price amounts in connection with such
Acquisition in the form of earnouts and other contingent obligations that should
be recorded as a liability on the balance sheet of the Borrower and its
Subsidiaries or expensed, in either event in accordance with GAAP, Regulation
S-X under the Securities Act of 1933, as amended, or any other rule or
regulation of the Securities and Exchange Commission, (v) all amounts paid in
respect of covenants not to compete, consulting agreements and other affiliated
contracts in connection with such Acquisition (taking into account the
reasonably anticipated present value of any contingent consideration with
respect thereto), (vi) the amount of all transaction fees and expenses
(including, without limitation, legal, accounting and finders' fees and
expenses) incurred by the Borrower and its Subsidiaries in connection with such
Acquisition and (vii) the aggregate fair market value of all other consideration
given by the Borrower and its Subsidiaries in connection with such Acquisition.

         "Adjusted Base Rate" shall mean, at any time with respect to any Base
Rate Loan, a rate per annum equal to the Base Rate as in effect at such time
plus the Applicable Margin Percentage for Base Rate Loans as in effect at such
time.

         "Adjusted LIBOR Rate" shall mean, at any time with respect to any LIBOR
Loan, a rate per annum equal to the LIBOR Rate as in effect at such time plus
the Applicable Margin Percentage for LIBOR Loans as in effect at such time.

         "Adjusted Leverage Ratio" shall mean, as of the last day of any fiscal
quarter, the ratio of (i) Consolidated Funded Debt as of such date to (ii)
Annualized Consolidated Cash Flow for the period ending on such day minus the
aggregate amount of Restricted Payments other than Allowable Tax Distributions
made or declared during such period.

         "Administrative Agent" shall mean Bank of America, in its capacity as
Administrative Agent appointed under ARTICLE XIII, and its successors and
permitted assigns in such capacity.

         "Administrative Questionnaire" shall mean an Administrative
Questionnaire in a form supplied by the Administrative Agent.

                                       4

<PAGE>

         "Affiliate" shall mean, as to any Person, each other Person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified. "Control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a Person, whether through the
ability to exercise voting power, by contract or otherwise. "Controlling" and
"Controlled" have meanings correlative thereto. A Person shall be deemed to be
Controlled by another Person if such other Person possesses, directly or
indirectly, power to vote 10% or more of the securities having ordinary voting
power for the election of directors or managing general partners.

         "Agent-Related Persons" means the Administrative Agent (including any
successor administrative agent), together with its Affiliates (including, in the
case of Bank of America in its capacity as the Administrative Agent, BAS), and
the officers, directors, employees and attorneys-in-fact of such Persons and
Affiliates.

         "Agreement" shall mean this Third Amended and Restated Credit
Agreement, as amended, modified or supplemented from time to time.

         "Allowable Tax Distributions" means distributions to the shareholders
of the Borrower in respect of the shareholders' federal, state and local income
tax liability (including quarterly tax estimates) arising as a result of the
Borrower's operations and the shareholders' interest in the Borrower, made not
more frequently than monthly and not in excess, in the aggregate in any fiscal
quarter, the sum of 40% of Consolidated Net Income for such fiscal quarter PLUS,
if positive, or LESS, if negative, the amount by which 40% of Consolidated Net
Income for all fiscal quarters then ended of such fiscal year exceeds the
aggregate amount of Allowable Tax Distributions made during such preceding
fiscal quarters of such fiscal year; provided, however, that notwithstanding the
foregoing, if the Borrower is not a "partnership" within the meaning of the Code
as of the last day of a fiscal year, then Allowable Tax Distributions
attributable to the operations of the Borrower during such calendar year shall
be equal to zero.

         "Amendment No. 2" means that certain Amendment Agreement No. 2 to the
Second Amended Credit Agreement, dated as of December 31, 2003, by and among the
Borrower, the Administrative Agent, Wachovia Bank, National Association, as
document agent, and the Lenders party thereto from time to time.

         "Annualized Consolidated Cash Flow" shall mean, as of the last day of
any fiscal quarter, the Consolidated Cash Flow for the period for the four
immediately preceding fiscal quarters; provided, however, that the amount of
Acquired EBITDA used to calculate Consolidated Cash Flow shall be calculated for
the period as determined pursuant to the definition of Acquired EBITDA.

         "Applicable Commitment Percentage" means, for each Lender at any time,
a fraction, (i) with respect to the Revolving Credit Facility, the Letters of
Credit and the Swing Line the numerator of which shall be such Lender's
Revolving Credit Commitment and the denominator of which shall be the Total
Revolving Credit Commitment, (ii) with respect to the Term Loan A Facility, the
numerator of which shall be such Lender's Term Loan A Commitment and the
denominator shall be the Total Term Loan A Commitment, and (iii) for the Term
Loan B Facility, the numerator of which shall be such Lender's Term Loan B
Commitment and the denominator shall be the Total Term Loan B Commitment, which
Applicable Commitment

                                       5

<PAGE>

Percentage for each Lender shall be maintained on the Register of the
Administrative Agent; provided that the Applicable Commitment Percentage of each
Lender shall be increased or decreased to reflect any assignments to or by such
Lender effected in accordance with SECTION 14.7.

         "Applicable Margin Percentage" shall mean, at any time from and after
the Effective Date, (a) with respect to Segments of the Term Loan B that are
Base Rate Loans, 2.25%, (b) with respect to Segments of the Term Loan B that are
LIBOR Loans, 3.75%, and (c) with respect to Revolving Loans and Segments of the
Term Loan A and the commitment fee payable pursuant to SECTION 5.2(a), the
applicable percentage set forth below, each (i) to be added to the Base Rate
pursuant to SECTION 5.1 for purposes of determining the Adjusted Base Rate, and
(ii) to be added to the LIBOR Rate pursuant to SECTION 5.1 for purposes of
determining the Adjusted LIBOR Rate:

<TABLE>
<CAPTION>
                                APPLICABLE MARGIN           APPLICABLE MARGIN
                                  PERCENTAGE                  PERCENTAGE
     LEVERAGE RATIO            FOR BASE RATE LOANS          FOR LIBOR  LOANS
--------------------------     -------------------          -----------------
<S>                            <C>                          <C>
Less than 1.00 to 1.00                 0.25%                             1.75%
Greater than or equal to               0.50%                             2.00%
   1.00 to 1.00, but less
   than 1.50 to 1.00
Greater  than  or   equal              0.75%                             2.25%
   to 1.50  to   1.00,  but
   less than 2.00 to 1
Greater than or equal to               1.00%                             2.50%
   2.00 to 1.00 but less
   than 2.50 to 1.00
Greater than or equal to              1.375%                            2.875%
   2.50 to 1.00 but less
   than 2.75 to 1.00
Greater than or equal to               1.75%                             3.25%
   2.75 to 1.00
</TABLE>

         On each Adjustment Date (as hereinafter defined), the Applicable Margin
Percentage for all Revolving Loans and Term Loan A and the commitment fee
payable pursuant to SECTION 5.2(a) shall be adjusted effective as of such date
(based upon the calculation of the Leverage Ratio as of the last day of the
fiscal period to which such Adjustment Date relates) in accordance with the
above matrix; provided, however, that, notwithstanding the foregoing or anything
else herein to the contrary, if at any time the Borrower shall have failed to
deliver the financial statements and a Compliance Certificate as required by
SECTION 9.1 (a) or SECTION 9.1(b), as the case may be, and SECTION 9.2(a), then
at the election of the Required Revolving Lenders and the Required Term Loan A
Lenders, at all times from and including the date on which such statements and
Compliance Certificate are required to have been delivered to the date on which
the same shall have been delivered each Applicable Margin Percentage shall be
determined in accordance with the above matrix as if the Leverage Ratio were
greater than 2.75:1.00 (notwithstanding the actual Leverage Ratio); provided,
further, however, that notwithstanding

                                       6

<PAGE>

the foregoing or anything else to the contrary herein, until the Adjustment Date
relating to the Borrower's September 30, 2004 Compliance Certificate, the
Applicable Margin Percentage shall be determined in accordance with the above
matrix as if the Leverage Ratio were greater than 2.75 to 1.00 (notwithstanding
the actual Leverage Ratio). For purposes of this definition, "Adjustment Date"
shall mean with respect to any fiscal period of the Borrower beginning with the
fiscal quarter ending September 30, 2004, the tenth (10th) day (or, if such day
is not a Business Day, on the next succeeding Business Day) after delivery by
the Borrower in accordance with SECTION 9.1(a), SECTION 9.1(b) OR SECTION
9.9(b), as the case may be, of (i) financial statements as of the end of and for
such fiscal period, (ii) a duly completed Compliance Certificate with respect to
such fiscal period, and (iii) any pro forma Compliance Certificate of the
Borrower and its Subsidiaries giving effect to a Permitted Acquisition in
accordance with SECTION 9.9.

         "Approved Fund" shall mean any Fund that is administered or managed by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of
any entity that administers or manages a Lender.

         "Asset Disposition" shall mean any sale, assignment, transfer or other
disposition by the Borrower or any of its Subsidiaries to any other Person
(other than to the Borrower or to a Wholly Owned Subsidiary), whether in one
transaction or a series of related transactions, of any of its assets, business
units or other properties (including any interests in property, whether tangible
or intangible, and including Capital Stock of Subsidiaries), but excluding the
sale or other disposition of assets permitted under clauses (i) through (iv) of
SECTION 11.4.

         "Assignee" shall have the meaning given to such term in EXHIBIT D.

         "Assignment and Assumption" shall mean an Assignment and Assumption
entered into by a Lender and Eligible Assignee (with the consent of any party
whose consent is required by SECTION 14.7), and accepted by the Administrative
Agent and the Borrower, in substantially the form of EXHIBIT D or any other form
approved by the Administrative Agent, and shall include, in the case of the
initial assignment of portions of the Term Loan B by Wachovia Bank, National
Association as one of the initial Term Loan B Lenders, one or more master
assignments and assumption agreement to effect assignments to multiple assignees
substantially on the terms of the form of Assignment and Assumption set for on
EXHIBIT D.

         "Attributable Indebtedness" shall mean, on any date, (a) in respect of
any capital lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, and (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease payments under the relevant lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a capital lease.

         "Authorized Officer" shall mean, with respect to any action specified
herein, the president, vice president, or with respect to any financial matter,
the chief financial officer of the Borrower or any other Financial Officer, or
any officer of the Borrower duly authorized by resolution of the board of
directors of the Borrower to take such action on its behalf, and whose signature
and incumbency shall have been certified to the Administrative Agent by the
secretary or an assistant secretary of the Borrower.

                                       7

<PAGE>

         "Bankruptcy Code" shall mean 11 U.S.C, Sections 101 et seq., as
amended from time to time, and any successor statute.

         "BAS" means Banc of America Securities LLC and its successors.

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

         "Base Rate Loan" shall mean, at any time, any Loan (including a
Segment) that bears interest at such time at the Adjusted Base Rate.

         "Base Rate Segment" means a Segment bearing interest at the Base Rate.

         "Borrower Margin Stock" shall mean shares of Capital Stock of the
Borrower that are held by the Borrower or any of its Subsidiaries and that
constitute Margin Stock.

         "Borrowing" shall mean (i) the borrowing under the Term Loan A
Facility, (ii) the incurrence by the Borrower (including as a result of
conversions and continuations of outstanding Revolving Loans pursuant to SECTION
5.4) on a single date of a group of Revolving Loans of a single Type and, in the
case of LIBOR Loans, as to which a single Interest Period is in effect, and
(iii) the borrowing under the Term Loan B Facility.

         "Borrowing Date" shall mean, with respect to any Borrowing, the date
upon which such Borrowing is made.

         "Business Day" shall mean (i) any day other than a Saturday or Sunday,
a legal holiday or a day on which commercial banks in Charlotte, North Carolina
are required by law to be closed and (ii) in respect of any determination
relevant to a LIBOR Loan, any such day that is also a day on which tradings are
conducted in the London interbank Eurodollar market.

         "Capital Expenditures" shall mean, for any period, the aggregate amount
(whether paid in cash or accrued as a liability) that would, in accordance with
GAAP, be included on the consolidated statement of cash flows of the Borrower
and its Subsidiaries for such period as additions to equipment, fixed assets,
real property or improvements or other capital assets (including, without
limitation, capital lease obligations); provided, however, that Capital
Expenditures shall not include any such expenditures (i) for replacements and
substitutions for capital assets, to the extent made with the proceeds of
insurance, or with proceeds from permitted disposition of the asset replaced or
substituted, or (ii) made in connection with Permitted Acquisitions.

         "Capital Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests or equivalents in capital stock
(whether voting or nonvoting, and whether

                                       8

<PAGE>

common or preferred) of such corporation, and (ii) with respect to any Person
that is not a corporation, any and all partnership, membership, limited
liability company or other equity interests of such Person; and in each case,
any and all warrants, rights or options to purchase any of the foregoing.

         "Cash Collateral Account" shall have the meaning given to such term in
SECTION 4.8.

         "Cash Equivalents" shall mean (i) securities issued or unconditionally
guaranteed by the United States of America or any agency or instrumentality
thereof backed by the full faith and credit of the United States of America and
maturing within 90 days from the date of acquisition, (ii) commercial paper
issued by any Person organized under the laws of the United States of America,
maturing within 90 days from the date of acquisition and at the time of
acquisition having a rating of at least A-l or the equivalent thereof by
Standard & Poor's Ratings Services or at least P-l or the equivalent thereof by
Moody's Investors Service, inc., (iii) time deposits and certificates of deposit
maturing within 90 days from the date of issuance and issued by a bank or trust
company organized under the laws of the United States of America or any state
thereof that has combined capital and surplus of at least $500,000,000 and that
has (or is a subsidiary of a bank holding company that has) a long-term,
unsecured debt rating of at least A or the equivalent thereof by Standard &
Poor's Ratings Services or at least A2 or the equivalent thereof by Moody's
Investors Service, Inc., (iv) repurchase obligations with a term not exceeding
seven (7) days with respect to underlying securities of the types described in
clause (i) above entered into with any bank or trust company meeting the
qualifications specified in clause (iii) above, and (v) money market funds at
least 95% of the assets of which are continuously invested in securities of the
type described in clause (i) above.

         "Casualty Event" shall mean, with respect to any property (including
any interest in property) of the Borrower or any of its Subsidiaries, any loss
of, damage to, or condemnation or other taking of, such property for which the
Borrower or such Subsidiary receives insurance proceeds, proceeds of a
condemnation award or other compensation.

         "Code" shall mean the Internal Revenue Code of 1986.

         "Collateral" shall mean all the assets, property and interests in
property that shall from time to time be pledged or be purported to be pledged
as direct or indirect security for the Obligations pursuant to any one or more
of the Security Documents.

         "Compliance Certificate" shall mean a fully completed and duly executed
certificate in the form of EXHIBIT C, together with a Covenant Compliance
Worksheet, which Compliance Certificate shall include calculations with respect
to the revenue generated by all Excluded Subsidiaries.

         "Confirmation and Amendment of Credit Documents" shall mean the
document executed by the Borrower and its Subsidiaries as of the Effective Date
amending and confirming their obligations under the Credit Documents executed in
conjunction with the Second Amended Credit Agreement and confirming that such
Credit Documents shall continue to be Credit Documents under this Agreement.

                                       9

<PAGE>

         "Consolidated Cash Flow" shall mean for any period, the aggregate of
(i) Consolidated Net Income of the Borrower and its Subsidiaries (including
Excluded Subsidiaries) for such period, determined on a consolidated basis in
accordance with GAAP, plus (ii) the sum of Consolidated Interest Expense,
taxes, depreciation, amortization, and other non-cash expenses or charges (as
approved by each of the Required Lenders) for such period plus (iii) the
Acquired EBITDA, provided, that the calculations of EBITDA and Acquired EBITDA
are supported by information satisfactory to the Administrative Agent, all as
determined in accordance with GAAP plus (iv) the write-off of any deferred
financing costs as a result of the execution and effectiveness of Amendment No,
2 and this Agreement, but in the case of (ii) and (iv), only to the extent
deducted in determining net income for the applicable period.

         "Consolidated Fixed Charges" shall mean, for any period, the aggregate
(without duplication) of the following, all determined on a consolidated basis
for the Borrower and its Subsidiaries (including Excluded Subsidiaries) in
accordance with GAAP for such period: (a) Consolidated Interest Expense for such
period, (b) the aggregate (without duplication) of all scheduled payments of
principal on Consolidated Funded Debt required to have been made by the Borrower
and its Subsidiaries during such period (whether or not such payments are
actually made), but excluding up to $1,000,000 of "earnout" payments in the
first quarter of fiscal year 2003 in respect of the North Carolina Asset
Purchase Agreement, (c) Restricted Payments in excess of Allowable Tax
Distributions; and (d) rental and operating lease expense.

         "Consolidated Funded Debt" shall mean, as of any date of determination,
any and all funded Indebtedness, in accordance with GAAP, which shall include
with respect to the Borrower and its Subsidiaries (including Excluded
Subsidiaries), all items of Indebtedness for money borrowed, matured
reimbursement obligations in respect of bonds, letters of credit and
acceptances, obligations to pay the deferred purchase price of property or
services (including without limitation seller notes, contingent or otherwise),
obligations to make "earnout" payments with respect to any Permitted
Acquisition, obligations secured by a Lien on property, Attributable
Indebtedness with respect to capital lease obligations and Synthetic Lease
Obligations, conditional sale obligations, obligations under Hedge Agreements
and similar arrangements, obligations to redeem, defease or otherwise make
payments in respect of Capital Stock, all guarantees, endorsements and other
similar Contingent Obligations in respect of others, and all other Indebtedness
secured by any Lien on any property or asset regardless of whether the
Indebtedness secured thereby shall have been assumed by such property owner or
is nonrecourse to such property owner.

         "Consolidated Interest Expense" shall mean, for any period, the sum
(without duplication) of (i) total interest expense of the Borrower and its
Subsidiaries (including Excluded Subsidiaries) for such period in respect of
Consolidated Funded Debt of the Borrower and its Subsidiaries (including,
without limitation, all such interest expense accrued or capitalized during such
period, whether or not actually paid during such period), determined on a
consolidated basis in accordance with GAAP, (ii) all net amounts payable under
or in respect of Hedge Agreements, to the extent paid or accrued by the Borrower
and its Subsidiaries (including Excluded Subsidiaries) during such period, and
(iii) all commitment fees and other ongoing fees in respect of Consolidated
Funded Debt paid, accrued or capitalized by the Borrower and its Subsidiaries
(including Excluded Subsidiaries) during such period.

                                       10

<PAGE>

         "Consolidated Net Changes in Working Capital" means, for any period for
the Borrower and its Subsidiaries (including Excluded Subsidiaries), an amount
(positive or negative) equal to the sum of (a) the net amount of decreases (or
minus the amount of increases) in accounts receivable, inventory and prepaid
expenses and (b) the amount of increases (or minus the amount of decreases) in
accounts payable (including accrued interest expense), in each case on a
consolidated basis determined in accordance with GAAP and as set forth in the
audited annual financial statements of the Borrower delivered to the
Administrative Agent pursuant to SECTION 9.1(b).

         "Consolidated Net Income" shall mean, for any period, net income (or
loss) for any Person for such period, determined in accordance with GAAP.

         "Consolidated Net Worth" shall mean, as of any date of determination
the net worth of the Borrower and its Subsidiaries (including Excluded
Subsidiaries) as of such date, determined on a consolidated basis in accordance
with GAAP, but excluding any Disqualified Capital Stock.

         "Contingent Obligation" shall mean, with respect to any Person, any
direct or indirect liability of such Person with respect to any Indebtedness,
liability or other obligation (the "primary obligation") of another Person (the
"primary obligor"), whether or not contingent, (a) to purchase, repurchase or
otherwise acquire such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or provide funds (i) for the payment
or discharge of any such primary obligation or (ii) to maintain working capital
or equity capital of the primary obligor or otherwise to maintain the net worth
or solvency or any balance sheet item, level of income or financial condition of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor in respect thereof to make payment of such
primary obligation or (d) otherwise to assure or hold harmless the owner of any
such primary obligation against loss or failure or inability to perform in
respect thereof; provided, however, that, with respect to the Borrower and its
Subsidiaries, the term Contingent Obligation shall not include endorsements for
collection or deposit in the ordinary course of business.

         "Covenant Compliance Worksheet" shall mean a fully completed worksheet
in the form of Attachment A to EXHIBIT C.

         "Convert," "Conversion," and "Converted" shall refer to a conversion
pursuant to SECTION 5.4 of one Type of Loan into another Type of Loan.

         "Credit Documents" shall mean this Agreement, the Notes, the
Confirmation and Amendment of Credit Documents, the Letters of Credit, the Fee
Letter, the Subsidiary Guaranty, the Security Documents, the Intercompany Notes,
any Related Hedge Agreement and all other agreements, instruments, documents and
certificates now or hereafter executed and delivered to the Administrative Agent
or any Lender by or on behalf of the Borrower or any of its Subsidiaries with
respect to this Agreement and the transactions contemplated hereby, in each case
as amended, modified, supplemented or restated from time to time.

         "Credit Exposure" shall mean, for each Lender, the amount equal at all
times (a) other than following the occurrence and during the continuance of an
Event of Default, to the sum of its Revolving Credit Commitment, the amount of
the Term Loan A Outstandings and the amount

                                       11

<PAGE>

of the Term Loan B Outstandings, each times its Applicable Commitment Percentage
with respect to the Revolving Credit Facility, the Term Loan A Facility and the
Term Loan B Facility, and (b) following the occurrence and during the
continuance of an Event of Default, to the sum of (i) the amount of such
Lender's Applicable Commitment Percentage of the Term Loan A Outstandings plus
(ii) the amount of such Lender's Applicable Commitment Percentage of Revolving
Credit Outstandings plus (iii) the amount of such Lender's Applicable Commitment
Percentage of the outstanding Letters of Credit and Swing Line Outstandings plus
(iv) the amount of such Lender's Applicable Commitment Percentage of the Term
Loan B Outstandings; provided that, for the purpose of this definition only, (A)
if any Lender shall have failed to fund its Applicable Commitment Percentage of
the Term Loan A, the Term Loan B or any Borrowing, then the Term Loan A
Commitment, the Term Loan B Commitment or Revolving Credit Commitment, as
applicable, of such Lender shall be deemed reduced by the amount it so failed to
fund for so long as such failure shall continue and such Lender's Credit
Exposure attributable to such failure shall be deemed held by any Lender making
more than its Applicable Commitment Percentage of the Term Loan A, the Term Loan
B or such Borrowing to the extent it covers such failure, (B) if any Revolving
Lender shall have failed to pay to the Issuing Lender upon demand its Applicable
Commitment Percentage of any drawing under any Letter of Credit resulting in an
outstanding Reimbursement Obligation (whether by funding its Participation
therein or otherwise), such Lender's Credit Exposure attributable to all Letter
of Credit Outstandings shall be deemed to be held by the Issuing Lender until
such Lender shall pay such deficiency amount to the Issuing Lender together with
interest thereon as provided in SECTION 5.13, and (C) if any Revolving Lender
shall have failed to pay to Bank of America on demand its Applicable Commitment
Percentage of any Swing Line Loan (whether by funding its Participation therein
or otherwise), such Lender's Credit Exposure attributable to all Swing Line
Outstandings shall be deemed to be held by Bank of America until such Lender
shall pay such deficiency amount to Bank of America together with interest
thereon as provided in SECTION 5.13.

         "Debt Issuance" shall mean the issuance or sale by the Borrower or any
of its Subsidiaries of any debt securities, whether in a public offering of such
securities or otherwise.

         "Default" shall mean any event or condition that, with the passage of
time or giving of notice, or both, would constitute an Event of Default.

         "Disqualified Capital Stock" shall mean, with respect to any Person,
any Capital Stock of such Person that, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event or otherwise, (i) matures or is mandatorily
redeemable or subject to any mandatory repurchase requirement, pursuant to a
sinking fund obligation or otherwise, (ii) is redeemable or subject to any
mandatory repurchase requirement at the sole option of the holder thereof, or
(iii) is convertible into or exchangeable for (whether at the option of the
issuer or the holder thereof) (a) debt securities or (b) any Capital Stock
referred to in (i) or (ii) above, in each case under (i), (ii) or (iii) above at
any time on or prior to the first anniversary of the Term Loan B Maturity Date;
provided, however, that only the portion of Capital Stock that so matures or is
mandatorily redeemable, is so redeemable at the option of the holder thereof, or
is so convertible or exchangeable on or prior to such date shall be deemed to be
Disqualified Capital Stock.

                                       12

<PAGE>

         "Dividend Payment" shall mean that certain dividend payment to be made
to the shareholders of the Borrower with the proceeds of the Term Loan B
Facility, which dividend payment shall not exceed $40,000,000 in the aggregate.

         "Dollars" or "$" shall mean dollars of the United States of America.

         "EBITDA" shall mean, for any period, the aggregate of (i) net income
(or loss) of a Person for such period, determined in accordance with GAAP, plus
(ii) the sum of interest expense, taxes, depreciation and amortization of such
Person for such Period, determined in accordance with GAAP, plus (iii) the
write-off of any deferred financing costs as a result of the execution and
effectiveness of Amendment No. 2 and this Agreement, but, in the case of both
(ii) and (iii), only to the extent deducted in determining net income for the
applicable period.

         "Effective Date" shall mean March 31, 2004.

         "Employee Benefit Plan" shall mean (i) any employee benefit plan,
including any Pension Plan, within the meaning of Section 3(3) of ERISA which
(A) is maintained for employees of the Borrower or any of its ERISA Affiliates,
or any Subsidiary (including any Excluded Subsidiary) or is assumed by the
Borrower or any of its ERISA Affiliates, or any Subsidiary (including any
Excluded Subsidiary) in connection with any Acquisition or (B) has at any time
been maintained for the employees of the Borrower, any current or former ERISA
Affiliate, or any Subsidiary (including any Excluded Subsidiary) and (ii) any
plan, arrangement, understanding or scheme maintained by the Borrower or any
Subsidiary (including any Excluded Subsidiary) that provides retirement,
deferred compensation, employee or retiree medical or life insurance, severance
benefits or any other benefit covering any employee or former employee and which
is administered under any Foreign Benefit Law or regulated by any Governmental
Authority other than the United States of America.

         "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.

         "ERISA Affiliate" shall mean any Person (including any trade or
business, whether or not incorporated) that would be deemed to be under "common
control" with, or a member of the same "controlled group" as, the Borrower or
any of its Subsidiaries, within the meaning of Sections 414(b), (c), (m) or (o)
of the Internal Revenue Code or Section 4001 of ERISA.

         "Eligible Assignee" shall mean (a) a Lender; (b) an Affiliate of a
Lender; (c) an Approved Fund; and (d) any other Person (other than a natural
person) approved by (i) the Administrative Agent, (ii) the Issuing Lender, and
(iii) unless an Event of Default has occurred and is continuing, the Borrower
(each such approval not to be unreasonably withheld of delayed); provided that
notwithstanding the foregoing, "Eligible Assignee" shall not include the
Borrower or any of the Borrower's Affiliates or Subsidiaries.

         "Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
accusations, allegations, notices of noncompliance or violation, investigations
(other than internal reports prepared by any Person in the ordinary course of
its business and not in response to any third party action or request of any

                                       13

<PAGE>

kind) or proceedings relating in any way to any actual or alleged violation of
or liability under any Environmental Law or relating to any permit issued, or
any approval given, under any Environmental Law (collectively, "Claims"),
including, without limitation, (i) any and all Claims by Governmental
Authorities for enforcement, cleanup, removal, response, remedial or other
actions or damages pursuant to any applicable Environmental Law and (ii) any and
all Claims by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from Hazardous
Substances or arising from alleged injury or threat of injury to human health or
the environment.

         "Environmental Laws" shall mean any and all federal, state and local
laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
rules of common law and orders of courts or Governmental Authorities, relating
to the protection of human health or occupational safety or the environment, now
or hereafter in effect and in each case as amended from time to time, including,
without limitation, requirements pertaining to the manufacture, processing,
distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of Hazardous
Substances.

         "Equity Issuance" shall mean the issuance, sale or other disposition by
the Borrower or any of its Subsidiaries of its Capital Stock (including, without
limitation, pursuant to an initial registered public offering of Capital Stock
of the Borrower), any rights, warrants or options to purchase or acquire any
shares of its Capital Stock or any other security or instrument representing,
convertible into or exchangeable for an equity interest in the Borrower or any
of its Subsidiaries; provided, however, that the term Equity Issuance shall not
include (i) the issuance or sale of Capital Stock by any of the Subsidiaries of
the Borrower to the Borrower or any other Subsidiary, provided that such Capital
Stock is pledged to the Administrative Agent pursuant to the Security Agreement,
(ii) any Capital Stock of the Borrower issued or sold in connection with any
Permitted Acquisition and constituting all or a portion of the Acquisition
Amount for such Permitted Acquisition, or (iii) any Capital Stock of the
Borrower issued or sold pursuant to SECTION 11.5(vii) herein.

         "Event of Default" shall have the meaning given to such term in SECTION
12.1.

         "Excess Cash Flow" means, with respect to the Borrower and its
Subsidiaries (including Excluded Subsidiaries) for any fiscal year, the
difference of (i) Consolidated Cash Flow for such period (but excluding therein
any amounts representing Acquired EBITDA) minus (ii) the sum of (A) the
Consolidated Net Changes in Working Capital for such period; plus (B) Capital
Expenditures paid in cash during such period; plus (C) expenditures for
Permitted Acquisitions paid in cash during such period; plus (D) taxes or
Allowable Tax Distributions paid in cash during such period; plus (E)
Consolidated Interest Expense paid in cash during such period; plus (F) the
aggregate amount of any optional prepayments of the Term Loan A and the Term
Loan B paid in cash during such period; plus (G) the aggregate amount of any
scheduled prepayments of principal of the Term Loan A and the Term Loan B paid
in cash during such period.

         "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.

                                       14

<PAGE>

         "Excluded Subsidiary" shall mean any Subsidiary of the Borrower or one
of its Subsidiaries existing as of the Effective Date or thereafter created or
acquired in connection with a transaction permitted under SECTION 11.5(vii)
which is not a Subsidiary Guarantor and which is designated by an Authorized
Officer of the Borrower as an Excluded Subsidiary in a certificate delivered to
the Administrative Agent in the form attached hereto as EXHIBIT J and which
Subsidiary (i) shall have no Indebtedness other than Permitted Excluded
Subsidiary Loans, and (ii) shall not guaranty or otherwise directly or
indirectly provide credit support for any Indebtedness of the Borrower or any
Subsidiary Guarantor.

         "Fair Market Value" shall mean with respect to any Capital Stock of the
Borrower given in connection with an Acquisition, the value given to such
Capital Stock for purposes of such Acquisition by the parties thereto, as
determined in good faith pursuant to the relevant acquisition agreement or
otherwise in connection with such Acquisition.

         "FASB 133" shall mean Statement of Financial Accounting Standards No.
133.

         "Federal Funds Rate" shall mean, for any day, the rate per annum equal
to the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds brokers on
such day, as published by the Federal Reserve Bank on the Business Day next
succeeding such day; provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to Bank of
America on such day on such transactions as determined by the Administrative
Agent.

         "Federal Reserve Board" shall mean the Board of Governors of the
Federal Reserve System or any successor thereto.

         "Fee Letter" shall mean, collectively, the letter from Bank of America
to the Borrower, dated December 13, 2001 and the letter from Bank of America to
the Borrower dated March 15, 2004, relating to certain fees payable by the
Borrower in respect of the transaction contemplated by this Agreement, as
amended, modified or supplemented from time to time.

         "Financial Condition Certificate" shall mean a fully completed and duly
executed certificate, substantially in the form OF EXHIBIT H, together with the
attachments thereto.

         "Financial Officer" shall mean, with respect to the Borrower, the chief
financial officer, vice president - finance, principal accounting officer or
treasurer of the Borrower.

         "Fixed Charge Coverage Ratio" shall mean, as of the last day of any
fiscal quarter, the ratio of (i) Consolidated Cash Flow for the four immediately
preceding fiscal quarters plus rental and operating lease expense for such
period minus the sum of (x) cash income taxes paid by the Borrower and its
Subsidiaries, (including Excluded Subsidiaries), if any, during such period (y)
Allowable Tax Distribution paid during such period, and (z) Shareholder Life
Insurance Payments during such period to (ii) Consolidated Fixed Charges for the
four immediately preceding fiscal quarters.

                                       15

<PAGE>

         "Foreign Benefit Law" shall mean any applicable statute, law,
ordinance, code, rule, regulation, order or decree of any foreign nation or any
province, state, territory, protectorate or other political subdivision thereof
regulating, relating to, or imposing liability or standards of conduct
concerning, any Employee Benefit Plan.

         "Foreign Lender" shall have the meaning given such term in SECTION
5.10.

         "Fund" shall mean any Person (other than a natural person) that is (or
will be) engaged in making, purchasing, holding or otherwise investing in
commercial loans and similar extensions of credit in the ordinary course of
business.

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

         "Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, any agency, authority, instrumentality,
regulatory body, court, administrative tribunal, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or 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.

         "Grantor" shall have the meaning given such term in SECTION 6.3.

         "HCFA" shall mean the United States Health Care Financing
Administration and any successor agency.

         "Hazardous Substances" shall mean any substances or materials (i) that
are or become defined as hazardous wastes, hazardous substances, pollutants,
contaminants or toxic substances under any applicable Environmental Law, (ii)
that are defined by any applicable Environmental Law as toxic, explosive,
corrosive, ignitable, infectious, radioactive or mutagenic, (iii) the presence
of which require investigation or response under any applicable Environmental
Law, (iv) that consist of underground or aboveground storage tanks, whether
empty, filled or partially filled with any substance, or (v) that contain,
without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde foam
insulation, petroleum hydrocarbons, petroleum derived substances or wastes,
crude oil, nuclear fuel, natural gas or, synthetic gas.

         "Hedge Agreement" shall mean (a) any and all rate swap transactions,
basis swaps, credit derivative transactions, forward rate transactions,
commodity swaps, commodity options, forward commodity contracts, equity or
equity index swaps or options, bond or bond price or bond index swaps or options
or forward bond or forward bond price or forward bond index transactions,
interest rate options, forward foreign exchange transactions, cap transactions,
floor transactions, collar transactions, currency swap transactions,
cross-currency rate swap transactions, currency options, spot contracts, or any
other similar transactions or any combination of any of the foregoing (including
any options to enter into any of the foregoing),

                                       16

<PAGE>

whether or not any such transaction is governed by or subject to any master
agreement and all other "derivative instruments" as defined in FASB 133 and
which are subject to the reporting requirements of FASB 133, and (b) any and all
transactions of any kind, and the related confirmations, which are subject to
the terms and conditions of, or governed by, any form of master agreement
published by the International Swaps and Derivatives Association, Inc., any
International Foreign Exchange Master Agreement, or any other master agreement
(any such master agreement, together with any related schedules, a "Master
Agreement"), including any such obligations or liabilities under any Master
Agreement.

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

         "Indebtedness" shall mean, as to any Person at a particular time, all
of the following, whether or not included as indebtedness or liabilities in
accordance with GAAP:

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

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

                  (c)      net obligations under any Hedge Agreement in an
         amount equal to the Hedge Termination Value thereof;

                  (d)      all obligations of such Person to pay the deferred
         purchase price of property or services (other than trade accounts
         payable in the ordinary course of business);

                  (e)      indebtedness (excluding prepaid interest thereon)
         secured by a Lien on property owned or being purchased by such Person
         (including indebtedness arising under conditional sales or other title
         retention agreements), whether or not such indebtedness shall have been
         assumed by such Person or is limited in recourse;

                  (f)      all Disqualified Capital Stock issued by such Person,
         with the amount of Indebtedness represented by such Disqualified
         Capital Stock being equal to the greater of its voluntary or
         involuntary liquidation preference and its maximum fixed repurchase
         price, but excluding accrued dividends, if any (for purposes hereof,
         the "maximum fixed repurchase price" of any Disqualified Capital Stock
         that does not have a fixed repurchase price shall be calculated in
         accordance with the terms of such Disqualified Capital Stock as if such
         Disqualified Capital Stock were purchased on any date on which
         Indebtedness

                                       17

<PAGE>

         shall be required to be determined pursuant to this Agreement, and if
         such price is based upon, or measured by, the fair market value of such
         Disqualified Capital Stock, such fair market value shall be determined
         reasonably and in good faith by the board of directors or other
         governing body of the issuer of such Disqualified Capital Stock;

                  (g)      capital leases and Synthetic Lease Obligations; and

                  (h)      all Contingent Obligations of such Person.

         For all purposes hereof, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person (subject only to customary exceptions
acceptable to the Required Lenders). The amount of any capital lease or
Synthetic Lease Obligation as of any date shall be deemed to be the amount of
Attributable Indebtedness in respect thereof as of such date.

         "Indemnified Liabilities" shall have the meaning given such term in
SECTION 14.2.

         "Indemnified Party" shall have the meaning given such term in SECTION
14.2.

         "Intercompany Notes" shall mean, collectively, the intercompany notes
made by the Subsidiaries, in substantially the form OF EXHIBIT E, as amended,
modified or supplemented from time to time.

         "Interest Coverage Ratio" shall mean, as of any date of determination,
the ratio of (a) Consolidated Cash Flow for the period of the four prior fiscal
quarter periods ending on such date, to (b) Consolidated Interest Expense for
such period.

         "Interest Period" shall have the meaning given to such term in SECTION
5.3.

         "Internal Revenue Code" shall mean the Internal Revenue Code of 1936,
as amended from time to time, and any successor statute, and all rules and
regulations from time to time promulgated thereunder.

         "Issuing Lender" shall mean Bank of America in its capacity as issuer
of the Letters of Credit, and its successors in such capacity.

         "LIBOR Loan" shall mean, at any time, any Loan (including a Segment)
that bears interest at such time at the Adjusted LIBOR Rate.

         "LIBOR Segment" means a Segment bearing interest or to bear interest at
the Adjusted LIBOR Rate.

         "LIBOR Rate" means for any Interest Period with respect to any LIBOR
Loan, a rate per annum determined by the Administrative Agent pursuant to the
following formula:

                                       18

<PAGE>

                  LIBOR Rate =         LIBOR Base Rate
                                ____________________________________
                                   1.00 - LIBOR Reserve Percentage
 Where,

"LIBOR Base Rate" means, for such Interest Period:

                  (a)      the rate per annum equal to the rate determined by
         the Administrative Agent to be the offered rate that appears on the
         page of the Tolerate screen (or any successor thereto) that displays an
         average British Bankers Association Interest Settlement Rate for
         deposits in Dollars (for delivery on the first day of such Interest
         Period) with a term equivalent to such Interest Period, determined as
         of approximately 11:00 a.m. (London time) two Business Days prior to
         the first day of such Interest Period, or

                  (b)      if the rate referenced in the preceding subsection
         (a) does not appear on such page or service or such page or service
         shall cease to be available, the rate per annum equal to the rate
         determined by the Administrative Agent to be the offered rate on such
         other page or other service that displays an average British Bankers
         Association Interest Settlement Rate for deposits in Dollars (for
         delivery on the first day of such Interest Period) with a term
         equivalent to such Interest Period, determined as of approximately
         11:00 a.m. (London time) two Business Days prior to the first day of
         such Interest Period, or

                  (c)      if the rates referenced in the preceding subsections
         (a) and (b) are not available, the rate per annum determined by the
         Administrative Agent as the rate of interest at which deposits in
         Dollars for delivery on the first day of such Interest Period in same
         day funds in the approximate amount of the LIBOR Loan being made,
         continued or converted by Bank of America and with a term equivalent to
         such Interest Period would be offered by Bank of America's London
         Branch to major banks in the London interbank eurodollar market at
         their request at approximately 4:00 p.m. (London time) two Business
         Days prior to the first day of such Interest Period.

         "LIBOR Reserve Percentage" means, for any day during any Interest
Period, the reserve percentage (expressed as a decimal, carried out to five
decimal places) in effect on such day, whether or not applicable to any Lender,
under regulations issued from time to time by the FRB for determining the
maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency funding (currently
referred to as "Eurocurrency liabilities"). The LIBOR Rate for each outstanding
LIBOR Loan shall be adjusted automatically as of the effective date of any
change in the LIBOR Reserve Percentage.

         "Lender" shall mean each financial institution signatory hereto and
each other Person that becomes a "Lender" hereunder pursuant to SECTION 14.7,
and their respective successors and permitted assigns.

         "Lending Office" shall mean, with respect to any Lender, the office of
such Lender designated as its "Lending Office" on its signature page hereto or
in an Assignment and Assumption, or such other office as may be otherwise
designated in writing from time to time by such Lender to the Borrower and the
Administrative Agent. A Lender may designate separate

                                       19

<PAGE>

Lending Offices as provided in the foregoing sentence for the purposes of making
or maintaining different Types of Loans, and, with respect to LIBOR Loans, such
office may be a domestic or foreign branch or Affiliate of such Lender.

         "Letter of Credit Exposure" shall mean, with respect to any Revolving
Lender at any time, such Revolving Lender's ratable share (based on the
proportion that its Revolving Credit Commitment bears to the Total Revolving
Credit Commitments at such time) of the sum of (i) the aggregate Stated Amount
of all Letters of Credit outstanding at such time and (ii) the aggregate amount
of all Reimbursement Obligations outstanding at such time.

         "Letter of Credit Notice" shall have the meaning given to such term in
SECTION 4,2,

         "Letter of Credit Sub limit" shall mean $2,000,000.00

         "Letters of Credit" shall have the meaning given to such term in
SECTION 4.1.

         "Leverage Ratio" shall mean, as of the last day of any fiscal quarter,
the ratio of (i) Consolidated Funded Debt as of such date (excluding up to
$2,000,000 of the outstanding amount of the unsecured Indebtedness represented
by the Shareholder Notes described on Schedule 11.2) to (ii) Annualized
Consolidated Cash Flow for the period ending on such day.

         "Lien" shall mean any mortgage, pledge, hypothecation, assignment,
security interest, lien (statutory or otherwise), preference, priority, charge
or other encumbrance of any nature, whether voluntary or involuntary, including,
without limitation, the interest of any vendor or lessor under any conditional
sale agreement, title retention agreement, capital lease or any other lease or
arrangement having substantially the same effect as any of the foregoing.

         "Licenses" shall mean any and all licenses (including provisional
licenses), certificates of need, accreditations, permits, franchises, rights to
conduct business, approvals (by a Governmental Authority or otherwise),
consents, qualifications, operating authority and any other authorizations.

         "Limitation" shall mean a revocation, suspension, termination,
impairment, probation, limitation, non-renewal, forfeiture, declaration of
ineligibility, loss of status as a participating provider in a Third Party Payor
Arrangement, and the loss of any other rights.

         "Loans" shall mean the Term Loan A, the Term Loan B, a Revolving Loan
or a Swing Line Loan, including any Segment.

         "Managed Practice" shall mean any radiation therapy professional
association, professional corporation, partnership or similar Person that,
pursuant to a Service Agreement, provides radiation therapy services at a
center, clinic or other facility operated by the Borrower or any of its
Subsidiaries, or at a hospital or hospital department with which the Borrower or
any of its Subsidiaries has a Service Agreement.

         "Margin Stock" shall have the meaning given to such term in Regulation
U.

                                       20

<PAGE>

         "Material Adverse Change" shall mean a material adverse change in the
condition (financial or otherwise), operations, prospects, business, properties
or assets of the Borrower and its Subsidiaries, taken as a whole.

         "Material Adverse Effect" shall mean a material adverse effect upon (i)
the condition (financial or otherwise), operations, prospects, business,
properties or assets of the Borrower and its Subsidiaries, taken as a whole,
(ii) the ability of the Borrower or any Subsidiary to perform its obligations
under this Agreement or any of the other Credit Documents to which it is a party
or (iii) the legality, validity or enforceability of this Agreement or any of
the other Credit Documents or the rights and remedies of the Administrative
Agent and the Lenders hereunder and thereunder.

         "Material Contract" shall have the meaning given to such term in
SECTION 8.18.

         "Maturity Date" shall mean, with respect to the Term Loan A Facility
and the Revolving Credit Facility, April 15, 2007.

         "Medicaid Certification" shall mean with respect to any health care
facility, certification by HCFA or another Governmental Authority, or any Person
under contract with HCFA that such health care facility is in compliance with
all conditions of participation set forth in the Medicaid Regulations, except
where the failure to so comply would not have a Material Adverse Effect.

         "Medicaid Provider Agreement" shall mean an agreement entered into
between any Person administering the Medicaid program and a health care facility
under which the health care facility agrees to provide services for Medicaid
patients in accordance with the terms of the agreement and Medicaid Regulations.

         "Medicaid Regulations" shall mean collectively, (i) all federal
statutes (whether set forth in Title XIX of the Social Security Act, 42 USC
Sections 1396 et seq. or elsewhere) affecting the medical assistance program
established fay Title XIX of the Social Security Act, and any statutes
succeeding thereto; (ii) 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 (i) 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 (i) above; (iii) all state
statutes and plans for medical assistance enacted in connection with the
statutes and provisions described in clauses (i) and (ii) above; and (iv) 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 (iii) 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 (iii) above, in each case as may be amended, supplemented or
otherwise modified from time to time.

         "Medicare Certification" shall mean, with respect to any health care
facility, certification by HCFA or any other Governmental Authority, or any
Person under contract with HCFA, that such health care facility is in compliance
with all the conditions of participation set forth in the

                                       21

<PAGE>

Medicare Regulations, except where the failure to so comply would not have a
Material Adverse Effect.

         "Medicare Provider Agreement" shall mean an agreement entered into
between any Person administering the Medicare program and a health care facility
under which the health care facility agrees to provide services for Medicare
patients in accordance with the terms of the agreement and Medicare Regulations.

         "Medicare Regulations" shall mean, collectively, all federal statutes
(whether set forth in Title XVIII of the Social Security Act, 42 USC Sections
1396 et seq., or elsewhere) affecting the health insurance program for the aged
and disabled established by Title XVIII of the Social Security Act 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 without limitation, Health and Human Services ("HHS"), HCFA, 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, in each case as may be amended,
supplemented or otherwise modified from time to time.

         "Mortgages" shall mean, collectively, (i) those mortgages, deeds of
trust, leasehold mortgages, leasehold deeds of trust, deeds to secure debt,
leasehold deeds to secure debt and comparable real estate Lien documents listed
on SCHEDULE 7.1, including all amendments thereto to show, among other things,
Bank of America, as Administrative Agent, (ii) the mortgage modifications
executed and delivered pursuant to Section 7.1(a)(vii) and (iii) those mortgages
executed and delivered after the Effective Date in accordance with SECTION 9.10,
as any such mortgage may be amended, modified or supplemented from time to time.

         "Mortgaged Property" shall mean, collectively, the real property,
improvements, fixtures and other items of real and personal property related
thereto and the products and proceeds thereof owned by the Borrower and its
Subsidiaries at the Effective Date or acquired thereafter and referenced in the
Mortgages, including any of such property owned or acquired by any Subsidiary
that is or is required to become a Guarantor after the Effective Date pursuant
to SECTION 9.10.

         "Mortgaged Property Support Documents" shall mean, for each Mortgaged
Property, (i) the Title Policy pertaining thereto, (ii) such surveys, flood
hazard certifications and environmental assessments thereof as the
Administrative Agent may require prepared by recognized experts in their
respective fields selected by the Borrower and reasonably satisfactory to the
Administrative Agent, (iii) as to the Mortgaged Properties located in a flood
hazard area, such flood hazard insurance as the Administrative Agent may
require, (iv) appraisals conducted by nationally recognized appraisal experts
selected by the Administrative Agent in its reasonable discretion and reasonably
acceptable to the Borrower, (v) with respect to facilities leased or subleased
from third parties, such lessor's estoppel, waiver and consent certificates as
the Administrative Agent may reasonably require and the Borrower can deliver
using its best efforts and subordination, nondisturbance and attornment
agreements as the Administrative Agent may reasonably require, (vi) such owner's
or lessee's affidavits as the Administrative Agent may reasonably require, (vii)
such opinions of local counsel with respect to the Mortgages, as applicable, as
the Administrative Agent may reasonably require, and (viii) such other

                                       22
<PAGE>

documentation as the Administrative Agent may reasonably require, in each case
as shall be in form and substance reasonably acceptable to the Administrative
Agent.

         "Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate is making, or
is accruing an obligation to make, contributions or has made, or been obligated
to make, contributions within the preceding six (6) fiscal years.

         "Net Cash Proceeds" shall mean in the case of any Equity Issuance, Debt
Issuance or Asset Disposition, the aggregate cash payments received by the
Borrower and its Subsidiaries less reasonable and customary fees and expenses
(including, without limitation, underwriting discounts and commissions and
out-of-pocket and reasonable attorneys' and accountants' fees) incurred by the
Borrower and its Subsidiaries in connection therewith.

         "Notes" shall mean Term Loan A Notes, the Revolving Notes, the Swing
Line Notes and the Term Loan B Notes of the Borrower in substantially the form
of EXHIBITS A-1, A-2, A-3 AND A-4, respectively, together with any amendments,
modifications and supplements thereto, substitutions therefor and restatements
thereof.

         "Notice of Borrowing" shall have the meaning given to such term in
SECTION 3.2(b).

         "Notice of Conversion/Continuation" shall have the meaning given to
such term in SECTION 5.4(b).

         "Obligations" shall mean all principal of and interest (including, to
the greatest extent permitted by law, post-petition interest) on the Loans, all
Reimbursement Obligations and all fees, expenses, indemnities and other
obligations owing, due or payable at any time by the Borrower to the
Administrative Agent, any Lender, the Issuing Lender or any other Person
entitled thereto, under this Agreement or any of the other Credit Documents.

         "Original Closing Date" shall mean October 28, 1998.

         "Participant" shall have the meaning given to such term in SECTION
14,7(d).

         "Participation" means, (i) with respect to any Revolving Lender (other
than the Issuing Lender) and a Letter of Credit, the extension of credit
represented by the participation of such Lender hereunder in the liability of
the Issuing Lender in respect of a Letter of Credit issued by the Issuing Lender
in accordance with the terms hereof and the rights of the Issuing Lender in
respect of Reimbursement Obligations, and (ii) with respect to any Revolving
Lender (other than Bank of America) and a Swing Line Loan, the extension of
credit represented by the participation of such Lender hereunder in the rights
of Bank of America in respect of a Swing Line Loan made by Bank of America in
accordance with the terms hereof.

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

         "Pension Plan" means any employee pension benefit plan within the
meaning of Section 3(2) of ERISA, other than a Multiemployer Plan, which is
subject to the provisions of Title IV of ERISA or Section 412 of the Code and
which (i) is maintained for employees of the Borrower or

                                       23
<PAGE>

any of its ERISA Affiliates or is assumed by the Borrower or any of its ERISA
Affiliates in connection with any Acquisition or (ii) has at any time been
maintained for the employees of the Borrower or any current or former ERISA
Affiliate.

         "Permitted Acquisition" shall mean (a) any Acquisition with respect to
which all of the following conditions are satisfied: (i) each business acquired
shall be within the permitted lines of business described in SECTION 11.8, (ii)
any Capital Stock given as consideration in connection therewith shall be
Capital Stock of the Borrower, (iii) in the case of an Acquisition, involving
the acquisition of control of Capital Stock of any Person, immediately after
giving effect to such Acquisition such Person (or the surviving Person, if the
Acquisition is effected through a merger or consolidation) shall be the Borrower
or a Wholly Owned Subsidiary, (iv) the board of directors or other managing
authority (and, to the extent required, the shareholders or other stakeholders)
of each business or Person acquired shall consent to the transaction, and (v)
all of the conditions and requirements of SECTIONS 9.9 and 9.10 applicable to
such Acquisition are satisfied; or (b) any other Acquisition to which the
Required Lenders (or the Administrative Agent on their behalf shall have given
their prior written consent (which consent shall not be unreasonably withheld
and may be given subject to such additional terms and conditions as the Required
Lenders may reasonably establish) and with respect to which all of the
conditions and requirements set forth in this definition and in SECTION 9.9 and
in or pursuant to any such consent, have been satisfied or waived by the
Required Lenders (or the Administrative Agent on their behalf).

         "Permitted Excluded Subsidiary Loan" shall mean a loan from the
Borrower to any Excluded Subsidiary, not to exceed $500,000 per Excluded
Subsidiary, and not to exceed $3,000,000 principal outstanding for all Excluded
Subsidiaries, (A) which is secured by the Excluded Subsidiary granting to the
Borrower a Lien on its tangible and intangible assets, including, if the
Borrower elects, real property, and which Lien (i) constitutes a first priority
perfected security interest on such assets, and (ii) has been pledged to the
Administrative Agent for the benefit of the Lenders, and (B) for which
documentation evidencing (i) and (ii) above shall have been delivered to the
Administrative Agent in form and substance acceptable to the Administrative
Agent in its reasonable discretion; provided, however, that a Permitted Excluded
Subsidiary Loan may be made to an Excluded Subsidiary only if such Excluded
Subsidiary has demonstrated to the satisfaction of the Administrative Agent that
EBITDA for such Excluded Subsidiary for the immediately preceding fiscal quarter
is greater than $1.00.

         "Permitted Liens" shall have the meaning given to such term in SECTION
11.3.

         "Person" shall mean any natural person, corporation, association, joint
venture, partnership, limited liability company, company, association, trust,
governmental authority or other entity.

         "Pledged Interests" shall mean the Subsidiary Securities required to be
pledged as Collateral pursuant to ARTICLE VI or the terms of any Security
Agreement.

         "Principal Office" means the principal office of Bank of America,
presently located at 101 North Tryon Street, 15th Floor, NCI 001-15-04,
Charlotte, North Carolina 28255, Attention: Agency Services, or such other
office and address as the Administrative Agent may from time to time designate.

                                       24
<PAGE>

         "Prior Credit Documents" shall have the meaning given such term in
SECTION 1.1(b).

         "Prior Notes" shall mean, collectively, the promissory notes issued
prior to the Effective Date under the Second Amended Credit Agreement evidencing
the revolving credit facility thereunder.

         "Pro Forma Balance Sheet" shall have the meaning given to such term in
SECTION 8.11(b).

         "Pro Rata Percentage" shall mean, as of any date of determination, (i)
with respect to the Term Loan A Facility, a fraction (expressed as a percentage
carried out the ninth decimal place), the numerator of which shall be the Term
Loan A Outstandings and the denominator of which shall be the sum of the Term
Loan A Outstandings and the Term Loan B Outstandings, and (ii) with respect to
the Term Loan B Facility, a fraction (expressed as a percentage carried out the
ninth decimal place), the numerator of which shall be the Term Loan B
Outstandings and the denominator of which shall be the sum of the Term Loan A
Outstandings and the Term Loan B Outstandings.

         "Projections" shall have the meaning given to such term in SECTION
8.11(c).

         "Physician Notes" shall have the meaning given such term in
SECTION 11.5.

         "Qualified IPO" means an initial public offering of the equity
interests of the Borrower resulting in net proceeds to the Borrower in an
aggregate amount equal to or greater than $45,000,000.

         "Related Hedge Agreement" shall mean, any Hedge Agreement between the
Borrower and any Lender or any Affiliate of any Lender with respect to the
obligations of the Borrower in respect of the Loans.

         "Related Parties" shall mean, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.

         "Register" shall have the meaning given to such term in SECTION
14.7(c).

         "Regulations D, U and X" shall mean Regulations D, U and X,
respectively, of the Federal Reserve Board, and any successor regulations.

         "Reimbursement Approvals" shall mean, with respect to all Third Party
Payor Arrangements, any and all certifications, provider numbers, provider
agreements, participation agreements, accreditations and any other similar
agreements with or approvals by Governmental Authorities or other Persons.

         "Reimbursement Obligation" shall have the meaning given to such term in
SECTION 4.4.

         "Required Lenders", as at any date, shall mean (i) if there shall be
three (3) or fewer Lenders, at least two (2) of all Lenders on such date, and
(ii) if there shall be more than three (3)

                                       25
<PAGE>

Lenders, the Lenders on such date having Credit Exposures greater than 50% of
the aggregate Credit Exposures of all the Lenders on such date

         "Required Revolving Lenders", as at any date, shall mean (i) if there
shall be three (3) or fewer Revolving Lenders, at least two (2) of all Revolving
Lenders on such date, and (ii) if there shall be more than three (3) Revolving
Lenders, the Revolving Lenders on such date having Credit Exposures with respect
to the Revolving Credit Facility greater than 50% of the aggregate Credit
Exposures with respect to the Revolving Credit Facility of all the Revolving
Lenders on such date.

         "Required Term Loan A Lenders", as at any date, shall mean (i) if there
shall be three (3) or fewer Term Loan A Lenders, at least two (2) of all Term
Loan A Lenders on such date, and (ii) if there shall be more than three (3) Term
Loan A Lenders, the Term Loan A Lenders on such date having Credit Exposures
with respect to the Term Loan A Credit Facility greater than 50% of the
aggregate Credit Exposures with respect to the Term Loan A Credit Facility of
all the Term Loan A Lenders on such date.

         "Required Term Loan B Lenders", as at any date, shall mean (i) if there
shall be three (3) or fewer Term Loan B Lenders, at least two (2) of all Term
Loan B Lenders on such date, and (ii) if there shall be more than three (3) Term
Loan B Lenders, the Term Loan B Lenders on such date having Credit Exposures
with respect to the Term Loan B Credit Facility greater than 50% of the
aggregate Credit Exposures with respect to the Term Loan B Credit Facility of
all the Term Loan B Lenders on such date.

         "Requirement of Law" shall mean, with respect to any Person, the
charter, articles or certificate of organization or incorporation and bylaws or
other organizational or government documents of such Person and any statute,
law, treaty, rule, regulation, order, decree, writ, injunction or determination
of any arbitrator or court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject or otherwise pertaining to any or
all of the transactions contemplated by this Agreement and the other Credit
Documents.

         "Reserve Requirement" shall mean, with respect to any Interest Period,
the reserve percentage (expressed as a decimal) in effect from time to time
during such Interest Period, as provided by the Federal Reserve Board, applied
for determining the maximum reserve requirements (including, without limitation,
basic, supplemental, marginal and emergency reserves) applicable to Bank of
America under Regulation D with respect to "Eurocurrency liabilities" within the
meaning of Regulation D, or under any similar or successor regulation with
respect to Eurocurrency liabilities or Eurocurrency funding.

         "Restricted Payment" means (a) any dividend or other distribution,
 direct or indirect, on account of any shares of any class of stock or other
 equity interest of the Borrower or any Subsidiary Securities of its
 Subsidiaries (other than those payable or distributable solely to the Borrower
 or a Subsidiary of the Borrower) now or hereafter outstanding, except a
 dividend payable solely in shares of a class of stock or other equity interests
 to the holders of that class; (b) any redemption, conversion, exchange,
 retirement or similar payment, purchase or other acquisition for value, direct
 or indirect, or any shares of any class of stock or other equity interest of
 the Borrower or any Subsidiary Securities of its Subsidiaries (other than those
 payable or

                                       26
<PAGE>

distributable solely to the Borrower) now or hereafter outstanding; and (c) any
payment made to retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of stock or other equity
interest of the Borrower or any Subsidiary Securities of its Subsidiaries now or
hereafter outstanding.

         "Revolving Credit Commitment" means, with respect to each Revolving
Lender, the obligation of such Lender to make Revolving Loans to the Borrower up
to an aggregate principal amount at any one time outstanding equal to such
Lender's Applicable Commitment Percentage of the Total Revolving Credit
Commitment.

         "Revolving Credit Facility" means the facility described in SECTION 3.1
hereof providing for Revolving Loans to the Borrower by the Revolving Lenders in
the aggregate principal amount of the Total Revolving Credit Commitment.

         "Revolving Credit Outstandings" means, as of any date of determination,
the aggregate principal amount of all Revolving Loans then outstanding.

         "Revolving Lender" means each lender that has a Revolving Credit
Commitment or, following termination of the Revolving Credit Commitments, has
Revolving Credit Outstandings.

         "Revolving Loan" means any Borrowing under the Revolving Credit
Facility in accordance with SECTION 3.2.

         "Revolving Notes" means, collectively, the promissory notes of the
Borrower evidencing Revolving Loans executed and delivered to the Lenders as
provided in SECTION 3.4 substantially in the form of EXHIBIT A-2, with
appropriate insertions as to amounts, dates and names of Lenders.

         "Second Amended Credit Agreement" shall have the meaning assigned to
such term in the Recitals to this Agreement.

         "Security Agreement" shall mean the Amended and Restated Pledge and
Security Agreement made by the Borrower and the Subsidiary Guarantors in favor
of the Administrative Agent simultaneously with the Second Amended Credit
Agreement, as amended, modified or supplemented from time to time, and including
any joinders thereto executed pursuant to SECTION 9.10.

         "Security Documents" shall mean the Security Agreement, the Mortgages
and all other pledge or security agreements, mortgages, deeds of trust,
assignments or other similar agreements or instruments executed and delivered by
the Borrower or any of its Subsidiaries pursuant to SECTION 9.10 or SECTION 9.11
or otherwise in connection with the transactions contemplated hereby, in each
case as amended, modified or supplemented from time to time.

         "Segment" means a portion of the Term Loan A (or all thereof) or the
Term Loan B (or all thereof) with respect to which a particular interest rate is
(or is proposed to be) applicable.

                                       27
<PAGE>

         "Service Agreement" shall mean any agreement or arrangement between the
Borrower or any of its Subsidiaries and one or more Managed Practices, hospitals
or hospital departments pursuant to which the Borrower or such Subsidiary agrees
to provide or arrange for comprehensive management, administrative and other
non-medical support services to such Managed Practice or Practices in exchange
for payment to the Borrower or such Subsidiary of a service, management or
similar fee.

         "Shareholders' Agreement" shall mean that certain Shareholders'
Agreement dated as of October 4, 2000, by and among Radiation Therapy Services,
Inc., Daniel E. Dosoretz, M.D., Michael J. Katin, M.D., Peter H. Blitzer, M.D.,
James H. Rubenstein, M.D., Graciela Garton, M.D. and Howard Sheridan, M.D., as
amended to the Effective Date.

         "Shareholder Life Insurance Payment" shall mean the repurchase of
Capital Stock of the Borrower with the proceeds of life insurance policies
insuring the life of key personnel and employees pursuant to the terms of the
Shareholder Agreement.

         "Stated Amount" shall mean, with respect to any Letter of Credit at any
time, the aggregate amount available to be drawn thereunder at such time
(regardless of whether any conditions for drawing could then be met).

         "Subordinated Indebtedness" shall have the meaning given to such term
in SECTION 11.2.

         "Subsidiary" shall mean, with respect to any Person, any corporation or
other Person of which more than fifty percent (50%) of the outstanding Capital
Stock having ordinary voting power to elect a majority of the board of
directors, board of managers or other governing body of such Person, is at the
time, directly or indirectly, owned or controlled by such Person and one or more
of its other Subsidiaries or a combination thereof (irrespective of whether, at
the time, securities of any other class or classes of any such corporation or
other Person shall or might have voting power by reason of the happening of any
contingency). When used without reference to a parent entity, the term
"Subsidiary" shall be deemed to refer to a Subsidiary of the Borrower, except
that unless otherwise indicated, the term "Subsidiary" shall not include any
Excluded Subsidiary.

         "Subsidiary Guarantor" shall mean any Subsidiary of the Borrower that
is a guarantor under the Subsidiary Guaranty and has granted to the
Administrative Agent a Lien upon and security interest in its personal property
assets pursuant to the Security Agreement; provided that no Excluded Subsidiary
shall be a Subsidiary Guarantor.

         "Subsidiary Guaranty" shall mean a Subsidiary Guaranty made by the
Subsidiary Guarantors in favor of the Administrative Agent and the Lenders, as
amended, restated, reaffirmed or supplemented from time to time, including
pursuant to that certain Reaffirmation of Subsidiary Guaranty in substantially
the form of EXHIBIT F, as amended, modified or supplemented from time to time,
and including any joinder thereto executed pursuant to SECTION 9.10.

         "Subsidiary Securities" shall mean the Capital Stock of any Subsidiary,
whether or not constituting a "security" under Article 8 of the Uniform
Commercial Code as in effect in any jurisdiction.

                                       28
<PAGE>

         "Swing Line" shall mean the revolving line of credit established by
Bank of America in favor of the Borrower pursuant to SECTION 3.8.

         "Swing Line Loans" means loans made by Bank of America to the Borrower
pursuant to SECTION 3.8.

         "Swing Line Note" means the promissory note of the Borrower evidencing
the Swing Line executed and delivered to Bank of America as provided in SECTION
3.4(d) substantially in the form of EXHIBIT A-3.

         "Swing Line Outstandings" means, as of any date of determination, the
aggregate principal amount of all Swing Line Loans then outstanding.

         "Swing Line Sublimit" means $2,000,000,00

         "Synthetic Lease Obligation" shall mean the monetary obligation of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property creating
obligations that do not appear on the balance sheet of such Person but which,
upon the insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).

         "Target" shall have the meaning given to such term in SECTION
9.9(b)(i).

         "Term Loan A" shall mean the loan made pursuant to the Term Loan A
Facility in accordance with SECTION 2.1.

         "Term Loan A Commitment" means, with respect to each Term Loan A
Lender, the obligation of such Lender to make the Term Loan A to the Borrower in
a principal amount equal to such Lender's Applicable Commitment Percentage of
the Total Term Loan A Commitment as set forth in SECTION 1.1(c).

         "Term Loan A Facility" means the facility described in SECTION 2.1
providing for a Term Loan A to the Borrower by the Term Loan A Lenders in the
original principal amount of $25,000,000, $22,500,000 of which is outstanding as
of the Effective Date.

         "Term Loan A Lenders" means each Lender that has a Term Loan A
Commitment or, following termination of the Term Loan A Commitments, has Term
Loan A Outstandings.

         "Term Loan A Outstandings" means, as of any date of determination, the
aggregate principal amount of the Term Loan A then outstanding and all interest
accrued thereon.

         "Term Loan A Notes" means, collectively, the promissory notes of the
Borrower evidencing the Term Loan A executed and delivered to the Term Loan A
Lenders as provided in SECTION 2.4 substantially in the form OF EXHIBIT A-1,
with appropriate insertions as to amounts, dates and names of Term Loan A
Lenders.

         "Term Loan B" means the loan made pursuant to the Term Loan B Facility
in accordance with SECTION 2.2.

                                       29
<PAGE>

         "Term Loan B Commitment" means, with respect to each Term Loan B
Lender, the obligation of such Lender to make the Term Loan B to the Borrower in
a principal amount equal to such Lender's Applicable Commitment Percentage of
the Total Term Loan B Commitment as set forth in SECTION 1.1(d).

         "Term Loan B Facility" means the facility described in SECTION 2.2
providing for an advance of the Term Loan B to the Borrower by the Term Loan B
Lenders in the original principal amount of $40,000,000.

         "Term Loan B Lender" means each Lender that has a Term Loan B
Commitment or, following termination of the Term Loan B Commitments, has Term
Loan B Outstandings.

         "Term Loan B Maturity Date" means, with respect to the Term Loan B
Facility, March 31,2009.

         "Term Loan B Note" means a promissory note made by the Borrower in
favor of a Term Loan B Lender evidencing the portion of the Term Loan B made by
such Term Loan B Lender, substantially in the form of EXHIBIT A-4.

         "Term Loan B Outstandings" means, as of any date of determination, the
aggregate principal amount of the Term Loan B then outstanding and all interest
accrued thereon.

         "Term Loan B Termination Date" means the Term Loan B Maturity Date or
such earlier date of termination of the Term Loan B Commitments pursuant to
SECTION 12.2.

         "Termination Date" shall mean the Maturity Date or such earlier date of
termination of the Revolving Credit Commitments and Term Loan A Commitments
pursuant to SECTION 3.5 or SECTION 12.2.

         "Termination Event" shall mean: (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder (unless the notice
requirement has been waived by applicable regulation); or (ii) 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
or was deemed such under Section 4062(e) of ERISA; or (iii) 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; or (iv) the institution of proceedings to terminate a Pension Plan by the
PBGC; or (v) 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; or (vi) the partial or complete withdrawal of
the Borrower or any ERISA Affiliate from a Multiemployer Plan; or (vii) the
imposition of a Lien pursuant to Section 412 of the Code or Section 302 of
ERISA; or (viii) any event or condition which results in the reorganization or
insolvency of a Multiemployer Plan under Section 4241 or Section 4245 of ERISA,
respectively; or (ix) any event or condition which results in the termination of
a Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA; or
(x) any event or condition with respect to any Employee Benefit Plan which is
regulated by any Foreign Benefit Law that results in the termination of such
Employee Benefit

                                       30
<PAGE>

Plan or the revocation of such Employee Benefit Plan's authority to operate
under the applicable Foreign Benefit Law.

         "Third Party Payor Arrangements" shall mean any and all arrangements
with Medicare, Medicaid, CHAMPUS and any other Governmental Authority or
quasi-public agency, Blue Cross, Blue Shield, any managed care plans and
organizations including, without limitation, health maintenance organizations
and preferred provider organizations, private commercial insurance companies and
any similar third party arrangements, plans or programs for payment or
reimbursement in connection with health care services, products or supplies.

         "Title Policy" shall mean, with respect to the Mortgaged Property, the
mortgagee title insurance policy (together with such endorsements as the
Administrative Agent may reasonably require) issued to the Administrative Agent
in respect of such Mortgaged Property by an insurer selected by the Borrower and
reasonably acceptable to the Administrative Agent, insuring the Lien of the
Administrative Agent on the Mortgaged Property to be duly perfected and of first
priority, subject only to exceptions as shall be acceptable to the
Administrative Agent.

         "Total Revolving Credit Commitment" means a principal amount equal to
$70,000,000, as reduced or increased from time to time in accordance with
SECTION 3.5 OR 3.6.

         "Total Term Loan A Commitment" means an original principal amount equal
to $25,000,000.

         "Total Term Loan B Commitment" means an original principal amount equal
to $40,000,000.

         "Type" shall mean any type of Loan (i.e., a Base Rate Loan or a LIBOR
Loan).

         "Unutilized Commitment" shall mean, with respect to any Revolving
Lender at any time, such Revolving Lender's Revolving Credit Commitment at such
time less the sum of (i) the aggregate principal amount of all Revolving Credit
Outstandings made by such Revolving Lender at such time and (ii) such Revolving
Lender's Letter of Credit Exposure at such time plus (iii) such Revolving
Lender's ratable share (based on its Applicable Commitment Percentage of the
Total Revolving Credit Commitment) of Swing Line Outstandings constituting its
Participation therein.

         "Wholly Owned" shall mean, with respect to any Subsidiary of any
Person, that 100% of the outstanding Capital Stock of such Subsidiary is owned,
directly or indirectly, by such Person.

         1.3      Accounting Terms. Except as specifically provided otherwise in
this Agreement, all accounting terms used herein that are not specifically
defined shall have the meanings customarily given them in accordance with GAAP.
Notwithstanding anything to the contrary in this Agreement, for purposes of
calculation of the financial covenants set forth in ARTICLE X or utilized in
determining the amount of Allowable Tax Distributions, all accounting
determinations and computations hereunder shall be made in accordance with GAAP
as in effect as of the date of this Agreement applied on a basis consistent with
the application used in preparing the most recent financial statements of the
Borrower referred to in SECTION 8.11(a) (including the use of the equity method
of accounting for investments in joint ventures and partnerships not

                                       31
<PAGE>

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

         1.4      Other Terms; Construction. Unless otherwise specified or
unless the context otherwise requires, all references herein to sections,
annexes, schedules and exhibits are references to sections, annexes, schedules
and exhibits in and to this Agreement, and all terms defined in this Agreement
shall have the defined meanings when used in any other Credit Document or any
certificate or other document made or delivered pursuant hereto. All references
herein to the Lenders or any of them shall be deemed to include the Issuing
Lender unless specifically provided otherwise or unless the context otherwise
requires.

         1.5      Accounting for Derivatives. In making any computation or
determining any amount pursuant to ARTICLE 10 by reference to any item appearing
on the balance sheet or other financial statement of the Borrower and its
Subsidiaries, all adjustments to such computation or amount resulting from the
application of FASB 133 shall be disregarded.

                                   ARTICLE II

               AMOUNT AND TERMS OF THE TERM LOAN A AND TERM LOAN B

         2.1      Term Loan A.

                  (a)      Funding. The Borrower hereby acknowledges that the
         Term Loan A has been advanced and is outstanding in the principal
         amount of $22,500,000 as of the Effective Date (after giving effect to
         the required payment made on the Effective Date). The principal amount
         of each Segment of the Term Loan A outstanding hereunder from time to
         time shall bear interest and the Term Loan A shall be repayable as
         herein provided. No amount of the Term Loan A repaid or prepaid by the
         Borrower may be reborrowed hereunder, and no subsequent advances of
         Term Loan A amounts shall be made by any Lender after the initial such
         advance.

                  (b)      Payment of Principal. The principal amount of the
         Term Loan A shall be repaid in thirteen (13) consecutive quarterly
         installments on the dates and in the amounts set forth below:

                                       32
<PAGE>

<TABLE>
<CAPTION>
       DATE                                                      AMOUNT
       ----                                                      ------
<S>                                                           <C>
June 30, 2004                                                 $1,250,000.00
September 30, 2004                                            $1,250,000.00
December 31, 2004                                             $1,250,000.00
March 31, 2005                                                $1,250,000.00
June 30, 2005                                                 $1,250,000.00
September 30, 2005                                            $1,250,000.00
December 31, 2005                                             $1,250.000.00
March 31, 2006                                                $1,250,000.00
June 30, 2006                                                 $1,250,000.00
September 30, 2006                                            $1,250,000.00
December 31, 2006                                             $1,250,000.00
March 31, 2007                                                $1,250,000.00
Maturity Date                                                 All remaining
                                                              principal outstanding
</TABLE>

         provided, however, that the entire amount of Term Loan A Outstandings
         shall be due and payable in full on the Termination Date.

         2.2      Term Loan B.

                  (a)      Funding. Subject to the terms and conditions of this
         Agreement, each Term Loan B Lender severally agrees to make an advance
         of its Term Loan B Commitment to the Borrower on the Effective Date,
         and from the Effective Date to the Term Loan B Maturity Date, Convert
         and Continue Segments from time to time in accordance with the terms
         hereof. The principal amount of each Segment of the Term Loan B
         outstanding hereunder from time to time shall bear interest and the
         Term Loan B shall be repayable as herein provided. No amount of the
         Term Loan B repaid or prepaid by the Borrower may be reborrowed
         hereunder, and no subsequent advance under the Term Loan B Facility
         shall be allowed after the initial advance of the Term Loan B on the
         Effective Date. Segments of the Term Loan B may be Base Rate Segments
         or LIBOR Segments at the Borrower's election, as provided herein.

                  (b)      Borrowing. Not later than 11:00 A.M. Charlotte time,
         on the Effective Date, each Term Loan B Lender shall, pursuant to the
         terms and subject to the conditions of this Agreement, make the amount
         of its Term Loan B Commitment available by wire transfer to the
         Administrative Agent. Such wire transfer shall be directed to the
         Administrative Agent at the Administrative Agent's office and shall be
         in the form of same day funds in Dollars. The amount so received by the
         Administrative Agent shall, subject to the terms and conditions of this
         Agreement, including without limitation the satisfaction of all
         applicable conditions in SECTION 7.1, be made available to the Borrower
         by delivery of the proceeds thereof as shall be directed by the
         Authorized Officer of the Borrower and reasonably acceptable to the
         Administrative Agent. The initial Borrowing of the Term Loan B may be a
         LIBOR Segment, a Base Rate Segment, or both; provided that (i)
         notwithstanding anything to the contrary in SECTION 5.4 or otherwise,
         any LIBOR Segment to be a portion of the initial Borrowing of the Term
         Loan B, and each Conversion to or Continuation of a LIBOR Segment made
         during the period of fourteen days after the Closing Date, may only be
         for a period beginning on the date such LIBOR Segment is initially
         advanced, or on the date any Segment is Continued as or Converted

                                       33
<PAGE>

         into a LIBOR Segment, and ending on the date that is one week
         thereafter, and (ii) if the Borrower desires that any portion of the
         initial Borrowing of the Term Loan B is advanced as a LIBOR Segment,
         the Administrative Agent shall make such Borrowing as a LIBOR Segment
         only if, not later than three Business Days prior to the date that is
         then anticipated to be the Effective Date, the Administrative Agent has
         received from the Borrower a Notice of Borrowing with respect thereto,
         together with the Borrower's written acknowledgement in form and
         substance satisfactory to the Administrative Agent that the provisions
         of SECTION 5.11 hereof shall apply to any failure by the Borrower to
         borrow on the date set forth in such Notice of Borrowing any or all of
         the amounts specified in such Notice of Borrowing.

                  (c)      Payment of Principal. The principal amount of the
         Term Loan B shall be repaid in twenty (20) consecutive quarterly
         installments on the dates and in the amounts set forth below;

<TABLE>
<CAPTION>
           DATE                                                      AMOUNT
-------------------------                                        -------------
<S>                                                              <C>
June 30, 2004                                                    $  500,000.00
September 30, 2004                                               $  500,000.00
December 31, 2004                                                $  500,000.00
March 31, 2005                                                   5  500,000.00
June 30, 2005                                                    $  500,000.00
September 30, 2005                                               $  500,000.00
December 31, 2005                                                $  500,000.00
March 31, 2006                                                   $  500,000.00
June 30, 2006                                                    5  500,000.00
September 30, 2006                                               $  500,000.00
December 31, 2006                                                $  500,000.00
March 31, 2007                                                   $  500,000.00
June 30, 2007                                                    $4,000,000.00
September 30, 2007                                               $4,000,000.00
December 31, 2007                                                $4,000,000.00
March 31, 2008                                                   $4,000,000.00
June 30, 2008                                                    $4,500,000.00
September 30, 2008                                               $4,500,000.00
December 31, 2008                                                $4,500,000.00
Term Loan B Maturity Date                                        All remaining
                                                                 principal outstanding
</TABLE>

         2.3      Prepayments.

                  (a)      Voluntary Prepayments. The Borrower may prepay the
         Term Loan A and the Term Loan B, but only on a pro rata basis based
         upon the Pro Rata Percentages, in whole or in part from time to time on
         any Business Day, without penalty or premium, upon at least three (3)
         Business Days' telephonic notice from an Authorized Officer (effective
         upon receipt) to the Administrative Agent prior to 10:30 A.M., which
         notice shall be irrevocable. The Authorized Officer shall provide the
         Administrative Agent

                                       34
<PAGE>

         written confirmation of each such telephonic notice but failure to
         provide such confirmation shall not affect the validity of such
         telephonic notice. Any prepayment, whether of a Base Rate Segment or a
         LIBOR Segment, shall be made at a prepayment price equal to (i) the
         amount of principal to be prepaid, plus (ii) all accrued and unpaid
         interest on the amount so prepaid, to the date of prepayment, plus any
         amounts due pursuant to SECTION 3.6(d). All prepayments under this
         SECTION 2.3(a) shall be made in the minimum principal amount of
         $500,000, or, if greater, an integral multiple of $100,000 in excess
         thereof (or in the entire remaining principal balance of the Term Loan
         A and Term Loan B, as applicable), and all such prepayments of
         principal shall be applied to installments of principal in inverse
         order of their maturities.

                  All payments of the Term Loan A and the Term Loan B shall be
         applied first to pay all Base Rate Segments before any LIBOR Segment is
         paid. The provisions of SECTION 3.6(e) shall apply to each payment or
         prepayment of a LIBOR Loan made pursuant to this SECTION 2.3(a) on a
         day other than the last day of the Interest Period applicable thereto.

                  (b)      Mandatory Prepayments. In addition to the required
         payments of principal of the Term Loan A and the Term Loan B set forth
         in SECTIONS 2.1 (b) and 2.2(c), respectively and any optional payments
         of principal of the Term Loan A and the Term Loan B effected under
         SECTION 2.3(a) above, the Borrower shall make the following required
         prepayments of the Term Loan A and Term Loan B, on a pro rata basis in
         accordance with their respective Pro Rata Percentages times the amount
         required to be prepaid, as provided below, each such payment to be made
         to the Administrative Agent for the benefit of the Lenders within the
         time period and in the amounts specified below:

                           (i)      The Borrower will prepay the Term Loan A
                  Facility and the Term Loan B Facility in an amount equal to
                  100% of the Net Cash Proceeds from any Asset Disposition (less
                  any taxes to the extent such taxes are paid) at the times and
                  in the amounts described in the following sentence, and will
                  deliver to the Administrative Agent, concurrently with such
                  prepayment, a certificate, signed by a Financial Officer in
                  form and substance reasonably satisfactory to the
                  Administrative Agent and setting forth the calculation of such
                  Net Cash Proceeds. With respect to any Segment maturing during
                  the ninety-day period following such Asset Disposition, the
                  prepayment shall be payable upon maturity of such Segment and
                  shall be in the principal amount of such Segment; provided,
                  however, that in the event that at the end of such ninety day
                  period the aggregate amount of such prepayment (the "Prepaid
                  Amount") is less than 100% of the Net Cash Proceeds from such
                  Asset Disposition (the "Required Amount"), the difference
                  between the Required Amount and the Prepaid Amount shall be
                  immediately due and payable; provided, further, however, that
                  at the election of the Administrative Agent or the Required
                  Term Loan A Lenders and the Required Term Loan B Lenders, upon
                  the occurrence of a Default or Event of Default which has not
                  been cured within the applicable cure period, the entire
                  prepayment amount shall be immediately due and payable without
                  regard to the preceding provisions. Notwithstanding the
                  foregoing, if the aggregate of all Asset

                                       35
<PAGE>

                  Dispositions made during any calendar year do not exceed
                  $500,000, no prepayment shall be required with respect to such
                  Asset Disposition.

                           (ii)     The Borrower will prepay the Term Loan A
                  Facility and the Term Loan B Facility in an amount equal to
                  100% of the Net Cash Proceeds from any Equity Issuance (other
                  than a Qualified IPO) and 100% of the Net Cash Proceeds from
                  any Debt Issuance described in SECTION 11.2(v) at the times
                  and in the amounts described in the following sentence and
                  will deliver to the Administrative Agent, concurrently with
                  such prepayment, a certificate, signed by a Financial Officer
                  in form and substance reasonably satisfactory to the
                  Administrative Agent and setting forth the calculation of such
                  Net Cash Proceeds. With respect to any Segment maturing during
                  the ninety-day period following such Equity Issuance or Debt
                  Issuance, the prepayment shall be payable upon maturity of
                  such Segment and shall be in the principal amount of such
                  Segment; provided, however, that in the event that at the end
                  of such ninety day period the aggregate amount of such
                  prepayment (the "Prepaid Amount") is less than 100% of the Net
                  Cash Proceeds from such Equity Issuance or Debt Issuance (the
                  "Required Amount"), the difference between the Required Amount
                  and the Prepaid Amount shall be immediately due and payable;
                  provided, further, however, that at the election of the
                  Administrative Agent or the Required Term Loan A Lenders and
                  the Required Term Loan B Lenders, upon the occurrence of a
                  Default or Event of Default which has not been cured within
                  the applicable cure period, the entire prepayment amount shall
                  be immediately due and payable without regard to the preceding
                  provisions. Notwithstanding the foregoing, if the aggregate of
                  all Equity Issuances made during any calendar year do not
                  exceed $500,000, no prepayment shall be required with respect
                  to such Equity Issuances.

                           (iii)    Not later than one hundred eighty (180) days
                  (or such longer period as the Required Term Loan A Lenders and
                  the Required Term Loan B Lenders may determine) after its
                  receipt of any proceeds of insurance, condemnation award or
                  other compensation in respect of any Casualty Event (and in
                  any event upon its determination not to repair or replace any
                  property subject to such Casualty Event), the Borrower will
                  prepay the Term Loan A Facility and the Term Loan B Facility
                  in an amount equal to 100% of the Net Cash Proceeds from such
                  Casualty Event (less any amounts theretofore applied to the
                  repair or replacement of property subject to such Casualty
                  Event) and will deliver to the Administrative Agent,
                  concurrently with such prepayment, a certificate signed by a
                  Financial Officer, in form and substance reasonably
                  satisfactory to the Administrative Agent, setting forth the
                  calculation of such Net Cash Proceeds; provided, however, (i)
                  nothing in this paragraph shall be deemed to limit or
                  otherwise affect any right of the Administrative Agent herein
                  or in any of the other Credit Documents to receive and hold
                  such proceeds as loss payee and to disburse the same to the
                  Borrower upon the terms hereof or thereof, or any obligation
                  of the Borrower and each of its Subsidiaries herein or in any
                  of the other Credit Documents to remit any such proceeds to
                  the Administrative Agent upon its receipt thereof, and (ii)
                  any and all such proceeds received or held by the
                  Administrative Agent or the Borrower or any of its
                  Subsidiaries during the

                                       36
<PAGE>

                  continuance of an Event of Default (regardless of any proposed
                  or actual use thereof for repair or replacement) shall be
                  applied to prepay the Term Loan A Facility and the Term Loan B
                  Facility.

                           (iv)     The Borrower will prepay the Term Loan A
                  Facility and the Term Loan B Facility in an amount equal to
                  50% of the Net Cash Proceeds from any Qualified IPO at the
                  times and in the amounts described in the following sentence
                  and will deliver to the Administrative Agent, concurrently
                  with such prepayment, a certificate, signed by a Financial
                  Officer in form and substance reasonably satisfactory to the
                  Administrative Agent and setting forth the calculation of such
                  Net Cash Proceeds. With respect to any Segment maturing during
                  the ninety-day period following such Qualified IPO, the
                  prepayment shall be payable upon maturity of such Segment and
                  shall be in the principal amount of such Segment; provided,
                  however, that in the event that at the end of such ninety day
                  period the aggregate amount of such prepayment (the "Prepaid
                  Amount") is less than 50% of the Net Cash Proceeds from such
                  Qualified IPO (the "Required Amount"), the difference between
                  the Required Amount and the Prepaid Amount shall be
                  immediately due and payable; provided, further, however, that
                  at the election of the Administrative Agent or the Required
                  Term Loan A Lenders and the Required Term Loan B Lenders, upon
                  the occurrence of a Default or Event of Default which has not
                  been cured within the applicable cure period, the entire
                  prepayment amount shall be immediately due and payable without
                  regard to the preceding provisions.

                           (v)      Each year the Borrower shall prepay the
                  outstanding principal amount of the Term Loan A Facility and
                  the Term Loan B Facility in an amount equal to 75% of Excess
                  Cash Flow for the preceding fiscal year, at the times and in
                  the amounts described in the following sentence and will
                  deliver to the Administrative Agent, concurrently with the
                  delivery of its Compliance Certificate with respect to such
                  preceding fiscal year, a certificate, signed by a Financial
                  Officer in form and substance reasonably satisfactory to the
                  Administrative Agent, setting forth the calculation of such
                  Excess Cash Flow. With respect to any Segment maturing during
                  the ninety-day period following date of delivery of the
                  calculation of Excess Cash Flow, the prepayment shall be
                  payable upon maturity of such Segment and shall be in the
                  principal amount of such Segment; provided, however, that in
                  the event that at the end of such ninety day period the
                  aggregate amount of such prepayment (the "Prepaid Amount") is
                  less than 75% of Excess Cash Flow (the "Required Amount"), the
                  difference between the Required Amount and the Prepaid Amount
                  shall be immediately due and payable; provided, further,
                  however, that at the election of the Administrative Agent or
                  the Required Term Loan A Lenders and the Required Term Loan B
                  Lenders, upon the occurrence of a Default or Event of Default
                  which has not been cured within the applicable cure period,
                  the entire prepayment amount shall be immediately due and
                  payable without regard to the preceding provisions; provided,
                  further, however, that in the event that the Compliance
                  Certificate referred to in the preceding sentence shall
                  reflect a Leverage Ratio of less than

                                       37
<PAGE>

                  2.00 to 1.00 for such preceding fiscal year, no prepayment
                  from Excess Cash Flow shall be required under this section.

         The Administrative Agent shall give each Lender, within one (1)
Business Day, telefacsimile notice of each notice of prepayment received by it
and described in CLAUSES (i), (ii), (iii), (iv) AND (v) of this SECTION 2.3(b).
All mandatory prepayments made pursuant to this SECTION 2.3(b) shall be applied
to installments of principal in inverse order of their maturities (as adjusted
to give effect to any prior payments or prepayments of principal). Without
limiting the foregoing, in the event that at any time a mandatory prepayment of
the Term Loan A Facility and the Term Loan B Facility would otherwise be
required under this SECTION 2.3 but each of the Term Loan A and the Term Loan B
shall be or has been fully paid prior to the application of all funds otherwise
required to be so utilized, such amount not utilized to prepay the Term Loan A
Facility and the Term Loan B Facility shall be applied to the prepayment of
Revolving Loans and the reduction of the Total Revolving Credit Commitment as
provided in SECTION 3.6.

         All payments of the Term Loan A and the Term Loan B shall be applied
first to pay all Base Rate Segments before any LIBOR Segment is paid. The
provisions of SECTION 3.6(e) shall apply to each payment or prepayment of a
LIBOR Loan made pursuant to this SECTION 2.3(b) on a day other than the last day
of the Interest Period applicable thereto.

         2.4      Notes. (a) The amount of the Term Loan A made by each Lender
shall be evidenced by a Term Loan A Note appropriately completed in
substantially the form of EXHIBIT A-1.

         (b)      Each Term Loan A Note issued to a Term Loan A Lender shall (i)
be executed by the Borrower, (ii) be payable to the order of such Lender, (iii)
be dated as of the Effective Date (or, in the case of a Term Loan A Note issued
after the Effective Date, dated the effective date of the applicable Assignment
and Assumption), (iv) be in a stated principal amount equal to the Term Loan A
Outstanding allocable to such Lender, (v) bear interest in accordance with the
provisions of SECTION 5.1, as the same may be applicable from time to time to
the Term Loan A made by such Lender, and (vi) be entitled to all of the benefits
of this Agreement and the other Credit Documents and subject to the provisions
hereof and thereof. The Term Loan A Notes shall be issued in substitution of and
replacement of the term loan notes issued in connection with the Second Amended
Credit Agreement.

         (c)      The amount of the Term Loan B made by each Lender shall be
evidenced by a Term Loan B Note appropriately completed in substantially the
form of EXHIBIT A-4.

         (d)      Each Term Loan B Note issued to a Term Loan B Lender shall (i)
be executed by the Borrower, (ii) be payable to the order of such Term Loan B
Lender, (iii) be dated as of the Effective Date (or, in the case of a Term Loan
B Note issued after the Effective Date, dated the effective date of the
applicable Assignment and Assumption), (iv) be in a stated principal amount
equal to the Term Loan B Outstanding allocable to such Lender, (v) bear interest
in accordance with the provisions of SECTION 5.1, as the same may be applicable
from time to time to the Term Loan B made by such Term Loan B Lender, and (vi)
be entitled to all of the benefits of this Agreement and the other Credit
Documents and subject to the provisions hereof and thereof.

                                       38
<PAGE>

         (e)      Each Lender will record on its internal records the amount and
Type of each Loan made by it and each payment received by it in respect thereof
and will, in the event of any transfer of any of its Notes, either endorse on
the reverse side thereof or on a schedule attached thereto (or any continuation
thereof) the outstanding principal amount and Type of the Loans evidenced
thereby as of the date of transfer or provide such information on a schedule to
the Assignment and Assumption relating to such transfer; provided, however, that
the failure of any Lender to make any such recordation or provide any such
information, or any error therein, shall not affect the Borrower's obligations
under this Agreement or the Notes.

                                   ARTICLE III

                     AMOUNT AND TERMS OF THE REVOLVING LOANS

         3.1      Revolving Credit Commitments. Each Revolving Lender severally
agrees, subject to and on the terms and conditions of this Agreement, to make
Revolving Loans to the Borrower, from time to time on any Business Day during
the period from and including the Effective Date to but not including the
Termination Date, in an aggregate principal amount at any time outstanding not
greater than the excess, if any, of its Revolving Credit Commitment at such time
over its Letter of Credit Exposure at such time, provided that no Borrowing of
Revolving Loans shall be made if, immediately after giving effect thereto, the
sum of (x) the aggregate principal amount of Revolving Credit Outstandings at
such time, (y) the Swing Line Outstandings at such time, and (z) the aggregate
Letter of Credit Exposure of all Revolving Lenders at such time would exceed the
aggregate Revolving Credit Commitments of all Lenders at such time. Subject to
and on the terms and conditions of this Agreement, the Borrower may borrow,
repay and reborrow Revolving Loans.

         3.2      Borrowings. (a) The Revolving Loans shall, at the option of
the Borrower and subject to the terms and conditions of this Agreement, be
either Base Rate Loans or LIBOR Loans, provided that all Revolving Loans
comprising the same Borrowing shall, unless otherwise specifically provided
herein, be of the same Type.

         (b)      In order to make a Borrowing (other than Borrowings involving
continuations or Conversions of outstanding Revolving Loans which shall be made
pursuant to SECTION 5.4), an Authorized Officer will give the Administrative
Agent telephonic notice not later than 11:00 a.m., Charlotte time, three (3)
Business Days prior to each Borrowing to be comprised of LIBOR Loans and on the
Business Day of each Borrowing to be comprised of Base Rate Loans, which notice
shall be irrevocable. The Authorized Officer shall provide the Administrative
Agent written confirmation of each such telephonic notice but failure to provide
such confirmation shall not affect the validity of such telephonic notice;
provided, however, that requests for the Borrowing of any Revolving Loans to be
made on the Effective Date may, at the discretion of the Administrative Agent,
be given later than the times specified hereinabove. Each such written notice
(each, a "Notice of Borrowing") shall be given in the form of EXHIBIT B-1 and
each Notice of Borrowing shall specify (1) the aggregate principal amount and
initial Type of the Revolving Loans to be made pursuant to such Borrowing, (2)
in the case of a Borrowing of LIBOR Loans, the initial Interest Period to be
applicable thereto, and (3) the requested date of such Borrowing (the "Borrowing
Date"), which shall be a Business Day. Upon its receipt of a

                                       39
<PAGE>

Notice of Borrowing, the Administrative Agent will promptly notify each
Revolving Lender of the proposed Borrowing. Notwithstanding anything to the
contrary contained herein:

                  (i)      the aggregate principal amount of each Borrowing
         comprised of Base Rate Loans other than a Borrowing (x) solely to repay
         a then outstanding Swing Line Loan in accordance with SECTION 3.8(d),
         which may be in the amount of such Swing Line Loan or (y) solely to
         satisfy any Reimbursement Obligation under SECTION 4.4, which may be in
         the amount of such Reimbursement Obligation, shall not be less than
         $500,000 or, if greater, an integral multiple of $100,000 in excess
         thereof (or, if less, in the amount of the aggregate Unutilized
         Commitments), and the aggregate principal amount of each Borrowing
         comprised of LIBOR Loans shall not be less than $1,000,000 or, if
         greater, an integral multiple of $100,000 in excess thereof;

                  (ii)     if the Borrower shall have failed to designate the
         Type of Revolving Loans comprising a Borrowing, the Borrower shall be
         deemed to have requested a Borrowing comprised of Base Rate Loans; and

                  (iii)    if the Borrower shall have failed to select the
         duration of the Interest Period to be applicable to any Borrowing of
         LIBOR Loans, then the Borrower shall be deemed to have selected an
         Interest Period with a duration of one month.

         (c)      Not later than 1:00 p.m., Charlotte time, on the requested
Borrowing Date, each Revolving Lender will make available to the Administrative
Agent at its office referred to in SECTION 14.5 (or at such other location as
the Administrative Agent may designate) an amount, in Dollars and in immediately
available funds equal to the amount of the Revolving Loan to be made by such
Revolving Lender. To the extent the Revolving Lenders have made such amounts
available to the Administrative Agent as provided hereinabove, the
Administrative Agent will make the aggregate of such amounts available to the
Borrower in accordance with SECTION 3,3(a) and in like funds as received by the
Administrative Agent.

         3.3      Disbursements; Funding Reliance; Domicile of Loans. (a) The
Borrower hereby authorizes the Administrative Agent to disburse the proceeds of
each Borrowing in accordance with the terms of any written instructions from any
of the Authorized Officers, provided that the Administrative Agent shall not be
obligated under any circumstances to forward amounts to any account not listed
in an Account Designation Letter. The Borrower may at any time deliver to the
Administrative Agent an Account Designation Letter listing any additional
accounts or deleting any accounts listed in a previous Account Designation
Letter.

         (b)      Each Revolving Lender may, at its option, make and maintain
any Revolving Loan at, to or for the account of any of its Lending Offices,
provided that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan to or for the account of such Revolving Lender in
accordance with the terms of this Agreement.

         3.4      Notes. (a) The Revolving Loans made by each Revolving Lender
shall be evidenced by a Revolving Note appropriately completed in substantially
the form of EXHIBIT A-2. Revolving Notes shall be issued in substitution of and
replacement for the Prior Notes.

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<PAGE>

         (b)      Each Revolving Note issued to a Lender shall (i) be executed
by the Borrower, (ii) be payable to the order of such Revolving Lender, (iii) be
dated as of the Effective Date (or, in the case of a Revolving Note issued after
the Effective Date, dated the effective date of the applicable Assignment and
Assumption), (iv) be in a stated principal amount equal to such Revolving
Lender's Revolving Credit Commitment, (v) bear interest in accordance with the
provisions of SECTION 5.1, as the same may be applicable from time to time to
the Revolving Loans made by such Revolving Lender, and (vi) be entitled to all
of the benefits of this Agreement and the other Credit Documents and subject to
the provisions hereof and thereof.

         (c)      Each Revolving Lender will record on its internal records the
amount and Type of each Revolving Loan made by it and each payment received by
it in respect thereof and will, in the event of any transfer of any of its
Revolving Notes, either endorse on the reverse side thereof or on a schedule
attached thereto (or any continuation thereof) the outstanding principal amount
and Type of the Revolving Loans evidenced thereby as of the date of transfer or
provide such information on a schedule to the Assignment and Assumption relating
to such transfer; provided, however, that the failure of any Revolving Lender to
make any such recordation or provide any such information, or any error therein,
shall not affect the Borrower's obligations under this Agreement or the
Revolving Notes.

         (d)      The Swing Line Outstandings shall be evidenced by a separate
Swing Line Note in the form of EXHIBIT A-3 payable to the order of the Bank of
America in the amount of the Swing Line, which Swing Line Note shall be dated
the Effective Date and shall be duly completed, executed and delivered by the
Borrower. The Swing Line Note shall be issued in substitution of and replacement
for the Swing Line Note issued under the Second Amended Credit Agreement.

         3.5      Termination and Reduction of Revolving Credit Commitments. (a)
The Revolving Credit Commitments shall be automatically and permanently
terminated on the Termination Date.

         (b)      At any time and from time to time after the date hereof, upon
not less than five (5) Business Days' prior written notice to the Administrative
Agent, the Borrower may terminate in whole or reduce in part the aggregate
Unutilized Commitments, provided that any such partial reduction shall be in an
aggregate amount of not less than $1,000,000 or, if greater, an integral
multiple thereof. The amount of any termination or reduction made under this
subsection (b) may not thereafter be reinstated.

         (c)      Each reduction of the Revolving Credit Commitments pursuant to
this SECTION 3.5 shall be applied ratably among the Revolving Lenders according
to their respective Revolving Credit Commitments.

         3.6      Mandatory Payments and Prepayments. (a) Except to the extent
due or paid sooner pursuant to the provisions of this Agreement, the aggregate
outstanding principal of the Revolving Loans and the Swing Line Loans shall be
due and payable in full on the Maturity Date.

         (b)      In the event that, at any time, the sum of (x) the Revolving
Credit Outstandings, (y) the aggregate principal amount of all Swing Line
Outstandings at such time, and (z) the

                                       41
<PAGE>

aggregate Letter of Credit Exposure of all Revolving Lenders at such time shall
exceed the aggregate Revolving Credit Commitments of all Revolving Lenders at
such time (after giving effect to any concurrent termination or reduction
thereof), the Borrower will immediately prepay the outstanding principal amount
of the Revolving Loans and Swing Line Loans in the amount of such excess;
provided that, to the extent such excess amount is greater than the aggregate
principal amount of Revolving Loans and Swing Line Loans outstanding immediately
prior to the application of such prepayment, the amount so prepaid shall be
retained by the Administrative Agent and held in the Cash Collateral Account as
cover for Letter of Credit Exposure, as more particularly described in SECTION
4.8, and thereupon such cash shall be deemed to reduce the aggregate Letter of
Credit Exposure by an equivalent amount.

         (c)      In the event each of the Term Loan A and the Term Loan B has
been fully repaid, the Borrower will prepay the outstanding principal amount of
the Revolving Credit Loans and the Swing Line Loans in the amounts and under the
provisions set forth in SECTION 2.3(b) except that references therein to the
Required Term Loan A Lenders or the Required Term Loan B Lenders shall be deemed
to mean the Required Revolving Lenders.

         (d)      Each prepayment of the Revolving Loans and the Swing Line
Loans made pursuant to subsection (c) above shall be applied (i) first, to
reduce the outstanding principal amount of the Revolving Loans and the Swing
Line Loans, and (ii) second, to the extent of any excess remaining after
application as provided in clause (i) above, to pay any outstanding
Reimbursement Obligations, and thereafter to cash collateralize Letter of Credit
Exposure pursuant to SECTION 4.8, and shall be applied first to prepay all Base
Rate Loans before any LIBOR Loans are prepaid. Each payment or prepayment
pursuant to the provisions of this Section shall be applied ratably among the
Lenders holding the Revolving Loans being prepaid, in proportion to the
principal amount held by each.

         (e)      Each payment or prepayment of a LIBOR Loan (including any
LIBOR Segment) made pursuant to the provisions of this SECTION 3.6 on a day
other than the last day of the Interest Period applicable thereto shall be made
together with all amounts required under SECTION 5.11 to be paid as a
consequence thereof; provided, however, at the request of the Borrower, any
amount of any such prepayment of a LIBOR Loan shall be deposited in a separate
Prepayment Account (as defined below), provided, further, that the deposit of
the amount of such prepayment in a Prepayment Account does not excuse, diminish
or discharge the Borrower's obligations to pay in full at the end of the
applicable Interest Period or at any other time interest is payable with respect
to such LIBOR Loan to be prepaid, all interest payable. The Administrative Agent
shall apply any cash deposited in the Prepayment Account to prepay LIBOR Loans
on the last day of the applicable Interest Period (or, at the direction of the
Borrower, on any earlier date) until all outstanding Revolving Loans have been
prepaid or until all the allocable cash on deposit in the Prepayment Account has
been exhausted. For purposes of this Agreement, the term "Prepayment Account"
shall mean an account established by the Borrower with the Administrative Agent
and over which the Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal for application in
accordance with this paragraph. The Administrative Agent will, at the request of
the Borrower, invest amounts on deposit in the Prepayment Account in Cash
Equivalents that mature prior to the last day of the applicable Interest Period
of the LIBOR Loans to be prepaid; provided, however, that (i) the Administrative
Agent shall not be required to make any investment that, in its sole judgment,

                                       42
<PAGE>

would require or cause the Administrative Agent to be in or would result in any
violation of any law, statute, rule or regulation, (ii) such Cash Equivalents
shall be subjected to a first priority perfected security interest in favor of
the Administrative Agent perfected by control or possession, as applicable under
the Uniform Commercial Code and (iii) if an Event of Default shall have occurred
and be continuing, the selection of such investments shall be in the sole
discretion of the Administrative Agent. The Borrower shall indemnify the
Administrative Agent for any losses relating to the investments so that the
amount available to prepay LIBOR Loans on the last day of the applicable
Interest Periods is not less than the amount that would have been available had
no investments been made pursuant thereto. Other than any interest or profits
earned on such investments, the Prepayment Accounts shall not bear interest.
Interest or profits, if any, on the investments in any Prepayment Account shall
accumulate in such Prepayment Account. If the maturity of the Loans has been
accelerated pursuant to SECTION 12.2, the Administrative Agent may, in its sole
discretion, apply all amounts on deposit in the Prepayment Account to satisfy
any of the Obligations. The Borrower hereby pledges and assigns to the
Administrative Agent, for its benefit and the benefit of the Lenders, each
Prepayment Account established hereunder to secure the Obligations. To the
extent the prepayment would or does reduce the outstanding principal amount of
the Revolving Loans and the Swing Line Loans, such reduction shall be effective
on the date the amount of the prepayment is deposited in the Prepayment Account.

         3.7      Voluntary Prepayments. (a) Upon certain events, from time to
time, the Borrower shall have the right to prepay the Revolving Loans and the
Swing Line Loans, in whole or in part, without premium or penalty (except as
provided in clause (iii) below), upon at least three (3) Business Days'
telephonic notice from an Authorized Officer (effective upon receipt) to the
Administrative Agent prior to 10:30 A.M., which notice shall be irrevocable. The
Authorized Officer shall provide the Administrative Agent written confirmation
of each such telephonic notice but failure to provide such confirmation shall
not affect the validity of such telephonic notice, provided that (i) each
partial prepayment shall be in an aggregate principal amount of not less than
$500,000, or if greater, an integral multiple of $100,000 in excess thereof,
(ii) no partial prepayment of LIBOR Loans made pursuant to any single Borrowing
shall reduce the aggregate outstanding principal amount of the remaining LIBOR
Loans under such Borrowing to less than $1,000,000 or to any greater amount not
an integral multiple of $1,000,000 in excess thereof, and (iii) unless made
together with all amounts required under SECTION 5.11 to be paid as a
consequence of such prepayment, a prepayment of a LIBOR Loan may be made only on
the last day of the Interest Period applicable thereto. Each such notice shall
specify the proposed date of such prepayment and the aggregate principal amount
and Type of the Loans to be prepaid (and, in the case of LIBOR Loans, the
Interest Period of the Borrowing pursuant to which made), and shall be
irrevocable and shall bind the Borrower to make such prepayment on the terms
specified therein. Revolving Loans or Swing Line Loans prepaid pursuant to this
subsection (a) may be reborrowed, subject to the terms and conditions of this
Agreement.

         (b)      Each prepayment of the Revolving Loans or Swing Line Loans
made pursuant to subsection (a) above shall be applied ratably among the Lenders
holding the Revolving Loans being prepaid and Bank of America, as Lender of the
Swing Line, in proportion to the principal amount held by each.

                                       43
<PAGE>

         3.8      Swing Line. (a) Notwithstanding any other provision of this
Agreement to the contrary, in order to administer the Revolving Loans in an
efficient manner and to minimize the transfer of funds between the
Administrative Agent and the Revolving Lenders, Bank of America shall make
available Swing Line Loans to the Borrower prior to the Maturity Date. Bank of
America shall not be obligated to make any Swing Line Loan pursuant hereto (i)
if to the actual knowledge of Bank of America the Borrower is not in compliance
with all the conditions to the making of Revolving Loans set forth in this
Agreement, (ii) if after giving effect to such Swing Line Loan, the Swing Line
Outstandings exceed the Swing Line Sublimit, or (iii) if after giving effect to
such Swing Line Loan, the sum of the Swing Line Outstandings, Revolving Credit
Outstandings at such time and the aggregate Letter of Credit Exposure of all
Revolving Lenders at such time would exceed the aggregate Revolving Credit
Commitments of all Revolving Lenders at such time. The Borrower may, subject to
the conditions set forth in the preceding sentence, borrow, repay and reborrow
under this SECTION 3.8. Unless notified to the contrary by Bank of America,
borrowings under the Swing Line shall be made in the minimum amount of $100,000,
or if greater, an integral multiple of $100,000 in excess thereof, upon written
request by telefacsimile transmission, effective upon receipt, by an Authorized
Officer of the Borrower made to Bank of America not later than 12:30 P.M. on the
Business Day of the requested borrowing. Each such Borrowing Notice shall
specify the amount of the borrowing and the date of borrowing, and shall be in
the form of EXHIBIT B-1(b), with appropriate insertions. Unless notified to the
contrary by Bank of America, each repayment of a Swing Line Loan shall be in an
amount which is an integral multiple of $100,000 or the aggregate amount of all
Swing Line Outstandings.

         (b)      The interest payable on Swing Line Loans is solely for the
account of Bank of America. Swing Line Loans shall bear interest solely at the
Adjusted Base Rate, or to the extent provided in SECTION 5.1 (b), the Default
Rate. All accrued and unpaid interest on Swing Line Loans shall be payable on
the dates and in the manner provided in SECTION 5.1 (c) with respect to interest
on Base Rate Loans. The principal amount of each Swing Line Loan is payable in
full on demand or such other earlier date as provided for herein.

         (c)      Upon the making of a Swing Line Loan, each Revolving Lender
shall be deemed to have purchased from Bank of America a Participation therein
in an amount equal to the percentage of that Lender's Revolving Credit
Commitment of such Swing Line Loan. Upon demand made by Bank of America, each
Lender shall, according to the percentage of its Applicable Commitment
Percentage of such Swing Line Loan, promptly provide to Bank of America its
purchase price therefor in an amount equal to its Participation therein. Any
advance made by a Revolving Lender pursuant to demand of Bank of America of the
purchase price of its Participation shall when made be deemed to be the funding
by each Revolving Lender of the purchase price of its Participation in such
Swing Line Loan. The obligation of each Revolving Lender to so provide its
purchase price to Bank of America shall be absolute and unconditional and shall
not be affected by the occurrence of an Event of Default or any other occurrence
or event. Simultaneously with the making of each such payment by a Revolving
Lender to Bank of America to fund such Revolving Lender's purchase price of a
Participation in such Swing Line Loan, such Revolving Lender shall,
automatically and without any further action on the part of Bank of America or
such Revolving Lender, acquire a Participation in an amount equal to such
payment (excluding the portion thereof constituting interest accrued prior to
the date the

                                       44
<PAGE>

Revolving Lender made its payment) in the related rights of Bank of America with
respect to obligations of the Borrower as to such Swing Line Loan.

         (d)      The Borrower, at its option and subject to the terms hereof,
may request a Borrowing pursuant to SECTION 3.2 in an amount sufficient to repay
Swing Line Outstandings on any date, and the Administrative Agent shall provide
from the proceeds of such Borrowing to Bank of America the amount necessary to
repay such Swing Line Outstandings (which Bank of America shall then apply to
such repayment) and credit any balance of the Borrowing in immediately available
funds in the manner directed by the Borrower pursuant to SECTION 3.2(b). The
proceeds of such Borrowings shall be paid to Bank of America for application to
the Swing Line Outstandings and the Revolving Lenders shall then be deemed to
have made Revolving Loans in the amount of such Borrowings. The Swing Line shall
continue in effect until the Termination Date, at which time all Swing Line
Outstandings and accrued interest thereon shall be due and payable in full. In
the event any Revolving Lender has funded the purchase price of its
Participation in any Swing Line Loan as provided above, then at the time payment
(in fully collected, immediately available funds) of any principal amount of, or
interest on, such Swing Line Loan, in whole or in part, is received by Bank of
America or the Administrative Agent, Bank of America or the Administrative Agent
(as applicable) shall promptly pay to such Revolving Lender an appropriate pro
rata amount of such payment from the Borrower.

                                   ARTICLE IV

                                LETTERS OF CREDIT

         4.1      Issuance. Subject to and upon the terms and conditions herein
set forth, so long as no Default or Event of Default has occurred and is
continuing, the Issuing Lender will, in reliance on the agreements of the other
Lenders set forth in this ARTICLE IV at any time and from time to time on and
after the Effective Date and prior to the earlier of (i) the seventh day prior
to the Maturity Date and (ii) the Termination Date, and upon request by the
Borrower in accordance with the provisions of SECTION 4.2, issue for the account
of the Borrower one or more irrevocable standby letters of credit denominated in
Dollars and in a form customarily used or otherwise approved by the Issuing
Lender (together with all amendments, modifications and supplements thereto,
substitutions therefor and renewals and restatements thereof, collectively, the
"Letters of Credit"). The Stated Amount of each Letter of Credit shall not be
less than $100,000 unless otherwise agreed to by the Issuing Lender.
Notwithstanding the foregoing:

         (a)      No Letter of Credit shall be issued the Stated Amount upon
issuance of which (i) when added to the aggregate Letter of Credit Exposure of
the Lenders at such time, would exceed the Letter of Credit Sublimit or (ii)
when added to the sum of (y) the aggregate Letter of Credit Exposure of all
Lenders at such time and (z) the aggregate principal amount of all Revolving
Credit Outstandings and Swing Line Outstandings, would exceed the Total
Revolving Credit Commitment at such time;

         (b)      No Letter of Credit shall be issued that by its terms expires
later than the seventh day prior to the Maturity Date or, in any event, more
than one (1) year after its date of issuance; provided, however, that a Letter
of Credit may, if requested by the Borrower, provide by its terms, and on terms
acceptable to the Issuing Lender, for renewal for successive periods of one year
or less (but not beyond the seventh day prior to the Maturity Date), unless and
until the

                                       45

<PAGE>

Issuing Lender shall have delivered a notice of nonrenewal to the beneficiary of
such Letter of Credit; and

         (c)      The Issuing Lender shall be under no obligation to issue any
Letter of Credit if, at the time of such proposed issuance, (i) any order,
judgment or decree of any Governmental Authority or arbitrator shall purport by
its terms to enjoin or restrain the Issuing Lender from issuing such Letter of
Credit, or any Requirement of Law applicable to the Issuing Lender or any
request or directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Issuing Lender shall prohibit,
or request that the Issuing Lender refrain from, the issuance of letters of
credit generally or such Letter of Credit in particular or shall impose upon the
Issuing Lender with respect to such Letter of Credit any restriction or reserve
or capital requirement (for which the Issuing Lender is not otherwise
compensated) not in effect on the Effective Date, or any unreimbursed loss, cost
or expense that was not applicable, in effect or known to the Issuing Lender as
of the Effective Date and that the Issuing Lender in good faith deems material
to it, or (ii) the Issuing Lender shall have actual knowledge, or shall have
received notice from any Lender prior to the issuance of such Letter of Credit
that one or more of the conditions specified in SECTIONS 7.1 (if applicable) or
7.2 are not then satisfied (or have not been waived in writing as required
herein) or that the issuance of such Letter of Credit would violate the
provisions of subsection (a) above, or (iii) the issuance of such Letter of
Credit would violate the policies of the Issuing Lender.

         4.2      Notices. Whenever the Borrower desires the issuance of a
Letter of Credit, the Borrower will give the Issuing Lender written notice with
a copy to the Administrative Agent not later than 11:00 a.m., Charlotte time,
three (3) Business Days (or such shorter period as is acceptable to the Issuing
Lender in any given case) prior to the requested date of issuance thereof. Each
such notice (each, a "Letter of Credit Notice") shall be irrevocable, shall be
given in the form OF EXHIBIT B-3 and shall specify (i) the requested date of
issuance, which shall be a Business Day, (ii) the requested Stated Amount and
expiry date of the Letter of Credit, and (iii) the name and address of the
requested beneficiary or beneficiaries of the Letter of Credit. The Borrower
will also complete any application procedures and documents required by the
Issuing Lender in connection with the issuance of any Letter of Credit. Upon its
issuance of any Letter of Credit, the Issuing Lender will promptly notify the
Administrative Agent of such issuance, and the Administrative Agent will give
prompt notice thereof to each Revolving Lender.

         4.3      Participations. Immediately upon the issuance of any Letter of
Credit, each Lender shall be deemed to have purchased from the Issuing Lender a
Participation therein in an amount equal such Revolving Lender's Applicable
Commitment Percentage of the Total Revolving Credit Commitment in such Letter of
Credit, each drawing made thereunder and the obligations of the Borrower under
this Agreement with respect thereto and any Collateral or other security
therefor or guaranty pertaining thereto; provided, however, that the fee
relating to Letters of Credit described in SECTION 5.2(c) shall be payable
directly to the Issuing Lender as provided therein, and the Revolving Lenders
shall have no right to receive any portion thereof. Upon any change in the
Revolving Credit Commitments of any of the Revolving Lenders pursuant to SECTION
14.7(a), with respect to all outstanding Letters of Credit and Reimbursement
Obligations there shall be an automatic adjustment to the Participations
pursuant to this SECTION 4.3 to reflect the new pro rata shares of the assigning
Lender and the Assignee.

                                       46
<PAGE>

         4.4      Reimbursement. The Borrower hereby agrees to reimburse the
Issuing Lender by making payment to the Administrative Agent, for the account of
the Issuing Lender, in immediately available funds, for any payment made by the
Issuing Lender under any Letter of Credit (each such amount so paid until
reimbursed, together with interest thereon payable as provided hereinbelow, a
"Reimbursement Obligation") immediately after, and in any event within one (1)
Business Day after its receipt of notice of, such payment (provided that any
such Reimbursement Obligation shall be deemed timely satisfied (but nevertheless
subject to the payment of interest thereon as provided hereinbelow) if satisfied
pursuant to a Borrowing of Revolving Loans or a Swing Line Loan made on or prior
to the next Business Day following the date of the Borrower's receipt of notice
of such payment), together with interest on the amount so paid by the Issuing
Lender, to the extent not reimbursed prior to 1:00 p.m., Charlotte time, on the
date of such payment or disbursement, for the period from the date of the
respective payment to the date the Reimbursement Obligation created thereby is
satisfied, at the Adjusted Base Rate applicable to Loans as in effect from time
to time during such period such interest also to be payable on demand. The
Issuing Lender will provide the Administrative Agent and the Borrower with
prompt notice of any payment or disbursement made under any Letter of Credit,
although the failure to give, or any delay in giving, any such notice shall not
release, diminish or otherwise affect the Borrower's obligations under this
Section or any other provision of this Agreement. The Administrative Agent will
promptly pay to the Issuing Lender any such amounts received by it under this
Section.

         4.5      Payment by Revolving Loans. In the event that the Issuing
Lender makes any payment under any Letter of Credit and the Borrower shall not
have timely satisfied in full its Reimbursement Obligation to the Issuing Lender
pursuant to SECTION 4.4, and to the extent that any amounts then held in the
Cash Collateral Account established pursuant to SECTION 4.8 shall be
insufficient to satisfy such Reimbursement Obligation in full, the Issuing
Lender will promptly notify the Administrative Agent, and the Administrative
Agent will promptly notify each Lender of such failure. If the Administrative
Agent gives such notice prior to 11:00 a.m., Charlotte time, on any Business
Day, each Revolving Lender will make available to the Administrative Agent, for
the account of the Issuing Lender, its pro rata share (based on its Applicable
Commitment Percentage of the Total Revolving Credit Commitment) of the amount of
such payment on such Business Day in immediately available funds. If the
Administrative Agent gives such notice after 11:00 a.m., Charlotte time, on any
Business Day, each such Revolving Lender shall make its pro rata share of such
amount available to the Administrative Agent on the next succeeding Business
Day. If and to the extent any Revolving Lender shall not have so made its pro
rata share of the amount of such payment available to the Administrative Agent,
such Revolving Lender agrees to pay to the Administrative Agent, for the account
of the Issuing Lender, forthwith on demand such amount, together with interest
thereon at the Federal Funds Rate for each day from such date until the date
such amount is paid to the Administrative Agent. The failure of any Revolving
Lender to make available to the Administrative Agent its pro rata share of any
payment under any Letter of Credit shall not relieve any other Revolving Lender
of its obligation hereunder to make available to the Administrative Agent its
pro rata share of any payment under any Letter of Credit on the date required,
as specified above, but no Lender shall be responsible for the failure of any
other Lender to make available to the Administrative Agent such other Revolving
Lender's pro rata share of any such payment. Each such payment by a Revolving
Lender under this Section of its pro rata share of an amount paid by the Issuing
Lender shall constitute (x) if the conditions to making and obtaining Revolving

                                       47
<PAGE>

Loans shall then be satisfied, a Revolving Loan by such Revolving Lender (the
Borrower being deemed to have given a timely Notice of Borrowing therefor) and
shall be treated as such for all purposes of this Agreement; provided that for
purposes of determining the aggregate Unutilized Commitments immediately prior
to giving effect to the application of the proceeds of such Revolving Loans, the
Reimbursement Obligation being satisfied thereby shall be deemed not to be
outstanding at such time, and (y) in all other circumstances, the funding by
each Revolving Lender of the purchase price of its Participation in such
Reimbursement Obligation. The obligation of each Revolving Lender to so provide
its purchase price to the Issuing Lender shall be absolute and unconditional and
shall not be affected by the occurrence of an Event of Default or any other
occurrence or event. Simultaneously with the making of each such payment by a
Lender to the Issuing Lender to fund such Revolving Lender's purchase price of a
Participation in such Letter of Credit, such Revolving Lender shall,
automatically and without any further action on the part of the Issuing Lender
or such Revolving Lender, acquire a Participation in an amount equal to such
payment (excluding the portion thereof constituting interest accrued prior to
the date the Revolving Lender made its payment) in the related rights of the
Issuing Lender with respect to obligations of the Borrower as to such
Reimbursement Obligation.

         4.6      Payment to Lenders. Whenever the Issuing Lender receives a
payment in respect of a Reimbursement Obligation as to which the Administrative
Agent has received, for the account of the Issuing Lender, any payments from the
Revolving Lenders pursuant to SECTION 4.5, the Issuing Lender will promptly pay
to the Administrative Agent, and the Administrative Agent will promptly pay to
each Revolving Lender that has paid its pro rata share thereof, in immediately
available funds, an amount equal to such Revolving Lender's ratable share (based
on the proportionate amount funded by such Revolving Lender to the aggregate
amount funded by all Lenders) of such Reimbursement Obligation.

         4.7      Obligations Absolute. The Reimbursement Obligations of the
Borrower, and the obligations of the Lenders under SECTION 4.5 to make payments
to the Administrative Agent, for the account of the Issuing Lender, with respect
to Letters of Credit shall be irrevocable, shall remain in effect until the
Issuing Lender shall have no further obligations to make any payments or
disbursements under any circumstances with respect to any Letter of Credit, and
except to the extent resulting from any gross negligence or willful misconduct
on the part of the Issuing Lender, shall be absolute and unconditional, shall
not be subject to counterclaim, setoff or other defense or any other
qualification or exception whatsoever and shall be made in accordance with the
terms and conditions of this Agreement under all circumstances, including
without limitation, any of the following circumstances:

         (a)      Any lack of validity or enforceability of this Agreement, any
of the other Credit Documents or any documents or instruments relating to any
Letter of Credit;

         (b)      Any change in the time, manner or place of payment of, or in
any other term of all or any of the Obligations in respect of any Letter of
Credit or any other amendment, modification or waiver of or any consent to
departure from any Letter of Credit or any documents or instruments relating
thereto in each case whether or not the Borrower has notice or knowledge
thereof;

         (c)      The existence of any claim, setoff, defense or other right
that the Borrower may have at any time against a beneficiary named in a Letter
of Credit, any transferee of any Letter of

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Credit (or any Person for whom any such transferee may be acting), the
Administrative Agent, the Issuing Lender, any Revolving Lender or other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated hereby or any unrelated transactions (including any
underlying transaction between the Borrower and the beneficiary named in any
such Letter of Credit);

         (d)      Any draft, certificate or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect (provided that such draft, certificate or other document appears on its
face to comply with the terms of such Letter of Credit), any errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
telecopier or otherwise, or any errors in translation or in interpretation of
technical terms;

         (e)      Any defense based upon the failure of any drawing under a
Letter of Credit to conform to the terms of the Letter of Credit (provided that
any draft, certificate or other document presented pursuant to such Letter of
Credit appears on its face to comply with the terms thereof), any nonapplication
or misapplication by the beneficiary or any transferee of the proceeds of such
drawing or any other act or omission of such beneficiary or transferee in
connection with such Letter of Credit;

         (f)      The exchange, release, surrender or impairment of any
Collateral or other security for the Obligations;

         (g)      The occurrence of any Default or Event of Default; or

         (h)      Any other circumstance or event whatsoever, including, without
limitation, any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Borrower or a guarantor. Any action taken
or omitted to be taken by the Issuing Lender under or in connection with any
Letter of Credit, if taken or omitted in the absence of gross negligence or
willful misconduct, shall be binding upon the Borrower and each Revolving Lender
and shall not create or result in any liability of the Issuing Lender to the
Borrower or any Revolving Lender. It is expressly understood and agreed that for
purposes of determining whether a wrongful payment under a Letter of Credit
resulted from the Issuing Lender's gross negligence or willful misconduct, (i)
the Issuing Lender's acceptance of documents that appear on their face to comply
with the terms of such Letter of Credit, without responsibility for further
investigation, regardless of any notice or information to the contrary, (ii) the
Issuing Lender's exclusive reliance on the documents presented to it under such
Letter of Credit as to any and all matters set forth therein, including the
amount of any draft presented under such Letter of Credit, whether or not the
amount due to the beneficiary thereunder equals the amount of such draft and
whether or not any document presented pursuant to such Letter of Credit proves
to be insufficient in any respect (so long, as such document appears on its face
to comply with the terns of such Letter of Credit) and whether or not any other
statement or any other document presented pursuant to such Letter of Credit
proves to be forged or invalid or any statement therein proves to be inaccurate
or untrue in any respect whatsoever, and (iii) any noncompliance in any
immaterial respect of the documents presented under such Letter of Credit with
the terms thereof shall, in each case, be deemed not to constitute gross
negligence or willful misconduct of the Issuing Lender.

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<PAGE>

         4.8      Cash Collateral Account. At any time and from time to time,
(i) after the occurrence and during the continuance of an Event of Default, the
Administrative Agent, at the direction or with the consent of the Required
Revolving Lenders, may require the Borrower to deliver to the Administrative
Agent such additional amount of cash as is equal to the aggregate Stated Amount
of all Letters of Credit at any time outstanding (whether or not any beneficiary
under any Letter of Credit shall have drawn or be entitled at such time to draw
thereunder) and (ii) in the event of a prepayment under SECTION 3.6(b), or to
the extent any amount of a required prepayment under SECTION 3.6(c), 3.6(d) or
3.6(e) remains after prepayment of all outstanding Revolving Loans and
Reimbursement Obligations, the Administrative Agent will retain such amount as
may then be required to be retained, such amounts in each case under clauses (i)
and (ii) above to be held by the Administrative Agent in a cash collateral
account (the "Cash Collateral Account"). The Borrower hereby grants to the
Administrative Agent, for the benefit of the Issuing Lender and the Revolving
Lenders, a Lien upon and security interest in the Cash Collateral Account and
all amounts held therein from time to time as security for Letter of Credit
Exposure, and for application to the Borrower's Reimbursement Obligations as and
when the same shall arise. The Administrative Agent shall have exclusive
dominion and control, including the exclusive right of withdrawal, over such
account. Other than any interest on the investment of such amounts in Cash
Equivalents, which investments shall be made at the direction of the Borrower
(unless a Default or Event of Default shall have occurred and be continuing, in
which case the determination as to investments shall be made at the option and
in the discretion of the Administrative Agent), amounts in the Cash Collateral
Account shall not bear interest. Interest and profits, if any, on such
investments shall accumulate in such account. In the event of a drawing, and
subsequent payment by the Issuing Lender, under any Letter of Credit at any time
during which any amounts are held in the Cash Collateral Account, the
Administrative Agent will deliver to the Issuing Lender an amount equal to the
Reimbursement Obligation created as a result of such payment (or, if the amounts
so held are less than such Reimbursement Obligation, all of such amounts) to
reimburse the Issuing Lender therefor. Any amounts remaining in the Cash
Collateral Account after the expiration of all Letters of Credit and
reimbursement in full of the Issuing Lender for all of its Obligations
thereunder shall be held by the Administrative Agent, for the benefit of the
Borrower, to be applied against the Obligations in such order and manner as the
Administrative Agent may direct. If the Borrower is required to provide cash
collateral pursuant to SECTION 3.6(b), such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower on demand, provided that after
giving effect to such return (i) the sum of (y) the aggregate principal amount
of all Revolving Credit Outstandings at such time and (z) the aggregate Letter
of Credit Exposure of all Revolving Lenders at such time would not exceed the
Total Revolving Credit Commitment at such time and (ii) no Default or Event of
Default shall have occurred and be continuing at such time. If the Borrower is
required to provide cash collateral as a result of an Event of Default, such
amount (to the extent not applied, as aforesaid) shall be returned to the
Borrower within three (3) Business Days after all Events of Default have been
cured or waived.

         4.9      Effectiveness. Notwithstanding any termination of the
Revolving Credit Commitments or repayment of the Loans or both, the obligations
of the Borrower under this Article shall remain in full force and effect until
the Issuing Lender and the Revolving Lenders shall have no further obligations
to make any payments or disbursements under any circumstances with respect to
any Letter of Credit.

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<PAGE>

                                    ARTICLE V

                         INTEREST, FEES, USE OF PROCEEDS

         5.1      Interest. (a) The Borrower will pay interest in respect of the
unpaid principal amount of each Segment of the Term Loan A and the Term Loan B,
each Swing Line Loan and each Revolving Loan, commencing on the first date of
such Segment, Swing Line Loan or Revolving Loan until such Segment, Swing Line
Loan or Revolving Loan, as the case may be, shall be repaid, (i) at the Adjusted
Base Rate, as in effect from time to time during such periods as such Segment of
the Term Loan A, Term Loan B Swing Line Loan or Revolving Loan is a Base Rate
Loan, and (ii) at the Adjusted LIBOR Rate, as in effect from time to time during
such periods as such Segment of the Term Loan A or Term Loan B or Revolving Loan
is a LIBOR Loan.

         (b)      Upon the occurrence and during the continuance of an Event of
Default as the result of failure by the Borrower to pay any principal of or
interest on any Term Loan A, any Term Loan B, any Revolving Loan, any Swing Line
Loan, any fees or other amount hereunder when due (whether at maturity, pursuant
to acceleration or otherwise), and (at the election of the Required Lenders)
upon the occurrence and during the continuance of any other Event of Default,
all outstanding principal amounts of the Term Loan A, Term Loan B, Revolving
Loans and Swing Line Loans and, to the greatest extent permitted by law, all
interest accrued on the Term Loan A, Term Loan B, Revolving Loans and Swing Line
Loans and all other accrued and outstanding fees and other amounts hereunder,
shall bear interest at a rate per annum equal to the interest rate applicable
from time to time thereafter to such Term Loan A, Term Loan B, Revolving Loans
or Swing Line Loans (whether the Adjusted Base Rate or the Adjusted LIBOR Rate)
plus 2% (or, in the case of fees and other amounts, at the Adjusted Base Rate
plus 2%), and, in each case, such default interest shall be payable on demand.
To the greatest extent permitted by law, interest shall continue to accrue after
the filing by or against the Borrower of any petition seeking any relief in
bankruptcy or under any law pertaining to insolvency or debtor relief.

         (c)      Accrued (and theretofore unpaid) interest shall be payable as
follows:

                  (i)      in respect of each Base Rate Loan (including any Base
         Rate Loan or Segment thereof paid or prepaid pursuant to the provisions
         of SECTIONS 2.1, 2.2, 2.3 AND 3.6, except as provided hereinbelow), in
         arrears on the last Business Day of each calendar quarter, beginning
         with the first such day to occur after the Effective Date; provided,
         that in the event the Loans are repaid or prepaid in full and the
         Revolving Credit Commitments have been terminated, then accrued
         interest in respect of all Base Rate Loans shall be payable together
         with such repayment or prepayment on the date thereof;

                  (ii)     in respect of each LIBOR Loan (including any LIBOR
         Loan or Segment thereof paid or prepaid pursuant to the provisions of
         SECTIONS 2.1, 2.2, 2.3 AND 3.6, except as provided hereinbelow), in
         arrears (y) on the last Business Day of the Interest Period applicable
         thereto (subject to the provisions of clause (iv) in SECTION 5.3) and
         (z) in addition, in the case of a LIBOR Loan with an Interest Period
         having a duration of six months, on the date three months after the
         first day of such Interest Period; provided, that in the event all
         LIBOR Loans made pursuant to a single Borrowing are repaid or prepaid

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<PAGE>

         in full, then accrued interest in respect of such LIBOR Loans shall be
         payable together with such repayment or prepayment on the date thereof;
         and

                  (iii)    in respect of the Term Loan A, Term Loan B, the
         Revolving Loans or the Swing Line Loan, at maturity (whether pursuant
         to acceleration or otherwise) and, after maturity, on demand.

         (d)      Nothing contained in this Agreement or in any other Credit
Document shall be deemed to establish or require the payment of interest to any
Lender at a rate in excess of the maximum rate permitted by applicable law. If
the amount of interest payable for the account of any Lender on any interest
payment date would exceed the maximum amount permitted by applicable law to be
charged by such Lender, the amount of interest payable for its account on such,
interest payment date shall be automatically reduced to such maximum permissible
amount. In the event of any such reduction affecting any Lender, if from time to
time thereafter the amount of interest payable for the account of such Lender on
any interest payment date would be less than the maximum amount permitted by
applicable law to be charged by such Lender, then the amount of interest
payable for its account on such subsequent interest payment date shall be
automatically increased to such maximum permissible amount, provided that at no
time shall the aggregate amount by which interest paid for the account of any
Lender has been increased pursuant to this sentence exceed the aggregate amount
by which interest paid for its account has theretofore been reduced pursuant to
the previous sentence.

         (e)      The Administrative Agent shall promptly notify the Borrower
and the Lenders upon determining the interest rate for each Borrowing of LIBOR
Loans after its receipt of the relevant Notice of Borrowing or Notice of
Conversion/Continuation, and upon each change in the Base Rate; provided,
however, that the failure of the Administrative Agent to provide the Borrower or
the Lenders with any such notice shall neither affect any obligations of the
Borrower or the Lenders hereunder nor result in any liability on the part of the
Administrative Agent to the Borrower or any Lender. Each such determination
(including each determination of the Reserve Requirement) shall, absent manifest
error, be conclusive and binding on all parties hereto.

         5.2      Fees. The Borrower agrees to pay:

         (a)      To the Administrative Agent, for the account of each Revolving
Lender, a commitment fee for each calendar quarter (or portion thereof) for the
period from the date of this Agreement to the Termination Date, at a per annum
rate of 0.375%, if the Leverage Ratio is less than or equal to 2.0 to 1.0, at
a per annum rate of 0.50% if the Leverage Ratio is greater than 2.0 to 1.0 on
such Lender's ratable share (based on the proportion that its Revolving Credit
Commitment bears to the Total Revolving Credit Commitment) of the average daily
aggregate Unutilized Commitments (provided, however, that for purposes of the
calculation of the fee payable under this SECTION 5.2(a) only, Swing Line
Outstandings shall constitute part of the Unutilized Commitments and provided
further, however, that notwithstanding the foregoing or anything else to the
contrary herein, until the Adjustment Date relating to the Borrower's September
30, 2004 Compliance Certificate, the fees payable under this SECTION 5.2(a)
shall be calculated as if the Leverage Ratio were greater than 2.0 to 1.0
notwithstanding the actual Leverage Ratio), such fees to be payable in arrears
(i) on the last Business Day of each calendar quarter, beginning with the
Effective Date, and (ii) on the Termination Date;

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<PAGE>

         (b)      To the Administrative Agent, for the account of each Revolving
Lender, a letter of credit fee for each calendar quarter (or portion thereof) in
respect of all Letters of Credit outstanding during such quarter, at a per annum
rate equal to the Applicable Margin Percentage in effect from time to time
during such quarter for Loans that are maintained as LIBOR Loans, on such
Lender's ratable share (based on the proportion that its Revolving Credit
Commitment bears to the Total Revolving Credit Commitment) of the daily average
aggregate Stated Amount of such Letters of Credit, payable in arrears (i) on the
last Business Day of each calendar quarter, beginning with the first such day to
occur after the Effective Date, and (ii) on the later of the Termination Date
and the date of termination of the last outstanding Letter of Credit;

         (c)      To the Issuing Lender, with respect to each Letter of Credit a
facing fee for each calendar quarter (or portion thereof) in respect of all
Letters of Credit outstanding during such quarter, at a per annum rate of 0.25%
on the daily average aggregate Stated Amount of such Letters of Credit payable
in arrears (i) on the last Business Day of each calendar quarter, beginning with
the first such day to occur after the Effective Date, and (ii) on the later of
the Termination Date and the date of termination of the last outstanding Letter
of Credit;

         (d)      To the Issuing Lender, for its own account, such commissions,
insurance fees, transfer fees and other fees and charges incurred in connection
with the issuance and administration of each Letter of Credit as are customarily
charged from time to time by the Issuing Lender for the performance of such
services in connection with similar letters of credit, or as may be otherwise
agreed to by the Issuing Lender, but without duplication of amounts payable
under subsection (c) above; and

         (e)      To the Administrative Agent, for its own account, the annual
administrative fee described in the Fee Letter, on the terms, in the amount and
at the times set forth therein.

         5.3      Interest Periods. Concurrently with the giving of a Notice of
Borrowing or Notice of Conversion/Continuation in respect of any Borrowing
comprised of Base Rate Loans to be converted into, or LIBOR Loans to be
continued as, LIBOR Loans, the Borrower shall have the right to elect, pursuant
to such notice, the interest period (each, an "Interest Period") to be
applicable to such LIBOR Loans, which Interest Period shall, at the option of
the Borrower, be a one, two, three or six-month period; provided, however, that:

                  (i)      with respect to Revolving Loans, all LIBOR Loans
         comprising a single Borrowing shall at all times have the same Interest
         Period;

                  (ii)     the initial Interest Period for any LIBOR Loan shall
         commence on the date of the Borrowing of such LIBOR Loan (including the
         date of any continuation of, or conversion into, such LIBOR Loan), and
         each successive Interest Period applicable to such LIBOR Loan shall
         commence on the day on which the next preceding Interest Period
         applicable thereto expires;

                  (iii)    LIBOR Loans may not be outstanding under more than
         eight (8) separate Interest Periods at any one time (for which purpose
         Interest Periods shall be deemed to be separate even if they are
         coterminous);

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<PAGE>

                  (iv)     if any Interest Period otherwise would expire on a
         day that is not a Business Day, such Merest Period shall expire on the
         next succeeding Business Day unless such next succeeding Business Day
         falls in another calendar month, in which case such Interest Period
         shall expire on the next preceding Business Day;

                  (v)      no Interest Period may be selected that would end
         after a scheduled date for repayment of principal of the Loans
         occurring on or after the first day of such Interest Period unless,
         immediately after giving effect to such selection, the aggregate
         principal amount of Loans subject to such repayment that are Base Rate
         Loans or that have Interest Periods expiring on or before such
         principal repayment date equals or exceeds the principal amount
         required to be paid on such principal repayment date;

                  (vi)     the Borrower may not select any Interest Period that
         begins prior to the third Business Day after the Effective Date or that
         expires after the Maturity Date; and

                  (vii)    if any Interest Period begins on a day for which
         there is no numerically corresponding day in the calendar month during
         which such Interest Period would otherwise expire, such Interest Period
         shall expire on the last Business Day of such calendar month.

         5.4      Conversions and Continuations. (a) The Borrower shall have the
right, on any Business Day occurring on or after the Effective Date, to elect
(i) to convert all or a portion of the outstanding principal amount of any Base
Rate Loans into LIBOR Loans, or to convert all or any portion of LIBOR Loans the
Interest Periods for which end on the same day into Base Rate Loans, or (ii)
upon the expiration of any Interest Period, to continue all or a portion of the
outstanding principal amount of any LIBOR Loans the Interest Periods for which
end on the same day for an additional Interest Period, provided that (x) any
such conversion of LIBOR Loans into Base Rate Loans shall involve an aggregate
principal amount of not less than $500,000 or, if greater, an integral multiple
of $100,000 in excess thereof; any such conversion of Base Rate Loans into, or
continuation of, LIBOR Loans shall involve an aggregate principal amount of not
less than $1,000,000 or, if greater, an integral multiple of $1,000,000 in
excess thereof; and no partial conversion of LIBOR Loans made pursuant to a
single Borrowing shall reduce the outstanding principal amount of such LIBOR
Loans to less than $1,000,000 or to any greater amount not an integral multiple
of $ 1,000,000 in excess thereof, (y) except as otherwise provided in SECTION
5.9(d), LIBOR Loans may be converted into Base Rate Loans only on the last day
of the Interest Period applicable thereto (and, in any event, if a LIBOR Loan is
converted into a Base Rate Loan on any day other than the last day of the
Interest Period applicable thereto, the Borrower will pay, upon such conversion,
all amounts required under SECTION 5.10 to be paid as a consequence thereof),
and (z) no conversion of Base Rate Loans into LIBOR Loans or continuation of
LIBOR Loans shall be permitted during the continuance of a Default or Event of
Default.

         (b)      The Borrower shall make each such election by giving the
Administrative Agent written notice not later than 11:00 a.m., Charlotte time,
three (3) Business Days prior to the intended effective date of any conversion
of Base Rate Loans into, or continuation of LIBOR Loans and on the same Business
Day for any conversion of LIBOR Loans into Base Rate Loans. Each such notice
(each, a "Notice of Conversion/Continuation") shall be irrevocable, shall be
given in the form of EXHIBIT B-2 and shall specify (w) the Term Loan A Segment,
the Term

                                       54
<PAGE>

Loan B Segment or Revolving Loans subject to such election, (x) the date of such
conversion or continuation (which shall be a Business Day), (y) in the case of a
conversion into, or a continuation of, LIBOR Loans, the Interest Period to be
applicable thereto, and (z) the aggregate amount and Type of the Loans being
converted or continued. Upon the receipt of a Notice of Conversion/Continuation,
the Administrative Agent will promptly notify each Lender of the proposed
conversion or continuation. In the event that the Borrower shall fail to deliver
a Notice of Conversion/Continuation as provided herein with respect to any
outstanding LIBOR Loans, such LIBOR Loans shall automatically be converted to
Base Rate Loans upon the expiration of the then current Interest Period
applicable thereto (unless repaid pursuant to the terms hereof). In the event
the Borrower shall have failed to select in a Notice of Conversion/Continuation
the duration of the Interest Period to be applicable to any conversion into, or
continuation of, LIBOR Loans, then the Borrower shall be deemed to have selected
an Interest Period with a duration of one month.

         5.5      Method of Payments; Computations. (a) All payments by the
Borrower hereunder shall be made without setoff, counterclaim, recoupment or
other defense in Dollars and in immediately available funds to the
Administrative Agent for the account of the Lenders or other parties entitled to
such payment (except as otherwise expressly provided herein as to payments
required to be made directly to the Issuing Lender, the Administrative Agent or
the Lenders) at its office referred to in SECTION 14.5, prior to 12:00 noon,
Charlotte time, on the date payment is due. Any payment made as required
hereinabove, but after 12:00 noon, Charlotte time, shall be deemed to have been
made on the next succeeding Business Day. If any payment falls due on a day that
is not a Business Day, then such due date shall be extended to the next
succeeding Business Day 1 except that in the case of LIBOR Loans to which the
applicable provisions of clause (iv) in SECTION 5.3 are applicable, such due
date shall be the next preceding Business Day) and such extension of time shall
then be included in the computation of payment of interest, fees or other
applicable amounts.

         (b)      The Administrative Agent will distribute to the Lenders like
amounts relating to payments made to the Administrative Agent for the account of
the Lenders as follows: (i) if the payment is received by 12:00 noon, Charlotte
time, in immediately available funds, the Administrative Agent will make
available to each relevant Lender on the same date, by wire transfer of
immediately available funds, such Lender's ratable share of such payment (based
on the percentage that the amount of the relevant payment owing to such Lender
bears to the total amount of such payment owing to all of the relevant Lenders),
and (ii) if such payment is received after 12:00 noon, Charlotte time, or in
other than immediately available funds, the Administrative Agent will make
available to each such Lender its ratable share of such payment by wire transfer
of immediately available funds on the next succeeding Business Day (or in the
case of uncollected funds as soon as practicable after collected). If the
Administrative Agent shall not have made a required distribution to the
appropriate Lenders as required hereinabove after receiving a payment for the
account of such Lenders, the Administrative Agent will pay to each such Lender,
on demand, its ratable share of such payment with interest thereon at the
Federal Funds Rate for each day from the date such amount was required to be
disbursed by the Administrative Agent until the date repaid to such Lender. The
Administrative Agent will distribute to the Issuing Lender like amounts relating
to payments made to the Administrative Agent for the account of the Issuing
Lender in the same manner, and subject to the same terms and conditions, as set
forth hereinabove with respect to distributions of amounts to the Lenders.

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<PAGE>

         (c)      All computations of interest and fees hereunder (including
computations of the Reserve Requirement) shall be made on the basis of a year
consisting of 360 days and the actual number of days (including the first day,
but excluding the last day) elapsed, except that calculation of the prime rate
referred to in the definition of "Base Rate" herein shall be made on the basis
of a year of 365/366 days and the actual number of days (including the first
day, but excluding the last day) elapsed.

         5.6      Recovery of Payments. (a) The Borrower agrees that to the
extent the Borrower makes a payment or payments to or for the account of the
Administrative Agent, any Lender or the Issuing Lender, which payment or
payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party under any bankruptcy, insolvency or similar state or
federal law, common law or equitable cause, or the recipient of any such payment
elects to repay the same in good faith settlement of any pending or threatened
avoidance claim, then, to the extent of such payment or repayment, the
Obligation intended to be satisfied shall be revived and continued in full force
and effect as if such payment had not been received.

         (b)      If any amounts distributed by the Administrative Agent to any
Lender are subsequently returned or repaid by the Administrative Agent to the
Borrower or its representative or successor in interest whether by court order
or by settlement approved by the Lender in question such Lender will, promptly
upon receipt of notice thereof from the Administrative Agent, pay the
Administrative Agent such amount. If any such amounts are recovered by the
Administrative Agent from the Borrower or its representative or successor in
interest, the Administrative Agent will redistribute such amounts to the Lenders
on the same basis as such amounts were originally distributed.

         5.7      Use of Proceeds. The proceeds of the Term Loan A and the
Revolving Loans shall be used for working capital and general corporate purposes
and in accordance with the terms and provisions of this Agreement (including to
finance Permitted Acquisitions in accordance with the terms and provisions of
this Agreement, including, without limitation, the provisions set forth in
SECTION 11.5). The proceeds of the Term Loan B shall be used (i) first, to pay
or reimburse reasonable transaction fees and expenses in connection with the
closing of the transaction contemplated hereby, and (ii) thereafter, for the
Dividend Payment.

         5.8      Pro Rata Treatment. (a) All fundings, continuations and
conversions of Loans shall be made by the Lenders pro rata on the basis of their
respective Term Loan A Commitment, Term Loan B Commitment and Revolving Credit
Commitments (in the case of the initial funding of Loans pursuant to SECTIONS
2.1, 2.2, 3.2 AND 7.1) or on the basis of their respective outstanding Loans (in
the case of continuations and conversions of Loans pursuant to SECTION 5.4, and
additionally in all cases in the event the Term Loan A Commitments, Term Loan B
Commitments and Revolving Credit Commitments have expired or have been
terminated), as the case may be from time to time. All payments on account of
principal of or interest on any Loans, fees or any other Obligations owing to or
for the account of any one or more Lenders shall be apportioned ratably among
such Lenders in proportion to the amounts of such principal, interest, fees or
other Obligations owed to them respectively.

         (b)      Each Lender agrees that if it shall receive any amount
hereunder (whether by voluntary payment, realization upon security, exercise of
the right of setoff or banker's lien,

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<PAGE>

counterclaim or cross action, or otherwise, other than pursuant to SECTION 14.7)
applicable to the payment of any of the Obligations (other than any Hedge
Agreement) that exceeds its ratable share (according to the proportion of (i)
the amount of such Obligations (other than any Hedge Agreement) due and payable
to such Lender at such time to (ii) the aggregate amount of such Obligations
(other than any Hedge Agreement) due and payable to all Lenders at such time) of
payments on account of such Obligations (other than any Hedge Agreement) then or
therewith obtained by all the Lenders to which such payments are required to
have been made, such Lender shall forthwith purchase from the other Lenders such
participations in such Obligations (other than any Hedge Agreement) as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
portion of such excess payment is thereafter recovered from such purchasing
Lender, such purchase from each such other Lender shall be rescinded and each
such other Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery, together with an amount equal to such other Lender's
ratable share (according to the proportion of (i) the amount of such other
Lender's required repayment to (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Borrower
agrees that any Lender so purchasing a participation from another Lender
pursuant to the provisions of this subsection may, to the fullest extent
permitted by law, exercise any and all rights of payment (including, without
limitation, setoff, banker's lien or counterclaim) with respect to such
participation as fully as if such participant were a direct creditor of the
Borrower in the amount of such participation. If under any applicable
bankruptcy, insolvency or similar law, any Lender receives a secured claim in
lieu of a setoff to which this subsection applies, such Lender shall, to the
extent practicable exercise its rights in respect of such secured claim in a
manner consistent with the rights of the Lenders entitled under this subsection
to share in the benefits of any recovery on such secured claim.

         5.9      Increased Costs; Change in Circumstances; Illegality: etc. (a)
If, at any time after the date hereof and from time to time, the introduction of
or any change in any applicable law, rule or regulation or in the interpretation
or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof, or compliance by any Lender with any
guideline or request from any such Governmental Authority (whether or not having
the force of law), shall (i) subject such Lender to any tax or other charge, or
change the basis of taxation of payments to such Lender, in respect of any of
its LIBOR Loans or any other amounts payable hereunder or its obligation to
make, fund or maintain any LIBOR Loans (other than any change in the rate or
basis of tae on the overall net income of such Lender or its applicable Lending
Office), (ii) impose, modify or deem applicable any reserve, special deposit or
similar requirement (but excluding any reserves to the extent actually included
within the Reserve Requirement in the calculation of the LIBOR Rate) against
assets of, deposits with or for the account of, or credit extended by, such
Lender or its applicable Lending Office, or (iii) impose on such Lender or its
applicable Lending Office any other condition, and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining
any LIBOR Loans or issuing or participating in Letters of Credit or to reduce
the amount of any sum received or receivable by such Lender hereunder (including
in respect of Letters of Credit), the Borrower will, promptly upon demand
therefor by such Lender, pay to such Lender such additional amounts as-shall
compensate such Lender for such increase in costs or reduction in return.

                                       57
<PAGE>

         (b)      If, at any time after the date hereof and from time to time,
any Lender shall have reasonably determined that the introduction of or any
change in any applicable law, rule or regulation regarding capital adequacy or
in the interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by such
Lender with any guideline or request from any such Governmental Authority
(whether or not having the force of law) relating thereto, has or would have the
effect as a consequence of such Lender's Term Loan A Commitment, Term Loan B
Commitment, Revolving Credit Commitment, Loans or issuance of or Participations
in Letters of Credit hereunder, of reducing the rate of return on the capital of
such Lender or any Person controlling such Lender to a level below that which
such Lender or controlling Person could have achieved but for such introduction,
change or compliance (taking into account such Lender's or controlling Person's
policies with respect to capital adequacy), the Borrower will, promptly upon
demand therefor by such Lender therefor pay to such Lender such additional
amounts as will compensate such Lender or controlling Person for such reduction
in return.

         (c)      If, on or prior to the: first day of any Interest Period, (y)
the Administrative Agent shall have reasonably determined that adequate and
reasonable means does not exist for ascertaining the applicable LIBOR Rate for
such Interest Period or (z) the Administrative Agent shall have received written
notice from the Required Lenders of their reasonable determination that the rate
of interest referred to in the definition of "LIBOR Rate" upon the basis of
which the Adjusted LIBOR Rate for LIBOR Loans for such Interest Period is to be
determined will not adequately and fairly reflect the cost to such Lenders of
making or maintaining LIBOR Loans during such Interest Period, the
Administrative Agent will forthwith so notify the Borrower and the Lenders. Upon
such notice (i) all then outstanding LIBOR Loans shall automatically, on the
expiration date of the respective Interest Periods applicable thereto (unless
then repaid in full), be converted into Base Rate Loans, (ii) the obligation of
the Lenders to, make, to convert Base Rate Loans into, or to continue. LIBOR
Loans shall be suspended (including pursuant to the Borrowing to which such
Interest Period applies), and (iii) any Notice of Borrowing or Notice of
Conversion/Continuation given at any time thereafter with respect to LIBOR Loans
shall be deemed to be a request for Base Rate Loans, in each case until the
circumstances giving rise to such suspension no longer exist (and the Required
Lenders, if malting such determination, shall have so notified the
Administrative Agent), and the Administrative Agent shall promptly notify the
Borrower and the Lenders of the same.

         (d)      Notwithstanding any other provision in this Agreement, if, at
any time after the date hereof and from time to time, any Lender shall have
determined in good faith that the introduction of or any change in any
applicable law, rule or regulation or in the interpretation or administration
thereof by any Governmental Authority charged with the interpretation or
administration thereof, or compliance with any guideline or request from any
such Governmental Authority (whether or not having the force of law), has or
would have the effect of making it unlawful for such Lender to make or to
continue to make or maintain LIBOR Loans, such Lender will forthwith so notify
the Administrative Agent and the Borrower. Upon such notice, (i) each of such
Lender's then outstanding LIBOR Loans shall automatically, on the expiration
date of the respective Interest Period applicable thereto (or, to the extent any
such LIBOR Loan may not lawfully be maintained as a LIBOR Loan until such
expiration date, upon such notice), be converted into a Base Rate Loan, (ii) the
obligation of such Lender to make, to convert Base Rate Loans into, or to
continue, LIBOR Loans shall be suspended (including pursuant to any

                                       58
<PAGE>

Borrowing for which the Administrative Agent has received a Notice of Borrowing
but for which the Borrowing Date has not arrived), and (iii) any Notice of
Borrowing or Notice of Conversion/Continuation given at any time thereafter with
respect to LIBOR Loans shall, as to such Lender, be deemed to be a request for a
Base Rate Loan, in each case until the circumstances giving rise to such
suspension no longer exist and shall promptly notify the Administrative Agent of
the same, and the Administrative Agent shall in turn notify the Borrower.

         (e)      Determinations by the Administrative Agent or any Lender for
purposes of this SECTION 5.9 of any increased costs, reduction in return, market
contingencies, illegality or any other matter shall, absent manifest error, be
conclusive, provided that such determinations are made in good faith. No failure
by the Administrative Agent or any Lender at any time to demand payment of any
amounts payable under, this SECTION 5.9 shall constitute a waiver of its right
to demand payment of any additional amounts arising at any subsequent time.
Nothing in this SECTION 5.9 shall require or be construed to require the
Borrower to pay any interest, fees, costs or other amounts in excess of that
permitted by applicable law.

         5.10     Taxes, (a) Any and all payments by the Borrower hereunder or
under any Note shall be made, in accordance with the terms hereof and thereof,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, other than net income and franchise taxes imposed on the
Administrative Agent or any Lender by the United States or by the jurisdiction
under the laws of which the Administrative Agent or such Lender or the Borrower
or Subsidiary Guarantor, as the case may be, is organized or does business or in
which its principal office or (in the case of a Lender) its applicable Lending
Office is located, or any political subdivision or taxing authority thereof (all
such nonexcluded 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 the Administrative Agent or any Lender, (i) 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), the Administrative Agent or such Lender, as the case may
be, receives an amount equal to the sum it would have received had no such
deductions been made, (ii) the Borrower will make such deductions, (iii) the
Borrower will pay the full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law and (iv) the Borrower will
deliver to the Administrative Agent or such Lender, as the case may be, evidence
of such payment.

         (b)      The Borrower will indemnify the Administrative Agent and each
Lender for the full amount of Taxes (including, without limitation, any Taxes
imposed by any jurisdiction on amounts payable under this Section) paid by the
Administrative Agent or such Lender, as the case may be, and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Administrative
Agent or such Lender, as the case may be, makes written demand therefor.

         (c)      Each of the Administrative Agent and the Lenders agrees that
if it subsequently recovers, or receives a permanent net tax benefit with
respect to, any amount of Taxes (i) previously paid by it and as to which it has
been indemnified by or on behalf of the Borrower or

                                       59
<PAGE>

(ii) previously deducted by the Borrower (including, without limitation, any
Taxes deducted from any additional sums payable under clause (i) of subsection
(a) above), the Administrative Agent or such Lender, as the case may be, shall
reimburse the Borrower to the extent of the amount of any such recovery or
permanent net tax benefit (but only to the extent of indemnity payments made, or
additional amounts paid, by or on behalf of the Borrower under this Section with
respect to the Taxes giving rise to such recovery or tax benefit); provided,
however, that the Borrower, upon the request of the Administrative Agent or such
Lender, agrees to repay to the Administrative Agent or such Lender, as the case
may be, the amount paid over to the Borrower (together with any penalties,
interest or other charges), in the event the Administrative Agent or such Lender
is required to repay such amount to the relevant taxing authority or other
Governmental Authority. The determination by the Administrative Agent or any
Lender of the amount of any such, recovery or permanent net tax benefit shall,
in the absence of manifest error, be conclusive and binding.

         (d)      Each Lender that is not a "United States person" within the
meaning of Section 7701(a)(30) of the Code (a "Foreign Lender") shall deliver to
the Administrative Agent, prior to receipt of any payment subject to withholding
under the Code (or upon accepting an assignment of an interest herein), two duly
signed completed copies of either IRS Form W-8BEN or any successor thereto
(relating to such Person and entitling it to an exemption from, or reduction of,
withholding tax on all payments to be made to such Person by the Borrower
pursuant to this Agreement) or IRS Form W-8ECI or any successor thereto
(relating to all payments to be made to such Person by the Borrower pursuant to
this Agreement) or such other evidence satisfactory to the Borrower and the
Administrative Agent that such Person is entitled to an exemption from, or
reduction of, U.S. withholding tax. Thereafter and from time to time, each such
Person shall (i) promptly submit to the Administrative Agent such additional
duly completed and signed copies of one of such forms (or such successor forms
as shall be adopted from time to time by the relevant United States taxing
authorities) as may then be available under then current United States laws and
regulations to avoid, or such evidence as is satisfactory to the Borrower and
the Administrative Agent of any available exemption from or reduction of, United
States withholding taxes in respect of all payments to be made to such Person by
the Borrower pursuant to this Agreement, (ii) promptly notify the Administrative
Agent of any change in circumstances which would modify or render invalid any
claimed exemption or reduction, and (iii) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Lender, and
as may be reasonably necessary (including the re-designation of its Lending
Office) to avoid any requirement of applicable Laws that the Borrower make any
deduction or withholding for taxes from amounts payable to such Person. If such
Person fails to deliver the above forms or other documentation, then the
Administrative Agent may withhold from any interest payment to such Person an
amount equivalent to the applicable withholding tax imposed by Sections 1441 and
1442 of the Code, without reduction.

         (e)      Upon the request of the Administrative Agent, each Lender that
is a "United States person" within the meaning of Section 7701(a)(30) of the
Code shall deliver to the Administrative Agent two duly signed completed copies
of IRS Form W-9. If such Lender fails to deliver such forms, then the
Administrative Agent may withhold from any interest payment to such Lender an
amount equivalent to the applicable back-up withholding tax imposed by the Code,
without reduction.

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<PAGE>

         If any Governmental Authority asserts that the Administrative Agent did
not properly withhold or backup withhold, as the case may be, any tax or other
amount from payments made to or for the account of any Lender, such Lender shall
indemnify the Administrative Agent therefor, including all penalties and
interest, any taxes imposed by any jurisdiction on the amounts payable to the
Administrative Agent under this SECTION 5.10, and costs and expenses (including
Attorney Costs) of the Administrative Agent. The obligation of the Lenders under
this Section shall survive the termination of the Aggregate Commitments,
repayment of all Obligations and the resignation of the Administrative Agent.

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

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

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

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

For purposes of calculating amounts payable by the Borrower to the Lenders under
this SECTION 5.11, each Lender shall be deemed to have funded each LIBOR Loan
made by it at the LIBOR Rate for such Loan by a matching deposit or other
borrowing in the London interbank eurodollar market for a comparable amount and
for a comparable period, whether or not such LIBOR Loan was in fact so funded.

         5.12     Deficiency Advances; Failure to Purchase Participations, No
Lender shall be responsible for any default of any other Lender in respect of
such other Lender's obligation to make its portion of the Term Loan A, Term Loan
B or any Revolving Loan hereunder or to fund its purchase of any Participation
hereunder nor shall the Revolving Credit Commitment, Term Loan A Commitment,
Term Loan B Commitment or Letter of Credit Exposure of any Lender hereunder be
increased as a result of such default of any other Lender. Without limiting the
generality of the foregoing or the provisions of SECTION 5.13, in the event any
Lender shall fail to advance funds to the Borrower as herein provided, the
Administrative Agent may in its discretion, but shall not be obligated to,
advance under the applicable Note in its favor as a Lender all or any portion of
such amount or amounts (each, a "deficiency advance") and shall thereafter be
entitled to payments of principal of and interest on such deficiency advance in
the same manner and at the same interest rate or rates to which such other
Lender would have been entitled had it made such advance under its Note;
provided that, (i) such defaulting Lender shall not be entitled to receive
payments of principal, interest or fees with respect to such deficiency advance
until such deficiency advance (together with interest thereon as provided in
clause (ii)) shall be paid by such Lender and (ii) upon payment to the
Administrative Agent from such other

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<PAGE>

Lender of the entire outstanding amount of each such deficiency advance,
together with accrued and unpaid interest thereon, from the most recent date or
dates interest was paid to the Administrative Agent by a Borrower on each Loan
comprising the deficiency advance at the Federal Funds Rate, then such payment
shall be credited against the applicable Note of the Administrative Agent in
full payment of such deficiency advance and such Borrower shall be deemed to
have borrowed the amount of such deficiency advance from such other Lender as of
the most recent date or dates, as the case may be, upon which any payments of
interest were made by the Borrower thereon. In the event any Lender shall fail
to fund its purchase of a Participation after notice from the Issuing Lender or
Bank of America as the Swing Line lender, as applicable, such Lender shall pay
to the Issuing Lender or Bank of America as the Swing Line lender, as
applicable, such amount on demand, together with interest at the Federal Funds
Rate on the amount so due from the date of such notice to the date such purchase
price is received by the Issuing Lender or Bank of America as the Swing Line
lender, as applicable.

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

                  (i)      if the Borrower failed to make such payment, each
         Revolving Lender shall forthwith on demand repay to the Administrative
         Agent the portion of such assumed payment that was made available to
         such Revolving Lender in immediately available funds, together with
         interest thereon in respect of each day from and including the date
         such amount was made available by the Administrative Agent to such
         Revolving Lender to the date such amount is repaid to the
         Administrative Agent in immediately available funds, at the Federal
         Funds Rate from time to time in effect; and

                  (ii)     if any Revolving Lender failed to make such payment,
         such Revolving Lender shall forthwith on demand pay to the
         Administrative Agent the amount thereof in immediately available funds,
         together with interest thereon for the period from the date such amount
         was made available by the Administrative Agent to the Borrower to the
         date such amount is recovered by the Administrative Agent (the
         "Compensation Period") at a rate per annum equal to the Federal Funds
         Rate from time to time in effect. If such Revolving Lender does not pay
         such amount forthwith upon the Administrative Agent's demand therefor,
         the Administrative Agent may make a demand therefor upon the Borrower,
         and the Borrower shall pay such amount to the Administrative Agent,
         together with interest thereon for the Compensation Period at a rate
         per annum equal to the rate of interest applicable to the applicable
         Borrowing. Until the Administrative Agent shall recover such
         corresponding amount together with interest thereon, such corresponding
         amount shall constitute a deficiency advance within the meaning of
         SECTION 5.12. Nothing herein shall be deemed to relieve any Revolving
         Lender from its obligation to fulfill its commitments hereunder or to
         prejudice any rights which the Administrative

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<PAGE>

         Agent or the Borrower may have against any Revolving Lender as a result
         of any default by such Revolving Lender hereunder.

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

         (b)      Unless the Administrative Agent has received, prior to 1:00
p.m., Charlotte time, on the relevant Borrowing Date, written notice from a
Revolving Lender that such Revolving Lender will not make available to the
Administrative Agent such Revolving Lender's ratable portion of the relevant
Borrowing, the Administrative Agent may assume that such Revolving Lender has
made such portion available to the Administrative Agent in immediately available
funds on such Borrowing Date in accordance with the applicable provisions of
SECTION 3.2, and the Administrative Agent may, in reliance upon such assumption,
but shall not be obligated to, make a corresponding amount available to the
Borrower on such Borrowing Date. If and, to the extent that such Revolving
Lender shall not have made such portion available to the Administrative Agent
and the Administrative Agent shall have made such corresponding amount available
to the Borrower, such Lender, on the one hand, and the Borrower, on the other,
severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount, together with interest thereon for each day from the date
such amount is made available to the Borrower until the date such amount is
repaid to the Administrative Agent, (i) in the case of such Revolving Lender, at
the Federal Funds Rate, and (ii) in the case of the Borrower, at the rate of
interest applicable at such time to the Type of Revolving Loans comprising such
Borrowing, as determined under the provisions of SECTION 5.1. If such "Revolving
Lender shall repay to the Administrative Agent such corresponding amount such
amount shall constitute such Lender's Revolving Loan as part of such Borrowing
for purposes of this Agreement. The failure of any Revolving Lender to make any
Revolving Loan required to be made by it as part of any Borrowing shall not
relieve any other Revolving Lender of its obligation, if any, hereunder to make
its Revolving Loan as part of such Borrowing, but no Revolving Lender shall be
responsible for the failure of any other Revolving Lender to make the Revolving
Loan to be made by such other Revolving Lender as part of any Borrowing.

                                   ARTICLE VI

                                    SECURITY

         6.1      Security. As security for the full and timely payment and
performance of all Obligations, the Borrower shall, and shall cause all its
Subsidiaries to, on or before the Effective Date, do or cause to be done all
things necessary in the opinion of the Administrative Agent and its counsel to
grant to the Administrative Agent or continue, in the case of a Lien in
existence on the Effective Date, for the benefit of the Administrative Agent and
the Lenders a duly perfected first priority security interest in all Collateral
subject to no prior Lien or other encumbrance or restriction transfer. Without
limiting the foregoing, the Borrower, on behalf of itself and each Subsidiary
having rights in any Subsidiary Securities, acknowledges that the Borrower and
each such Subsidiary (other than Excluded Subsidiaries) has delivered to the
Administrative Agent, (A) a Security Agreement which pledged to the
Administrative Agent for the benefit of the Administrative Agent and the
Lenders, all of the Subsidiary Securities of each Subsidiary, (B) if such
Subsidiary Securities were in the form of certificated securities, such
certificated securities, together with undated stock powers or other appropriate
transfer documents endorsed in blank

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<PAGE>

pertaining thereto, (C) if such Subsidiary Securities did not constitute
securities and the Subsidiary has not elected to have such interests treated as
securities under Article 8 of the Uniform Commercial Code, a control agreement
from the registrar of such Subsidiary Securities and (D) Uniform Commercial Code
financing statements reflecting the Lien in favor of the Administrative Agent on
such Subsidiary Securities, each in form and substance acceptable to the
Administrative Agent, and shall take such further action and deliver or cause to
be delivered such further documents as required by the Security Documents or
otherwise as the Administrative Agent may request to effect the transactions
contemplated by this ARTICLE VI. The Borrower shall, and shall cause each
Subsidiary, to pledge to the Administrative Agent for the benefit of the
Administrative Agent and the Lenders (and as appropriate to reaffirm its prior
pledge of) all of the Pledged Interests of any Subsidiary acquired or created
after the Effective Date and to deliver to the Administrative Agent all of the
documents and instruments in connection therewith as are required pursuant to
the terms of SECTION 9,10 and of the Security Documents.

         6.2      Further Assurances. At the request of the Administrative
Agent, the Borrower will or will cause all its Subsidiaries, as the case may be,
to execute, by its duly authorized officers, alone or with the Administrative
Agent, any certificate, instrument, financing statement, control agreement,
statement or document, or to procure any such certificate, instrument, statement
or document, or to take such other action (and pay all connected costs) which
the Administrative Agent reasonably deems necessary from time to time to create,
continue or preserve the liens and security interests in Collateral (and the
perfection and priority thereof) of the Administrative Agent contemplated hereby
and by the other Credit Documents and specifically including all Collateral
acquired by the Borrower or its Subsidiaries after the Effective Date. The
Administrative Agent is hereby irrevocably authorized to execute and file or
cause to be filed, without the signature of the Borrower or any Subsidiary
appearing thereon, all Uniform Commercial Code financing statements reflecting
the Borrower or any Subsidiary as "debtor" and the Administrative Agent as
"secured party", and continuations thereof and amendments thereto, as the
Administrative Agent reasonably deems necessary or advisable to give effect to
the transactions contemplated hereby and by the other Credit Documents. The Lien
granted by the Security Agreement shall include all such amounts advanced by the
Administrative Agent in its reasonable discretion to protect the Collateral.

          6.3     Information Regarding Collateral. The Borrower represents,
warrants and covenants that (i) the chief executive office of the Borrower and
each other Person providing Collateral pursuant to a Security Document (each, a
"Grantor") at the Effective Date is located at the address or addresses
specified on SCHEDULE 6.3, and (ii) SCHEDULE 6.3 contains a true and
complete list of (a) the exact legal name, jurisdiction of formation, and
address of each Grantor and of each other Person that has effected any merger or
consolidation with a Grantor or contributed or transferred to a Grantor any
property constituting Collateral at any time since January 1, 1999 (excluding
Persons making sales in the ordinary course of their businesses to a Grantor of
property constituting inventory in the hands of such seller), (b) the exact
legal name, jurisdiction of formation, and each location of the chief executive
office of each Grantor at any time since January 1, 1999, (c) each location in
which goods constituting Collateral are located or have been located since
January 1, 1999 (together with the name of each owner of the property located at
such address if not the applicable Grantor, and a summary description of the
relationship between the applicable Grantor and such Person), and (d) each trade
name,

                                       64
<PAGE>

trademark or other trade style used by any Grantor since January 1, 1999 and the
purposes for which it was used. Borrower shall not change, and shall not permit
any other Grantor to change, its name, jurisdiction of formation (whether by
reincorporation, merger or otherwise), the location of its chief executive
office or any location specified in clause (c) of the immediately preceding
sentence, or use or permit any other Grantor to use, any additional trade name,
trademark or other trade style, except upon giving not less than thirty (30)
days' prior written notice to the Administrative Agent and taking or causing to
be taken all such action at Borrower's or such other Grantor's expense as may be
reasonably requested by the Administrative Agent to perfect or maintain the
perfection of the Lien of the Administrative Agent in Collateral.

                                   ARTICLE VII

                             CONDITIONS OF BORROWING

         7.1      Conditions to Effectiveness. This Agreement shall become
effective as of the Effective Date upon the execution and delivery of a
counterpart signature page hereof by each of the parties hereto and receipt by
the Administrative Agent and the Borrower of each such executed signature page,
and satisfaction or effective waiver of each of the conditions precedent set
forth below. The obligation of each Lender to continue the Revolving Loans and
the Term Loan A and of each Term Loan B Lender to make the Term Loan B, as
applicable, at or after the Effective Date in accordance with the terms herein,
the obligation of the Issuing Lender to issue Letters of Credit hereunder and
the obligation of Bank of America to make any Swing Line Loan, is subject to the
satisfaction of the following conditions precedent:

         (a)      The Administrative Agent shall have received the following,
each dated as of the Effective Date and, except for the Notes and any
certificates or instruments required to be delivered under the Security
Agreement, in sufficient copies for each Lender:

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

                  (ii)     a Term Loan A Note for each Term Loan A Lender, dated
         as of the Effective Date, in the amount of such Term Loan A Lender's
         pro rata share of the Term Loan A Outstandings as of the Effective
         Date, each duly completed in accordance with the relevant provisions of
         SECTION 2.4 and executed by the Borrower;

                  (iii)    a Revolving Note for each Lender, dated as of the
         Effective Date, in the amount of such Lender's Revolving Credit
         Commitment, each duly completed in accordance with the relevant
         provisions of SECTION 3.4 and executed by the Borrower;

                  (iv)     the Swing Line Note for Bank of America, dated as of
         the Effective Date, in the amount of the Swing Line, duly completed in
         accordance with the relevant provisions of SECTION 3.4(d) and executed
         by the Borrower;

                  (v)      a Term Loan B Note for each Term Loan B Lender, dated
         as of the Effective Date, in the amount of such Lender's Term Loan B
         Commitment, each duly

                                       65
<PAGE>

         completed in accordance with the relevant provisions of SECTION 2.4 and
         executed by the Borrower;

                  (vi)     a reaffirmation of the Subsidiary Guaranty, duly
         completed and executed by each Subsidiary Guarantor of the Borrower;

                  (vii)    amendments or modifications to the existing
         Mortgages, in form and substance reasonably satisfactory to the
         Administrative Agent, dated as of the Effective Date and duly executed
         by the Borrower, a Subsidiary Guarantor and the trustee thereunder, as
         applicable, together in each case with the Mortgaged Property Support
         Documents and any additional title policy endorsements required by the
         Administrative Agent in its reasonable discretion;

                  (viii)   the favorable opinion of Shumaker, Loop & Kendrick,
         LLP, counsel to the Borrower and the Guarantors, in substantially the
         form of EXHIBIT G, addressed to the Administrative Agent and the
         Lenders and addressing such matters as the Administrative Agent or any
         Lender may reasonably request;

                  (ix)     such amendments to existing UCC financing statements
         or initial UCC financing statements as the Administrative Agent may
         deem necessary to create and/or maintain its perfected security
         interest in the Collateral;

                  (x)      all fees and expenses (including fees and expenses of
         counsel) of the Administrative Agent and the Lenders required hereunder
         or under any other Credit Document to be paid on or prior to the date
         hereof, including but not limited to all fees due and payable to Bank
         of America, N.A., as Administrative Agent, pursuant to the letter
         agreement dated as of March 15, 2004, relating to the Restatement, and
         all fees due and payable to Wachovia Capital Markets, LLC, as co-lead
         arranger for the Term Loan B Facility, pursuant to the letter agreement
         dated as March 6, 2004;

                  (xi)     the Draft 2003 Audit, the Two-Month Stub, the Pro
         Forma Balance Sheet and the Projections, all as defined and described
         in SECTIONS 8.11 (a), (b) and (c), all of which shall be in form and
         substance satisfactory to the Administrative Agent;

                  (xii)    evidence in form and substance reasonably
         satisfactory to the Administrative Agent that all of the requirements
         of SECTION 9.6 and those provisions of the Security Agreement and the
         Mortgages relating to the maintenance of insurance have been satisfied,
         including receipt of certificates of insurance evidencing the insurance
         coverages described on SCHEDULE 8.17 and all other or additional
         coverages required under the Security Agreement and naming the
         Administrative Agent as loss payee or additional insured, as its
         interests may appear;

                  (xiii)   a certificate, in substantially the form of EXHIBIT H
         hereto, designating any and all Excluded Subsidiaries;

                  (xiv)    payment of the scheduled March 31, 2004 principal
         payment of $1,250,000, due with respect to the Term Loan A;

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<PAGE>

                  (xv)     an initial Notice of Borrowing with respect to the
         Term Loan B; and

                  (xvi)    such other documents, certificates, opinions and
         instruments in connection with the transactions contemplated hereby as
         it shall have reasonably requested.

         (b)      The Administrative Agent shall have received a certificate,
signed by the president, the Chief Executive Officer or the Chief Financial
Officer, in form and substance satisfactory to the Administrative Agent,
certifying that (i) all representations and warranties of the Borrower contained
in this Agreement and the other Credit Documents are true and correct as of the
Effective Date, both immediately before and after giving effect to the
consummation of the transactions contemplated hereby, the making of the Loans
hereunder and the, application of the proceeds thereof, (ii) no Default or Event
of Default has occurred and is continuing, both immediately before and after
giving effect to the consummation of the transactions contemplated hereby, the
making of the Loans hereunder and the application of the proceeds thereof, (iii)
both immediately before and after giving effect to the consummation of the
transactions contemplated hereby, the making of the Loans hereunder and the
application of the proceeds thereof, no Material Adverse Change has occurred
since December 31, 2000, and there exists no event, condition or state of facts
that could reasonably be expected to result in a Material Adverse Change, and
(iv) all conditions to the continual extensions of credit hereunder set forth in
this SECTION 7.1 and in SECTION 7.2 have been satisfied as required hereunder.

         (c)      The Administrative Agent shall have received a certificate of
the secretary or an assistant secretary of each of the Borrower and its
Subsidiaries (including all Excluded Subsidiaries), in form and substance
satisfactory the Administrative Agent, certifying (i) that attached thereto is a
true and complete copy of the articles or certificate of incorporation or
articles or certificate of organization and all amendments thereto of the
Borrower or such Subsidiary, as the case may be certified as of a recent date by
the Secretary of State (or comparable Governmental Authority) of its
jurisdiction of organization, and that the same has not been amended since the
date of such certification, (ii) that attached thereto is a true and complete
copy of the bylaws, operating agreement, partnership agreement or other
comparable document of the Borrower or such Subsidiary, as the case may be, as
then in effect and as in effect at all times from the date on which the
resolutions referred to in clause (iii) below were adopted to and including the
date of such certificate, and (iii) that attached thereto is a true and complete
copy of resolutions adopted by the board of directors, managers, general
partners or other comparable governing body of the Borrower or such Subsidiary,
as the case may be, authorizing the execution, delivery and performance of this
Agreement and the other Credit Documents to which it is a party, and as to the
incumbency and genuineness of the signature of each officer of the Borrower or
such Subsidiary, as the case may be, executing this Agreement or any of such
other Credit Documents, and attaching all such copies of the documents described
above,

         (d)      The Administrative Agent shall have received (i) a certificate
as of a recent date of the good standing of each of the Borrower and its
Subsidiaries (including al! Excluded Subsidiaries) under the laws of its
jurisdiction of organization, from the Secretary of State (or comparable
Governmental Authority) of such jurisdiction, (ii) a certificate as of a recent
date of the qualification of each of the Borrower and its Subsidiaries
(including all Excluded

                                       67
<PAGE>

Subsidiaries) to conduct business as a foreign corporation in each jurisdiction
where it is so qualified as of the Effective Date, from the Secretary of State
(or comparable Governmental Authority) of such jurisdiction, and (iii) to the
extent generally provided, a tax clearance, tax good standing or similar
certificate or letter as to each of the Borrower and its Subsidiaries, from the
Department of Revenue (or comparable Governmental Authority) in each applicable
jurisdiction under (i) and (ii) above.

         (e)      All legal matters, documentation, and corporate or other
proceedings incident to the transactions contemplated hereby shall be
satisfactory in form and substance to the Administrative Agent; all approvals,
permits and consents of any Governmental Authorities or other Persons required
in connection with the execution and delivery of this Agreement and the other
Credit Documents and the consummation of the transactions contemplated hereby
and thereby shall have been obtained, without the imposition of conditions that
are not acceptable to the Administrative Agent, and all related filings, if any,
shall have been made, and all such approvals, permits, consents and filings
shall be in full force and effect and the Administrative Agent shall have
received such copies thereof as it shall have requested; all applicable waiting
periods shall have expired without any adverse action being taken by any
Governmental Authority having jurisdiction; and no action, proceeding,
investigation, regulation or legislation shall have been instituted, threatened
or proposed before, and no order, injunction or decree shall have been entered
by, any court or other Governmental Authority, in each case to enjoin, restrain
or prohibit, to obtain substantial damages in respect of, or that is otherwise
related to or arises out of, this Agreement, any of the other Credit Documents
or the consummation of the transactions contemplated hereby or thereby, or that,
in the opinion of the Administrative Agent could reasonably be expected to have
a Material Adverse Effect.

         (f)      Since December 31, 2000, both immediately before and after
giving effect to the consummation of the transactions contemplated by this
Agreement, there shall not have occurred any Material Adverse Change or any
event, condition or state of facts that could reasonably be expected to result
in a Material Adverse Change.

         7.2      Conditions of All Borrowings. The obligation of each Lender to
make or continue any Loans hereunder, fund the Term Loan B and make subsequent
Revolving Loans, the obligation of Bank of America to make any Swing Line Loan
and the obligation of the Issuing Lender to issue any Letters of Credit
hereunder, is subject to the satisfaction of the following conditions precedent
on the relevant Borrowing Date or date of issuance:

         (a)      The Administrative Agent shall have received a Notice of
Borrowing in accordance with SECTION 3.2(b), or (together with Bank of America)
SECTION 3.8(a), or (together with the Issuing Lender) a Letter of Credit Notice
in accordance with SECTION 4.2, as applicable;

         (b)      Each of the representations and warranties (taking into
account any materiality standards set forth therein) contained in ARTICLE VIII
and in the other Credit Documents shall be true and correct on and as of such
Borrowing Date (including the Effective Date, in the case of the funding of the
Term Loan A and any Borrowing made hereunder), date of such Swing Line Loan or
date of issuance with the same effect as if made on and as of such date, both
immediately before and after giving effect to the Loans or Swing Line Loans to
be made or Letter of Credit to be issued on such date (except to the extent any
such representation or

                                       68
<PAGE>
warranty is expressly stated to have been made as of a specific date, in which
case such representation or warranty shall be true and correct in all material
respects as of such date);

         (c)      No Default or Event of Default shall have occurred and be
continuing on such date, both immediately before and after giving effect to the
Loans or Swing Line Loans to be made or Letter of Credit to be issued on such
date;

         Each giving of a Notice of Borrowing or a Letter of Credit Notice, and
the consummation of each Borrowing, advance of a Swing Line Loan or issuance of
a Letter of Credit, shall be deemed to constitute a representation by the
Borrower that the statements contained in subsections (b) and (c) above are
true, both as of the date of such notice or request and as of the relevant
Borrowing Date or date of issuance.

                                  ARTICLE VIII

                         REPRESENTATIONS AND WARRANTIES

         To induce the Administrative Agent and the Lenders to enter into this
Agreement and to induce the Lenders to extend the credit contemplated hereby,
the Borrower represents and warrants to the Administrative Agent and the Lenders
as follows:

         8.1      Corporate Organization and Power. Each of the Borrower and its
Subsidiaries (including all Excluded Subsidiaries) (i) is a corporation, limited
liability company or limited partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or
organization, (ii) has the full corporate, limited liability company or limited
partnership power and authority to execute, deliver and perform the Credit
Documents to which it is or will be a party, to own and hold its property and to
engage in its business as presently conducted and (iii) is duly qualified to do
business as a foreign corporation, limited liability company or limited
partnership and is in good standing in each jurisdiction where the nature of its
business or the ownership of its properties requires it to be so qualified,
except where the failure to be so qualified would not, individually or in the
aggregate be reasonably likely to have a Material Adverse Effect.

         8.2      Authorization: Enforceability. Each of the Borrower and its
Subsidiaries (including all Excluded Subsidiaries) has taken, or on the
Effective Date will have taken all necessary corporate action to execute,
deliver and perform each of the Credit Documents to which it is or will be a
party, and has or on the Effective Date (or any later date of execution and
delivery) will have validly executed and delivered each of the Credit Documents
to which it is or will be a party. This Agreement constitutes, and each of the
other Credit Documents upon execution and delivery will constitute the legal,
valid and binding obligation of each of the Borrower and its Subsidiaries
(including all Excluded Subsidiaries) that is a party hereto or thereto,
enforceable against it in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally, by general equitable
principles or by principles of good faith and fair dealing.

         8.3      No Violation. The execution, delivery and performance by each
of the Borrower and its Subsidiaries (including all Excluded Subsidiaries) of
this Agreement and each of the other

                                       69
<PAGE>

Credit Documents to which it is or will be a party, and compliance by it with
the terms hereof and thereof, do not and will not (i) violate any provision of
its articles or certificate of incorporation or bylaws or contravene any other
Requirement of Law applicable to it, (ii) conflict with, result in a breach of
or constitute (with notice, lapse of time or both) a default under any
indenture, agreement or other instrument to which it is a party, by which it or
any of its properties is bound or to which it is subject, or (iii) result in a
Limitation on any Licenses applicable to the business, operations or properties
of the Borrower or any of its Subsidiaries (including all Excluded Subsidiaries)
or adversely affect the ability of the Borrower or any of its Subsidiaries
(including all Excluded Subsidiaries) to participate in any Third Party Payor
Arrangement, or (iv) except for the Liens granted in favor of the Administrative
Agent pursuant to the Security Documents, result in or require the creation or
imposition of any Lien upon any of its properties or assets. No Subsidiary is a
party to any agreement or instrument or otherwise subject to any restriction or
encumbrance that restricts or limits its ability to make dividend payments or
other distributions in respect of its Capital Stock, to repay Indebtedness owed
to the Borrower or any other Subsidiary (including all Excluded Subsidiaries),
to make loans or advances to the Borrower or any other Subsidiary (including all
Excluded Subsidiaries), or to transfer any of its assets or properties to the
Borrower or any other Subsidiary, in each case other than such restrictions or
encumbrances existing under or by reason of the Credit Documents or applicable
Requirements of Law.

         8.4      Governmental and Third-Party Authorization; Permits. (a) No
consent, approval, authorization or other action by, notice to, or registration
or filing with, any Governmental Authority or other Person is or will be
required as a condition to or otherwise in connection with the due execution,
delivery and performance by each of the Borrower and its Subsidiaries (including
all Excluded Subsidiaries) of this Agreement or any of the other Credit
Documents to which it is or will be a party or the legality, validity or
enforceability hereof or thereof, other than (i) filings of Uniform Commercial
Code financing statements and other instruments and actions necessary to perfect
the Liens created by the Security Documents, (ii) consents, authorizations and
filings that have been (or on or prior to the Effective Date will have been)
made or obtained and that are (or on the Effective Date will be) in full force
and effect, which consents, authorizations and filings are listed on SCHEDULE
8.4, and (iii) consents and filings the failure to obtain or make which would
not, individually or in the aggregate, have a Material Adverse Effect.

         (b)      Each of the Borrower and its Subsidiaries (including all
Excluded Subsidiaries) and each Managed Practice (i) has, and is in good
standing with respect to, all approvals, permits and other Licenses and (to the
extent applicable) all Reimbursement Approvals necessary to conduct its business
as presently conducted and to own or lease and operate its properties, (ii) has
obtained and maintains accreditation from all generally recognized accrediting
agencies for the Borrower and its Subsidiaries to the extent prudent and
customary in the industry in which the Borrower, any of its Subsidiaries or any
Managed Practice is engaged or to the extent required for rehabilitation
entities or skilled nursing facilities, and (iii) if required, has obtained and
maintains Medicaid Certification and Medicare Certification, (iv) if required,
has entered into and maintains in good standing its Medicare Provider Agreement
and its Medicaid Provider Agreement, except, in each case referred to in clauses
(i) through (iv), for those instances the failure to obtain or enter into which
would not be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect. There is no pending or, to the knowledge of the

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<PAGE>

Borrower, threatened Limitation of any such approval, permit or other License or
Reimbursement Approval of the Borrower or any Subsidiary (including all Excluded
Subsidiaries) or any Managed Practice, except for such Limitations as would not
be reasonably likely, individually or in the aggregate, to have a Material
Adverse Effect.

         (c)      Each professional employee, officer and director of the
Borrower, the Borrower's Subsidiaries (including all Excluded Subsidiaries), and
any Managed Practices providing professional services to patients of the
Borrower or any such Subsidiary is duly Licensed (where License is required) by
each state or state agency or commission, or any other Governmental Authority
having jurisdiction over the provisions of such services by such employee,
officer or director, in which the Borrower or its Subsidiaries (including all
Excluded Subsidiaries) is located, required to enable such employee, officer or
director to provide the professional services necessary to enable the Borrower
or such Subsidiary to operate as currently operated and as presently
contemplated to be operated and in connection with each such employee related to
the duties performed by such employee. All such required Licenses are in full
force and effect on the date hereof and have not been revoked or suspended or
otherwise limited except where such limitation would not be reasonably expected
to result in a Material Adverse Effect. Each physician retained or otherwise
engaged as an independent contractor by the Borrower or its Subsidiaries
(including all Excluded Subsidiaries) possesses a valid narcotics number issued
by the United States Drug Enforcement Administration and a valid state narcotics
registration.

         8.5      Litigation. Except as set forth on SCHEDULE 8.5, there are no
actions, investigations, suits or proceedings pending or, to the knowledge of
the Borrower, threatened, at law, in equity or in arbitration, before any
court, other Governmental Authority or other Person, (i) against or, to the
Borrower's knowledge, affecting the Borrower, any of its Subsidiaries (including
all Excluded Subsidiaries) any Managed Practice or any of their respective
properties that would, if adversely determined, be reasonably likely to have a
Material Adverse Effect, or (ii) with respect to this Agreement or any of the
other Credit Documents.

         8.6      Taxes. Except as set forth on SCHEDULE 8.6, each of the
Borrower and its Subsidiaries (including all Excluded Subsidiaries) has timely
filed all federal, state and local tax returns and reports required to be filed
by it and has paid all taxes, assessments, fees and all other charges levied
upon it or upon its properties that are shown thereon as due and payable, other
than those that are being contested in good faith and by proper proceedings and
for which adequate reserves have been established in accordance with GAAP.
Except as set forth on SCHEDULE 8.6, such returns accurately reflect in all
material respects all liability for taxes of the Borrower and its Subsidiaries
(including all Excluded Subsidiaries) for the periods covered thereby. Except as
set forth on SCHEDULE 8.6, as of the Effective Date, there is no ongoing_audit
or examination or, to the knowledge of the Borrower, other investigation by any
Governmental Authority of the tax liability of the Borrower or any of its
Subsidiaries (including all Excluded Subsidiaries). Except as set forth on
SCHEDULE 8.6, there is no unresolved claim by any Governmental Authority
concerning the tax liability of the Borrower or any of its Subsidiaries for any
period for which tax returns have been or were required to have been filed,
other than claims for which adequate reserves have been established in
accordance with GAAP. Except as set forth on SCHEDULE 8.6, neither the Borrower
nor any of its Subsidiaries (including all Excluded Subsidiaries) has waived or
extended or has been requested to waive or extend the statute of limitations
relating to the payment of any taxes.

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<PAGE>

         8.7      Subsidiaries. SCHEDULE 8.7 sets forth a list, as of the
Effective Date, of all of the Subsidiaries (including all Excluded Subsidiaries)
of the Borrower and, as to each such Subsidiary, the percentage ownership
(direct and indirect) of the Borrower in each class of its Capital Stock and
each direct owner thereof. Except for the shares of Capital Stock expressly
indicated on SCHEDULE 8.7, there are no shares of Capital Stock, warrants,
rights, options or other equity securities, or other Capital Stock of any
Subsidiary of the Borrower (including all Excluded Subsidiaries) outstanding or
reserved for any purpose. All outstanding shares of Capital Stock of each
Subsidiary (including all Excluded Subsidiaries) of the Borrower are duly and
validly issued, fully paid and nonassessable. The Borrower and, as applicable,
any Subsidiary, is the sole legal, record and beneficial owner of, and has good
and valid title to, all such Capital Stock, free and clear of all Liens other
than the Liens created pursuant to the Security Agreement. As of the Effective
Date, neither the Borrower nor any Subsidiary (including ail Excluded
Subsidiaries) is engaged in any joint venture, partnership or similar
arrangement with any other Person except, as set forth on SCHEDULE 8.7.

         8.8      Full Disclosure. All factual information heretofore or
contemporaneously furnished to the Administrative Agent or any Lender in writing
by or on behalf of the Borrower or any of its Subsidiaries (including all
Excluded Subsidiaries) in connection with this Agreement and the transactions
contemplated hereby and related to this Agreement or another Credit Document is,
and all other such factual information hereafter furnished to the Administrative
Agent or any Lender in writing by or on behalf of the Borrower or any of its
Subsidiaries (including all Excluded Subsidiaries) will be, true and accurate in
all material respects on the date as of which such information is dated or
certified (or, if such information has been amended or supplemented, on the date
as of which any such amendment or supplement is dated or certified) and not made
incomplete by omitting to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which such information
was provided, not misleading.

         8.9      Margin Stock. The proceeds of the Borrowings made hereunder
will be used by the Borrower only for the purposes expressly authorized herein.
None of such proceeds will be used, directly or indirectly, for the purpose of
purchasing or carrying any Margin Stock or for the purpose of reducing or
retiring any Indebtedness which was originally incurred to purchase or carry
Margin Stock or for any other purpose which violates or which would be
inconsistent with Regulation U (12 CFR Part 221) or Regulation X (12 CFR Part
224) of the FRB. Neither the Borrower nor any agent acting on its behalf has
taken or will take any action which might cause this Agreement or any of the
other Credit Documents or instruments delivered pursuant hereto to violate any
regulation of the Board or to violate the Securities Exchange Act of 1934, as
amended, or the Securities Act of 1933, as amended, or any state securities
laws, in each case as in effect on the date hereof.

         8.10     No Material Adverse Change. There has been no Material Adverse
Change since December 31, 2000, and there exists no event, condition or state of
facts that could reasonably be expected to result in a Material Adverse Change.

         8.11     Financial Matters. (a) The Borrower has heretofore furnished
to the Administrative Agent copies of (i) the audited consolidated balance
sheets of the Borrower and its Subsidiaries (including any Excluded
Subsidiaries) as of December 31, 2000, 2001 and 2002, and the related statements
of income, cash flows and stockholders' equity for the fiscal years

                                       72
<PAGE>

then ended, together with the opinion of Ernst & Young LLP thereon, (ii) the
draft audited consolidated balance sheet of the Borrower and its Subsidiaries
(including any Excluded Subsidiaries) as of December 31, 2003, and the related
statements of income, cash flows and stockholders' equity for the twelve month
period then ended (the "Draft 2003 Audit") and (iii) the company-prepared
consolidated balance sheets of the Borrower and its Subsidiaries (including
Excluded Subsidiaries) for the two-month period ended February 29, 2004 (the
"Two-Month Stub"). Such financial statements have been prepared in accordance
with GAAP and present fairly the financial condition of the Borrower and its
Subsidiaries (including any Excluded Subsidiaries) on a consolidated basis as of
the respective dates thereof and the consolidated results of operations of the
Borrower and its Subsidiaries for the respective periods then ended. Except as
fully reflected in the most recent financial statements referred to above and
the notes thereto or as disclosed on SCHEDULE 8,11, there are no material
liabilities or obligations of the Borrower or any of its Subsidiaries of any
nature whatsoever (whether absolute, contingent or otherwise and whether or not
due).

         (b)      The unaudited pro forma balance sheet of the Borrower as of
February 29, 2004, a copy of which has heretofore been delivered to the
Administrative Agent, gives pro forma effect to the funding of the Term Loan B
and the consummation of the Dividend Payment, and the payment of transaction
fees and expenses related to the foregoing, all as if such events had occurred
on such date (the "Pro Forma Balance Sheet"). The Pro Forma Balance Sheet has
been prepared in accordance with GAAP (subject to the absence of footnotes
required by GAAP and subject to normal year-end adjustments) and. subject to
stated assumptions made in good faith and having a reasonable basis set forth
therein, presents fairly the financial condition of the Borrower on an unaudited
pro forma basis as of the date set forth therein after giving effect to the
consummation of the transactions described above.

         (c)      The Borrower has prepared, and has heretofore furnished to the
Administrative Agent a copy of, annual projected balance sheets and statements
of income and cash flows of the Borrower for the three-year period beginning
with the year ended December 31, 2002, giving effect to the consummation of the
transactions contemplated by this Agreement, the initial extensions of credit
hereunder, and the payment of transaction fees and expenses related to the
foregoing (the "Projections"). In the opinion of management of the Borrower, the
assumptions used in the preparation of the Projections were fair, complete and
reasonable when made and continue to be fair, complete and reasonable as of the
date hereof. The Projections have been prepared in good faith by the executive
and financial personnel of the Borrower, are complete and represent a reasonable
estimate of the future performance and financial condition of the Borrower,
subject to the uncertainties and approximations inherent in any projections.

         (d)      Each of the Borrower and its Subsidiaries (including any
Excluded Subsidiaries), after giving effect to the consummation of the
transactions contemplated hereby and taking into account rights of contribution,
(i) has capital sufficient to carry on its businesses as conducted and as
proposed to be conducted, (ii) has assets with a fair saleable value, determined
on a going concern basis, (y) not less than the amount required to pay the
probable liability on its existing debts as they become absolute and matured and
(z) greater than the total amount of its liabilities (including identified
contingent liabilities, valued at the amount that can reasonably be expected to
become absolute and matured), and (iii) does not intend to, and does not believe
that it will incur debts or liabilities beyond its ability to pay such debts and
liabilities as they mature.

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<PAGE>

         8.12     Ownership of Properties. Except as set forth on SCHEDULE 8.12,
each of the Borrower and its Subsidiaries (including all Excluded Subsidiaries)
(i) has good and marketable title to all real property owned by it (including
the Mortgaged Property), (ii) holds interests as lessee under valid leases in
full force and effect with respect to all material leased real and personal
property used in connection with its business, (iii) possesses or has rights to
use licenses, patents, copyrights, trademarks, service marks, trade names and
other assets sufficient to enable it to continue to conduct its business
substantially as heretofore conducted and without any material conflict with the
rights of others, and (iv) has good title to all of its other properties and
assets reflected in the most recent financial statements referred to in SECTION
8.11 (a) (except as sold or otherwise disposed of since the date thereof in the
ordinary course of business), in each case under (i), (ii), (iii) and (iv) above
free and clear of all Liens other than Permitted Liens. SCHEDULE 8.12 lists, as
of the Effective Date, all real property interests of the Borrower and its
Subsidiaries, indicating in each case the identity of the owner, the address of
the property, the nature of use of the premises, and whether such interest is a
leasehold or fee ownership interest.

         8.13     Employee Benefit Plans.

                  (a)      The Borrower and each ERISA Affiliate is in
         compliance with all applicable provisions of ERISA and the regulations
         and published interpretations thereunder and in compliance with all
         Foreign Benefit Laws with respect to all Employee Benefit Plans 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 or the Borrower or its
         Subsidiaries is in the process of obtaining a determination by the
         Internal Revenue Service to be so qualified, each trust related to such
         plan has been determined to be exempt under Section 501 (a) of the
         Code, and each Employee Benefit Plan subject to any Foreign Benefit Law
         has received the required approvals by any Governmental Authority
         regulating such Employee Benefit Plan. 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;

                  (b)      Neither the Borrower nor any ERISA Affiliate has (i)
         engaged in a nonexempt prohibited transaction described in Section 4975
         of the Code or Section 406 of ERISA affecting any of the Employee
         Benefit Plans or the trusts created thereunder which could subject any
         such Employee Benefit Plan or trust to a material tax or penalty on
         prohibited transactions imposed under Internal Revenue Code Section
         4975 or ERISA, (ii) incurred any accumulated funding deficiency with
         respect to any Employee Benefit Plan, whether or not waived, or any
         other liability to the PBGC which remains outstanding other than the
         payment of premiums and there are no premium payments which are due and
         unpaid, (iii) failed to make a required contribution or payment to a
         Multiemployer Plan, (iv) failed to make a required installment or other
         required payment under Section 412 of the Code, Section 302 of ERISA or
         the terms of such Employee Benefit Plan, or (v) failed to make a
         required contribution or payment, or otherwise failed to operate in
         compliance with any Foreign Benefit Law regulating any Employee Benefit
         Plan;

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<PAGE>

                  (c)      No Termination Event has occurred or is reasonably
         expected to occur with respect to any Pension Plan or Multiemployer
         Plan, and neither the Borrower nor any ERISA Affiliate has incurred any
         unpaid withdrawal liability with respect to any Multiemployer Plan;

                  (d)      The present value of all vested accrued benefits
         under each Employee Benefit Plan which is subject to Title IV of ERISA,
         or the funding of which is regulated by any Foreign Benefit Law did
         not, as of the most recent valuation date for each such plan, exceed
         the then current value of the assets of such Employee Benefit Plan
         allocable to such benefits;

                  (e)      To the best of the Borrower's knowledge, each
         Employee Benefit Plan which is subject to Title IV of ERISA or the
         funding of which is regulated by any Foreign Benefit Law, maintained by
         the Borrower or any ERISA Affiliate, has been administered in
         accordance with its terms in all material respects and is in compliance
         in all material respects with all applicable requirements of ERISA,
         applicable Foreign Benefit Law and other applicable laws, regulations
         and rules;

                  (f)      The consummation of the Loans and the issuance of the
         Letters of Credit provided for herein will not involve any prohibited
         transaction under ERISA which is not subject to a statutory or
         administrative exemption; and

                  (g)      No material proceeding, claim, lawsuit and/or
         investigation exists or, to the best knowledge of the Borrower after
         due inquiry, is threatened concerning or involving any Employee Benefit
         Plan.

         8.14     Environmental Matters, (a) Except as set forth on SCHEDULE
8.14(a), no Hazardous Substances are, or have been generated, used, located,
released, treated, disposed of or stored by the Borrower or any of its
Subsidiaries (including all Excluded Subsidiaries) or, to the knowledge of the
Borrower, by any other Person (including any predecessor in interest), in, on or
under any portion of any real property leased or owned by the Borrower or any of
its Subsidiaries (including all Excluded Subsidiaries), except in material
compliance with all applicable Environmental Laws, and no portion of any such
real property or, to the knowledge of the Borrower, any other real property at
any time leased, owned or operated by the Borrower or any of its Subsidiaries,
requires remedial action under any Environmental Law; and, to the knowledge of
the Borrower, no portion of any real property, leased or owned, by the Borrower
or any of its Subsidiaries (including all Excluded Subsidiaries) has been or is
presently the subject of remedial action.

         (b)      Except as set forth on SCHEDULE 8.14(b), no portion of any
real property leased or owned by the Borrower or any of its Subsidiaries
(including all Excluded Subsidiaries) has been used by the Borrower or any of
its Subsidiaries (including any Excluded Subsidiary) or, to the knowledge of the
Borrower, by any other Person, as or for a mine, a landfill, a dump or other
disposal facility, a gasoline service station, or (other than for petroleum
substances stored in the ordinary course of business) a petroleum products
storage facility; to the knowledge of the Borrower, no portion of such real
property or any other real property at any time leased, owned or operated by the
Borrower or any of its Subsidiaries (including any Excluded Subsidiary) has,

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pursuant to any Environmental Law, been placed on the "National Priorities List"
or "CERCLIS List" (or any similar federal, state or local list) of sites subject
to possible environmental problems; and, to the knowledge of the Borrower, there
are not and have never been any underground storage tanks situated on any real
property, leased or owned, by the Borrower or any of its Subsidiaries.

         (c)      All activities and operations of the Borrower and its
Subsidiaries (including all Excluded Subsidiaries) are in compliance with the
requirements of all applicable Environmental Laws, except to the extent the
failure so to comply, individually or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect. Each of the Borrower and its
Subsidiaries (including all Excluded Subsidiaries) has obtained all licenses and
permits under Environmental Laws necessary to its respective operations: all
such licenses and permits are being maintained in good standing and each of the
Borrower and its Subsidiaries (including all Excluded Subsidiaries) is in
compliance with all terms and conditions of such licenses and permits, except
for such failure to obtain or maintain a license or permit or such noncompliance
that would not be reasonably likely, individually or in the aggregate, to have a
Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries
(including any Excluded Subsidiary) is involved in any suit, action or
proceeding, or has received any notice or complaint from any Governmental
Authority or other Person, with respect to any actual or alleged Environmental
Claims that, if adversely determined, would be reasonably likely, individually
or in the aggregate, to have a Material Adverse Effect: and, to the knowledge of
the Borrower, there are no threatened actions, suits, proceedings or
investigations with respect to any such Environmental Claims, nor any basis
therefor.

         8.15     Compliance With Laws. Each of the Borrower and its
Subsidiaries (including all Excluded Subsidiaries) has timely filed all material
reports, documents and other materials required to be filed by it under all
applicable Requirements of Law with any Governmental Authority, has retained all
material records and documents required to be retained by it under all
applicable Requirements of Law, and is otherwise in compliance with all
applicable Requirements of Law in respect of the conduct of its business and the
ownership and operation of its properties (including, without limitation, all
applicable Medicare Regulations and Medicaid Regulations), except for such
Requirements of Law the failure to comply with which, individually or in the
aggregate, would not be reasonably likely to have a Material Adverse Effect.

         8.16     Regulated Industries. Neither the Borrower nor any of its
Subsidiaries (including any Excluded Subsidiary) is (i) an "investment company,"
a company "controlled" by an "investment company," or an "investment advisor,"
within the meaning of the Investment Company Act of 1940, as amended, or (ii) a
"holding company," a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.

         8.17     Insurance. SCHEDULE 8.17 sets forth a true and complete
summary of all insurance policies or arrangements carried or maintained by the
Borrower and its Subsidiaries (including all Excluded Subsidiaries) as of the
Effective Date, indicating in each case the insurer, policy number, expiration,
amount and type of coverage and deductibles. The assets, properties and business
of the Borrower arid its Subsidiaries (including ail Excluded Subsidiaries) are
insured

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against such hazards and liabilities, under such coverages and in such amounts,
as are customarily maintained by prudent companies similarly situated and under
policies issued by insurers of recognized responsibility.

         8.18     Material Contracts. SCHEDULE 8.18 lists, as of the Effective
Date, each "material contract" (within the meaning of Item 601(b)(10) of
Regulation S-K under the Exchange Act) to which the Borrower or any of its
Subsidiaries (including any Excluded Subsidiary) is a party, by which any of
them or their respective properties is bound or to which any of them is subject
(collectively, "Material Contracts"), and also indicates the parties, subject
matter and term thereof. As of the Effective Date, (i) each Material Contract is
in full force and effect and is enforceable by the Borrower or the Subsidiary
that is a party thereto in accordance with its terms, and (ii) neither the
Borrower nor any of its Subsidiaries (including any Excluded Subsidiary) (nor,
to the knowledge of the Borrower, any other party thereto) is in breach of or
default under any Material Contract in any material respect or has given notice
of termination or cancellation of any Material Contract.

         8.19     Security Documents. (a) The provisions of each of the Security
Documents (whether executed and delivered prior to or on the Effective Date or
thereafter) are and will be effective to create in favor of the Administrative
Agent, for its benefit and the benefit of the Lenders, a valid and enforceable
security interest in and Lien upon all right, title and interest of each of the
Borrower and its Subsidiaries (including, to the extent applicable, each
Excluded Subsidiary) that is a party thereto in and to the Collateral purported
to be pledged by it thereunder and described therein, and upon (i) the filing of
appropriately completed Uniform Commercial Code financing statements and
continuations thereof in the jurisdictions specified therein, (ii) if
applicable, the filing of appropriately completed short-form assignments in the
U.S. Patent and Trademark Office and the U.S. Copyright Office, and (iii) the
possession by the Administrative Agent of any certificates evidencing the
securities pledged thereby, such security interest and Lien shall constitute a
fully perfected and first priority security interest in and Lien upon such
right, title and interest of the Borrower or such Subsidiary, as applicable, in
and to such Collateral, to the extent that such security interest and Lien can
be perfected by such filings, actions and possession, subject only to Permitted
Liens.

         (b)      Each Mortgage is effective to create in favor of the
Administrative Agent, for its benefit and the benefit of the Lenders, a legal,
valid and enforceable Lien on all of the right, title and interest of Borrower
and its Subsidiaries, as applicable, in and to the Mortgaged Property subject to
each Mortgage and the proceeds thereof, and when each Mortgage is filed in the
applicable filing office specified on SCHEDULE 8.19(b), the Mortgages shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interests of Borrower and its Subsidiaries, as applicable, in all real
property owned by the Borrower and its Subsidiaries, the buildings and
improvements located on such real property and all proceeds thereof, in each
case prior and superior in right to any other Person, subject only to Permitted
Liens.

         8.20     Labor Relations. As of the Effective Date, and following the
Effective Date to the extent that such would result in a Material Adverse
Effect, neither the Borrower nor any of its Subsidiaries is engaged in any
unfair labor practice within the meaning of the National Labor Relations Act of
1947, as amended. There is (i) no unfair labor practice complaint before the
National Labor Relations Board, or grievance or arbitration proceeding arising
out of or under any collective bargaining agreement, pending or, to the
knowledge of the Borrower, threatened,

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against the Borrower or any of its Subsidiaries, (ii) no strike, lock-out,
slowdown, stoppage, walkout or other labor dispute pending or, to the knowledge
of the Borrower, threatened, against the Borrower or any of its Subsidiaries,
and (iii) to the knowledge of the Borrower, no petition for certification or
union election or union organizing activities taking place with respect to the
Borrower or any of its Subsidiaries.

         8.21     Intentionally Deleted.

         8.22     Service Agreements. No Service Agreement to which the Borrower
or any of its Subsidiaries (including all Excluded Subsidiaries) is a party, nor
any of the transactions contemplated thereunder, violates any applicable
Requirement of Law (i) relating to the eligibility of a Managed Practice to
enter into or participate in any Third Party Payor Arrangement or otherwise
applicable to such Managed Practice as a result of such participation, (ii)
relating to any License or Reimbursement Approval of a Managed Practice required
in connection with any Third Party Payor Arrangement in which it participates,
or (iii) relating to the practice of medicine or the sharing of fees in
connection therewith, except in each case under (i), (ii) and (iii) above for
such violations as would not, individually or in the aggregate, be reasonably
likely to have a Material Adverse Effect.

         8.23     Reimbursement. The accounts receivable of the Borrower and
each Subsidiary (including any Excluded Subsidiary) have been properly adjusted
in all material respects to reflect the reimbursement policies under all
applicable Requirements of Law (including, without limitation, all applicable
Medicare Regulations and Medicaid Regulations) and other Third Party Payor
Arrangements to which the Borrower or such Subsidiary or any Managed Practice is
subject, and do not exceed in any material respect amounts the Borrower, such
Subsidiary or Managed Practice is entitled to receive under any capitation
arrangement, fee schedule, discount formula, cost-based reimbursement or other
adjustment or limitation to usual charges. All billings by the Borrower, each
Subsidiary (including any Excluded Subsidiary) and each Managed Practice
pursuant to Third Party Payor Arrangements have been made in compliance with all
applicable Requirements of Law, except where the failure to comply would not,
individually or in the aggregate, be reasonably likely to have a Material
Adverse Effect; and there has been no intentional or material overbilling or
overcollection pursuant to any Third Party Payor Arrangements, other than as
created by routine adjustments and disallowances made in the ordinary course of
business by the payors with respect to such billings.

         8.24     Fraud and Abuse. None of the Borrower, any Subsidiary
(including any Excluded Subsidiary), any Managed Practice, or any physician
shareholder or employee of any Managed Practice, has engaged in any activities
that are prohibited under 42 U.S.C. Sections. 1320a-7b, or the regulations
promulgated thereunder, or related Requirements of Law, or that are prohibited
by rules of professional conduct, including, without limitation, the following:
(i) knowingly and willfully making or causing to be made a false statement or
misrepresentation of a material fact in any application for any benefit or
payment; (ii) knowingly and willfully making or causing to be made any false
statement or misrepresentation of a material fact for use in determining rights
to any benefit or payment; (iii) failure to disclose knowledge by a claimant of
the occurrence of any event affecting the initial or continued right to any
benefit or payment on its own behalf or on behalf of another with intent to
secure such benefit or payment fraudulently; and (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 land or
offering to pay or

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receive such remuneration (y) 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 any other
government or private third party payor, or (z) in return for purchasing,
leasing, or ordering or arranging for or recommending purchasing, leasing or
ordering any good facility, service, or item for which payment may be made in
whole or in part by Medicare, Medicaid or any other government or private third
party payor.

         8.25     Maintenance of Mortgaged Property. As of the Effective Date,
there has been no material change in the market conditions applicable to or
physical aspect of any Mortgaged Property that would threaten the Administrative
Agent's real estate Collateral protection, ordinary wear and tear excepted.

         8.26     Assets of Borrower. The Borrower (a) does not own,
beneficially or of record, any assets other than (i) equity interests in its
Subsidiaries and Excluded Subsidiaries and Physician Notes, and (ii) such other
assets as are de minimis with respect to the consolidating balance sheet of the
Borrower on a stand-alone basis, and (b) does not conduct business, operations
or generate any revenue except (i) such revenue received as distributions on
Capital Stock of its Subsidiaries and Excluded Subsidiaries and (ii) such other
revenue as is de minimis with respect to the consolidating income statement of
the Borrower on a stand-alone basis.

                                   ARTICLE IX

                             AFFIRMATIVE COVENANTS

         The Borrower covenants and agrees that, until the termination of the
Revolving Credit Commitments, the termination or expiration of all Letters of
Credit and the payment in full of all principal and interest with respect to the
Loans and all Reimbursement Obligations together with all other amounts then due
and owing hereunder:

         9.1      Financial Statements. The Borrower will deliver to the
Administrative Agent:

         (a)      As soon as available and in any event within forty-five (45)
days after the end of each of the first three fiscal quarters of each fiscal
year, beginning with the fiscal quarter ending March 31, 2004, unaudited
consolidated balance sheets of the Borrower and its Subsidiaries (including all
Excluded Subsidiaries) as of the end of such fiscal quarter and unaudited
consolidated statements of income, retained earnings, and cash flows for the
Borrower and its Subsidiaries (including all Excluded Subsidiaries) for the
fiscal quarter then ended and for that portion of the fiscal year then ended, in
each case setting forth comparative consolidated figures as of the end of and
for the corresponding period in the preceding fiscal year together with
comparative budgeted figures for such fiscal year to date, all in reasonable
detail and prepared in accordance with GAAP (subject to the absence of notes
required by GAAP and subject to the absence of normal year-end adjustments)
applied on a basis consistent with that of the preceding quarter or containing
disclosure of the effect on the financial condition or results of operations of
any change in the application of accounting principles and practices during such
quarter; and

         (b)      (i) As soon as available and in any event within one hundred
(100) days after the end of each fiscal year, beginning with the fiscal year
ending December 31, 2003, an auditor's draft of a consolidated balance sheet of
the Borrower and its Subsidiaries (including all Excluded

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Subsidiaries) as of the end of such fiscal year and consolidated statements of
income, retained earnings and cash flows for the Borrower and its Subsidiaries
(including all Excluded Subsidiaries) for the fiscal year then ended, including
the notes thereto, in each case setting forth comparative figures as of the end
of and for the preceding fiscal year together with unaudited comparative
budgeted figures for the fiscal year then ended, all in reasonable detail; (ii)
as soon as available and in any event within one hundred thirty-five (135) days
after the end of each fiscal year (by May 15), beginning with the fiscal year
ended December 31, 2003, an audited consolidated balance sheet of the Borrower
and its Subsidiaries (including all Excluded Subsidiaries) as of the end of such
fiscal year and audited consolidated statements of income, retained earnings and
cash flows for the Borrower and its Subsidiaries for the fiscal year then ended,
including the notes thereto, in each case setting forth comparative figures as
of the end of and for the preceding fiscal year together with unaudited
comparative budgeted figures for the fiscal year then ended, together with an
accounting of any changes from the auditor's draft delivered pursuant to SECTION
9.1(b)(i) above, all in reasonable detail and certified by the independent
certified public accounting firm regularly retained by the Borrower or another
independent certified public accounting firm of recognized national standing
reasonably acceptable to the Required Lenders, together with (y) a report
thereon by such accountants that is not qualified as to going concern or scope
of audit and to the effect that such financial statements present fairly the
consolidated financial condition and results of operations of the Borrower and
its Subsidiaries (including all Excluded Subsidiaries) as of the dates and for
the periods indicated in accordance with GAAP applied on a basis consistent with
that of the preceding year or containing disclosure of the effect on the
financial condition or results of operations of any change in the application of
accounting principles and practices during such year, and (z) a report by such
accountants to the effect that, based on and in connection with their
examination of the financial statements of the Borrower and its Subsidiaries
(including all Excluded Subsidiaries), they obtained no knowledge of the
occurrence or existence of any Default or Event of Default relating to
accounting or financial reporting matters, or a statement specifying the nature
and period of existence of any such Default or Event of Default disclosed by
their audit; provided, however, that such accountants shall not be liable by
reason of the failure to obtain knowledge of any Default or Event of Default
that would not be disclosed or revealed in the course of their audit
examination, and (iii) as soon as available and in any event within one hundred
(100) days after the end of each fiscal year, beginning with the fiscal year
ending December 31, 2003, an unaudited consolidating balance sheet of the
Borrower and its Subsidiaries (including all Excluded Subsidiaries) as of the
end of such fiscal year and unaudited consolidating statements of income, cash
flows and stockholders' equity for the Borrower and its Subsidiaries (including
all Excluded Subsidiaries) for the fiscal year then ended, all in reasonable
detail.

         Notwithstanding anything in this subsection (b) to the contrary, in the
event that the Borrower delivers its audited financial statements to the
Administrative Agent within ninety (90) days after the end of any fiscal year,
it shall not be required to deliver any draft financial statements with respect
to such fiscal year as otherwise required by this subsection (b).

         9.2      Other Business and Financial Information. The Borrower will
deliver to each Lender:

         (a)      Concurrently with each delivery of the financial statements
described in SECTION 9.1 (except, for the auditor's draft financial statements
provided for in subsection (b) thereof) a

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Compliance Certificate with respect to the period covered by the financial
statements then being delivered, executed by a Financial Officer, setting forth
all Allowable Tax Distributions made during the immediately preceding fiscal
quarter, together with (i) Covenant Compliance Worksheet reflecting the
computation of the financial covenants set forth in ARTICLE X and ARTICLE XI as
of the last day of the period covered by such financial statements, (ii) an
accounts receivable aging schedule for the consolidated company and individual
locations, and (iii) Securities and Exchange Commission reports and filings,
management letters from auditors and other operating and financial information
reasonably requested by the Administrative Agent;

         (b)      Concurrently with the delivery of the financial statements
described in SECTION 9.1(b), in the aggregate and by individual location or
other grouping acceptable to the Borrower and the Required Lenders, (i)
unaudited income information (including revenues and Consolidated EBITDA) for
such fiscal year then ended, (ii) a schedule of actual maintenance Capital
Expenditures (including repairs and maintenance) for such fiscal year then
ended, and (iii) the maintenance Capital Expenditure budget for the fiscal year
following the fiscal year then ended;

         (c)      Within twenty-five (25) days of the end of each calendar
month, a certificate executed by a Financial Officer reflecting (i) the
Allowable Tax Distributions made during the immediately preceding calendar
month, (ii) any distributions permitted under SECTION 11.6(a)(ii) made during
the immediately preceding calendar month, and (iii) the estimated Consolidated
Net Income for the current fiscal quarter.

         (d)      Promptly upon receipt thereof, copies of any "management
letter" submitted to the Borrower or any of its Subsidiaries by its certified
public accountants in connection with each annual, interim or special audit, and
promptly upon completion thereof, any response reports from the Borrower or any
such Subsidiary in respect thereof;

         (e)      Concurrently with the sending, filing or receipt thereof,
copies of (i) all financial statements, reports, notices and proxy statements of
the Borrower or any of its Subsidiaries that the Borrower shall send or make
available generally to its shareholders, (ii) all regular, periodic and special
reports, registration statements and prospectuses (other than on Form S-8) that
the Borrower or any of its Subsidiaries (including any Excluded Subsidiaries)
shall render to or file with the Securities and Exchange Commission, the
National Association of Securities Dealers, Inc. or any national securities
exchange, and (iii) all press releases and other statements made available
generally by the Borrower or any of its Subsidiaries to the public concerning
material developments in the business of the Borrower or any of its
Subsidiaries;

         (f)      Promptly upon (and in any, event within five (5) Business Days
after) any Authorized Officer obtaining knowledge thereof, written notice of any
of the following:

                  (i)      the occurrence of any Default or Event of Default,
         together with a written statement of a Authorized Officer of the
         Borrower specifying the nature of such Default or Event of Default, the
         period of existence thereof and the action that the Borrower has taken
         and proposes to take with respect thereto;

                  (ii)     the institution or threatened institution of any
         action, suit, investigation or proceeding against or affecting the
         Borrower, any of its Subsidiaries (including all

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         Excluded Subsidiaries) or any Managed Practice, including any such
         investigation or proceeding by any Governmental Authority (other than
         routine periodic inquiries, investigations or reviews), that would, if
         adversely determined, be reasonably likely, individually or in the
         aggregate, to have a Material Adverse Effect, and any material
         development in any litigation or other proceeding previously reported
         pursuant to SECTION 8.5 or this SUBSECTION 9.2(f);

                  (iii)    the receipt by the Borrower or any of its
         Subsidiaries (including all Excluded Subsidiaries) from any
         Governmental Authority or other Person of (y) any notice asserting any
         failure by the Borrower, any of its Subsidiaries or any Managed
         Practice to be in compliance with applicable Requirements of Law or
         that threatens the taking of any action against such Person or sets
         forth circumstances that, if taken or adversely determined, would be
         reasonably likely to have a Material Adverse Effect, or (z) any notice
         of any actual or threatened Limitation with respect to any License or
         Reimbursement Approval of the Borrower, any of its Subsidiaries or any
         Managed Practice, where such action would be reasonably likely to have
         a Material Adverse Effect;

                  (iv)     the occurrence of any ERISA Event, together with (x)
         a written statement of a Authorized Officer of the Borrower specifying
         the details of such ERISA Event and the action that the Borrower has
         taken and proposes to take with respect thereto, (y) a copy of any
         notice with respect to such ERISA Event that may be required to be
         filed with the PBGC and (z) a copy of any notice delivered by the PBGC
         to the Borrower or such ERISA Affiliate with respect to such ERISA
         Event;

                  (v)      the occurrence of any material default under, or any
         proposed or threatened termination or cancellation of, any Material
         Contract or other material contract or agreement to which the Borrower,
         any of its Subsidiaries (including all Excluded Subsidiaries) or any
         Managed Practice is a party, the termination or cancellation of which
         would be reasonably likely to have a Material Adverse Effect;

                  (vi)     the occurrence of any of the following: (x) the
         assertion of any Environmental Claim against or affecting the Borrower,
         any of its Subsidiaries (including all Excluded Subsidiaries) or any of
         their respective real property leased or owned; (y) the receipt by the
         Borrower or any of its Subsidiaries (including any Excluded Subsidiary)
         of notice of any alleged violation of or noncompliance with any
         Environmental Laws; or (z) the taking of any remedial action by the
         Borrower, any of its Subsidiaries or any other Person in response to
         the actual or alleged generation storage, release, disposal or
         discharge of any Hazardous Substances on, to, upon or from any real
         property leased or owned by the Borrower or any of its Subsidiaries;
         but in each case under clauses (x), (y) and (z) above, only to the
         extent the same would be reasonably likely to have a Material Adverse
         Effect;

                  (vii)    any other matter or event that has, or would be
         reasonably likely to have, a Material Adverse Effect, together with a
         written statement of a Authorized Officer of the Borrower setting forth
         the nature and period of existence thereof and the action that the
         Borrower has taken and proposes to take with respect thereto;

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         (g)      Contemporaneously with delivery of the Financial Statements
required under SECTION 9.1(b), beginning with the fiscal year ended December
31, 2003, consolidated projections for the Borrower and its Subsidiaries
(including all Excluded Subsidiaries) for the succeeding three (3) fiscal years
(prepared on a quarterly basis), together with a certificate of a Financial
Officer of the Borrower to the effect that such projections have been prepared
in good faith and are reasonable estimates of the financial position and results
of operations of the Borrower and its Subsidiaries for the period covered
thereby; and, as soon as available from time to time thereafter, any
modifications or revisions to or restatements of such projections; and

         (h)      As promptly as reasonably possible, such other information
about the business, condition (financial or otherwise), operations or properties
of the Borrower or any of its Subsidiaries (including all Excluded Subsidiaries)
(including any Plan and any information required to be filed under ERISA) as the
Administrative Agent or any Lender may from time to time reasonably request.

         9.3      Corporate Existence; Franchises; Maintenance of Properties.
The Borrower will, and will cause each of its Subsidiaries (including all
Excluded Subsidiaries) to, (i) maintain and preserve in full force and effect
its corporate existence, except as expressly permitted otherwise by SECTION
11.1, (ii) obtain, maintain and preserve in full force and effect all other
rights, franchises, licenses, permits, certifications, approvals, authorizations
and other Licenses, and all Reimbursement Approvals, required by Governmental
Authorities and necessary to the ownership, occupation or use of its properties
or the conduct of its business, except to the extent the failure to do so would
not be reasonably likely to have a Material Adverse Effect, and (iii) keep all
material properties in good working order and condition (normal wear and tear
excepted) and from time to time make all necessary repairs to and renewals and
replacements of such properties, except to the extent that any of such
properties are obsolete or are being replaced; provided that it is acknowledged
that Radiation Therapy Payroll Services, Inc. is currently inactive.

         9.4      Compliance with Laws. The Borrower will, and will cause each
of its Subsidiaries (including all Excluded Subsidiaries) to, comply in all
respects with all Requirements of Law applicable in respect of the conduct of
its business and the ownership and operation of its properties (including,
without limitation, all applicable Medicare Regulations and Medicaid
Regulations), except to the extent the failure so to comply would not be
reasonably likely to have a Material Adverse Effect.

         9.5      Payment of Obligations. The Borrower will, and will cause each
of its Subsidiaries (including all Excluded Subsidiaries) to, (i) pay all
liabilities and obligations as and when due (subject to any applicable
subordination provisions), except to the extent failure to do so would not be
reasonably likely to have a Material Adverse Effect, and (ii) pay and discharge
all taxes, assessments and governmental charges or levies imposed upon it, upon
its income or profits or upon any of its properties, prior to the date on which
penalties would attach thereto, and all lawful claims that, if unpaid, might
become a Lien upon any of the properties of the Borrower or any of its
Subsidiaries; provided, however, that neither the Borrower nor any of its
Subsidiaries shall be required to pay any such tax, assessment, charge, levy or
claim that is being contested in good faith and by proper proceedings and as to
which the Borrower or such Subsidiary is maintaining adequate reserves with
respect thereto in accordance with GAAP.

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         9.6      Insurance. The Borrower will, and will cause each of its
Subsidiaries (including all Excluded Subsidiaries) to, maintain with financially
sound and reputable insurance companies insurance with respect to its assets,
properties and business, against such hazards and liabilities, of such types and
in such amounts, as is customarily maintained by companies in the same or
similar businesses similarly situated, and maintain such other or additional
insurance on such terms and subject to such conditions as may be required under
any Security Document.

         9.7      Maintenance of Books and Records; Inspection. The Borrower
will, and will cause each of its Subsidiaries (including all Excluded
Subsidiaries) to, (i) maintain adequate books, accounts and records, in which
full, true and correct entries shall be made of all financial transactions in
relation to its business and properties, and prepare all financial statements
required under this Agreement, in each case in accordance with GAAP and in
compliance with the requirements of any Governmental Authority having
jurisdiction over it, and (ii) permit employees or agents of the Administrative
Agent or any Lender to inspect its properties and examine or audit its books,
records, working papers and accounts and make copies and memoranda of them, and
to discuss its affairs, finances and accounts with its officers and employees
and, upon notice to the Borrower, the independent public accountants of the
Borrower and its Subsidiaries (including all Excluded Subsidiaries) (and by this
provision the Borrower authorizes such accountants to discuss the finances and
affairs of the Borrower and its Subsidiaries (including all Excluded
Subsidiaries)), all at such times and from time to time, upon reasonable notice
and during business hours, as may be reasonably requested.

         9.8      Managed Practices. The Borrower will cause each Managed
Practice to (i) comply in all respects with all Requirements of Law applicable
in respect of the conduct of its business and the ownership and operation of its
properties (including, without limitation, all applicable Medicare Regulations
and Medicaid Regulations), and (ii) obtain, maintain and preserve in full force
and effect all other rights, franchises, permits, certifications, approvals,
authorizations and other Licenses (including with respect to physician
employees), and all Reimbursement Approvals, required by Governmental
Authorities and necessary to the ownership, occupation or use of its properties
or the conduct of its business, except in each case under (i) and (ii) above to
the extent the failure to do so would not be reasonably likely to have a
Material Adverse Effect.

         9.9      Permitted Acquisitions. (a) Subject to the provisions of
subsection (b) below and the requirements contained in the definition of
Permitted Acquisition and subject to the other terms and conditions of this
Agreement, the Borrower may from time to time on or after the Effective Date
effect Permitted Acquisitions, provided that, with respect to each Permitted
Acquisition:

                  (i)      no Default or Event of Default shall have occurred
         and be continuing at the time of the consummation of such Permitted
         Acquisition or would exist immediately after giving effect thereto; and

                  (ii)     the Required Lenders shall have given their consent
         to such acquisition which consent shall (A) not be unreasonably
         withheld and (B) be given within ten (10) Business Days from the
         Administrative Agent's receipt of the information, in form and
         substance satisfactory to the Administrative Agent in its reasonable
         discretion, referred to in clauses (b) and (c) of this SECTION 9.9;
         provided that no such consent will be required if

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<PAGE>

         the Acquisition Amount with respect to such acquisition (regardless of
         the form of consideration) (y) shall not exceed $6,000,000, and (z)
         together with the aggregate of the Acquisition Amounts (regardless of
         the form of consideration) for all other Permitted Acquisitions
         consummated during the same fiscal year, shall not exceed $20,000,000
         (including any "earnout" payments made such fiscal year with respect to
         any Permitted Acquisition, irrespective of when such Permitted
         Acquisition was consummated).

         (b)      Not less than ten (10) Business Days prior to the consummation
of any Permitted Acquisition with respect to which the Required Lenders' consent
is required under SECTION 9.9(a)(ii), the Borrower shall have delivered to the
Administrative Agent the following:

                  (i)      a reasonably detailed description of the material
         terms of such Permitted Acquisition (including, without limitation the
         Acquisition Amount and the method and structure of payment) and of each
         Person or business that is the subject of such Permitted Acquisition
         (each, a "Target");

                  (ii)     historical financial statements of the Target (or, if
         there are two or more Targets that are the subject of such Permitted
         Acquisition and that are part of the same consolidated group,
         consolidated historical financial statements for all such Targets for
         the two (2) most recent fiscal years available and, if available, for
         any interim periods since the most recent fiscal year-end;

                  (iii)    consolidated projected income statements of the
         Borrower and its Subsidiaries (giving effect to such Permitted
         Acquisition and the consolidation with the Borrower of each relevant
         Target) for the two-year period following the consummation of such
         Permitted Acquisition, in reasonable detail, together with any
         appropriate statement of assumptions and pro forma adjustments; and

                  (iv)     a certificate, in form and substance reasonably
         satisfactory to the Administrative Agent, executed by a Financial
         Officer setting forth the Acquisition Amount and further to the effect
         that, to the best of such individual's knowledge (x) the consummation
         of such Permitted Acquisition will not result in a violation of any
         provision of this Section and after giving effect to such Permitted
         Acquisition and any Borrowings made in connection therewith, the
         Borrower will be in compliance with the financial covenants contained
         in ARTICLE X such compliance determined with regard to calculations
         made on a pro forma basis in accordance with GAAP as if each Target had
         been consolidated with the Borrower for those periods applicable to
         such covenants (such calculations to be attached to the certificate),
         (y) the Borrower believes in good faith that it will continue to comply
         with such financial covenants for a period of one year following the
         date of the consummation of such Permitted Acquisition, and (z) after
         giving effect to such Permitted Acquisition and any Borrowings in
         connection therewith, the Borrower believes in good faith that it will
         have sufficient availability under the Revolving Credit Commitments to
         meet its ongoing working capital requirements, together with a
         Compliance Certificate giving effect to the Permitted Acquisition on a
         pro-forma basis.

                                       85
<PAGE>

         (c)      Prior to the consummation of any Permitted Acquisition with
respect to which the Required Lenders' consent is not required under SECTION
9.9(a)(ii), the Borrower shall have delivered to the Administrative Agent and
each Lender the following:

                  (i)      a reasonably detailed description of the material
         terms of such Permitted Acquisition (including, without limitation the
         Acquisition Amount and the method and structure of payment) and of the
         Target; and

                  (ii)     a certificate, in form and substance reasonably
         satisfactory to the Administrative Agent, executed by a Financial
         Officer setting forth the Acquisition Amount and further to the effect
         that, to the best of such individual's knowledge, (x) the consummation
         of such Permitted Acquisition will not result in a violation of any
         provision of this Section and after giving effect to such Permitted
         Acquisition and any Borrowings made in connection therewith, the
         Borrower will be in compliance with the financial covenants contained
         in ARTICLE X, such compliance determined with regard to calculations
         made on a pro forma basis in accordance with GAAP as if each Target had
         been consolidated with the Borrower for those periods applicable to
         such covenants (such calculations to be attached to the certificate),
         (y) the Borrower believes in good faith that it will continue to comply
         with such financial covenants for a period of one year following the
         date of the consummation of such Permitted Acquisition, and (z) after
         giving effect to such Permitted Acquisition and any Borrowings in
         connection therewith, the Borrower believes in good faith that it will
         have sufficient availability under the Revolving Credit Commitments to
         meet its ongoing working capital requirements.

         (d)      As soon as reasonably practicable after the consummation of
any Permitted Acquisition, the Borrower will deliver to the Administrative Agent
and each Lender a copy of the fully executed acquisition agreement (including
schedules and exhibits thereto) and other material documents and closing papers
delivered in connection therewith and any other documentation reasonably
requested by the Administrative Agent or the Lenders.

         (e)      The consummation of each Permitted Acquisition shall be deemed
to be a representation and warranty by the Borrower that (except as shall have
been approved in writing by the Required Lenders) all conditions thereto set
forth in this Section and in the description furnished under clause (i) of
subsection (b) or (c) above, as applicable, have been satisfied, that the same
is permitted in accordance with the terms of this Agreement and that the matters
certified to by the Financial Officer in the certificate referred to in clause
(iv) of subsection (b) or (c) above, as applicable, are, to the best of such
individual's knowledge, true and correct in all material respects as of the date
such certificate is given, which representation and warranty shall be deemed to
be a representation and warranty as of the date thereof for all purposes
hereunder, including, without limitation, for purposes of SECTIONS 7.2 and 12.1.

         9.10     Creation or Acquisition of Subsidiaries. Subject to the
provisions of SECTION 11.5, the Borrower may from time to time create or acquire
new Subsidiaries (including Excluded Subsidiaries) in connection with Permitted
Acquisitions or otherwise, and the Subsidiaries of the Borrower may create or
acquire new Subsidiaries, provided that:

         (a)      Concurrently with (and in any event within ten (10) Business
Days thereafter) the creation or direct or indirect acquisition by the Borrower
thereof, each such new Subsidiary that

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<PAGE>

is not designated as an Excluded Subsidiary will execute and deliver to the
Administrative Agent (i) a joinder to the Subsidiary Guaranty, pursuant to which
such new Subsidiary shall become a party thereto and shall guarantee the payment
in full of the Obligations of the Borrower under this Agreement and the other
Credit Documents, (ii) a joinder to the Security Agreement, pursuant to which
such new Subsidiary shall become a party thereto and shall, grant to the
Administrative Agent a first priority Lien upon and security interest in its
accounts receivable, inventory, equipment, general intangibles and other
personal property as Collateral for its obligations under the Subsidiary
Guaranty, subject only to Permitted Liens and (iii) a Mortgage with respect to
any real property owned by such Subsidiary (or a landlord lien waiver with
respect to any real property leased by such Subsidiary), together with all
Mortgaged Property Support Documents; provided, however, that in the event any
real property owned by such Subsidiary has an appraised or book value of
$750,000 or less, Mortgage shall only be required upon the request of the
Administrative Agent or the Required Lenders;

         (b)      Concurrently with (and in any event within ten (10) Business
Days thereafter) the creation or acquisition of any new Subsidiary (including
any Excluded Subsidiary) all or a portion of the Capital Stock of which is
directly owned by the Borrower, the Borrower will execute and deliver to the
Administrative Agent an amendment or supplement to the Security Agreement
pursuant to which all of the Capital Stock of such new Subsidiary owned by the
Borrower shall be pledged to the Administrative Agent, together with the
certificates evidencing such Capital Stock and undated stock powers duly
executed in blank; and concurrently with (and in any event within ten (10)
Business Days thereafter) the creation or acquisition of any new Subsidiary all
or a portion of the Capital Stock of which is directly owned by another
Subsidiary (the "Parent Subsidiary"), the Parent Subsidiary will execute and
deliver to the Administrative Agent an appropriate joinder, amendment or
supplement to the Security Agreement pursuant to which all of the Capital Stock
of such new Subsidiary owned by such Parent Subsidiary shall be pledged to the
Administrative Agent, together with the certificates evidencing such Capital
Stock and undated stock powers duly executed in blank; and

         (c)      As promptly as reasonably possible, the Borrower and its
Subsidiaries (including all Excluded Subsidiaries) will deliver any such other
documents, certificates and opinions, and opinions of local counsel in the
jurisdiction of organization of each such new Subsidiary (including an Excluded
Subsidiary), in form and substance reasonably satisfactory to the Administrative
Agent, as the Administrative Agent may reasonably request in connection
therewith and will take such other action as the Administrative Agent may
reasonably request to create in favor of the Administrative Agent a perfected
security interest in the Collateral being pledged pursuant to the documents
described above.

         9.11     Additional Security, The Borrower will, and will cause each of
its Subsidiaries to grant to the Administrative Agent from time to time security
interests, mortgages and other Liens in and upon such assets and properties of
the Borrower or such Subsidiary as are not covered by the Security Documents
executed and delivered before or on the Effective Date or pursuant to SECTION
9.10 (including, without limitation, Liens on assets acquired by the Borrower or
a Subsidiary in connection with any Permitted Acquisition) provided, however,
that in the event any real property owned by the Borrower or such Subsidiary has
an appraised or book value of $750,000 or less, Mortgage shall only be required
upon the request of the Administrative Agent or the Required Lenders;. Such
security interests, mortgages and Liens shall be granted pursuant

                                       87
<PAGE>

to documentation in form and substance reasonably satisfactory to the
Administrative Agent and shall constitute valid and perfected security interests
and Liens subject to no Liens other than Permitted Liens. Without limitation of
the foregoing, in connection with the grant of any mortgage or deed of trust
with respect to any interest in real property, the Borrower will, and will cause
each applicable Subsidiary to, at the Borrower's expense, prepare, obtain and
deliver to the Administrative Agent all Mortgaged Property Support Documents.

         9.12     Designated Excluded Subsidiaries. So long as no Event of
Default shall have occurred and be continuing, Borrower may from time to time
redesignate any Excluded Subsidiary as a non-Excluded Subsidiary and upon such
redesignation shall comply with the provisions of SECTION 9.10 within the time
periods provided for therein with respect to the execution and delivery of a
Subsidiary Guaranty and Security Agreement. If an Event of Default has occurred
and is continuing, the Administrative Agent may so redesignate any or all of the
Excluded Subsidiaries and shall give notice to the Borrower of any such
selection in accordance with SECTION 14.5, and thereafter, such redesignated
Subsidiaries shall comply with the requirements of SECTION 9.10.

         9.13     Employee Benefit Plans.

                  (a)      With reasonable promptness, and in any event within
         thirty (30) days thereof, give notice to the Administrative Agent of
         (a) the establishment of any new Pension Plan (which notice shall
         include a copy of such plan), (b) the commencement of contributions to
         any Employee Benefit Plan to which the Borrower or any of its ERISA
         Affiliates was not previously contributing, (c) any material increase
         in the benefits of any existing Employee Benefit Plan, (d) each funding
         waiver request filed with respect to any Pension Plan and all
         communications received or sent by the Borrower or any ERISA Affiliate
         with respect to such request and (e) the 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 (in the case of Employee
         Benefit Plans regulated by the Code or ERISA) or under any Foreign
         Benefit Law (in the case of Employee Benefit Plans regulated by any
         Foreign Benefit Law) by the due date;

                  (b)      Promptly and in any event within fifteen (15) days of
         becoming aware of the occurrence or forthcoming occurrence of any (a)
         Termination Event or (b) nonexempt "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, deliver to the Administrative Agent a notice specifying the
         nature thereof, what action the Borrower or any ERISA Affiliate 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; and

                  (c)      With reasonable promptness but in any event within
         fifteen (15) days for purposes of clauses (i), (ii) and (iii), deliver
         to the Administrative Agent copies of (i) any unfavorable determination
         letter from the Internal Revenue Service regarding the qualification of
         an Employee Benefit Plan under Section 401(a) of the Code, (ii) all
         notices received by the Borrower or any ERISA Affiliate of the PBGC's
         or any Governmental Authority's intent to terminate any Pension Plan or
         to have a trustee

                                       88
<PAGE>

         appointed to administer any Pension Plan, (iii) 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 Employee Benefit Plan and (iv) 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. The Borrower will notify
         the Administrative Agent in writing within five (5) Business Days of
         the Borrower or any ERISA Affiliate obtaining knowledge or reason to
         know that the 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.

         9.14     Further Assurances. The Borrower will, and will cause each of
its Subsidiaries (including all Excluded Subsidiaries) to, make, execute,
endorse, acknowledge and deliver any amendments, modifications or supplements
hereto and restatements hereof and any other agreements, instruments or
documents, and take any and all such other actions, as may from time to time be
reasonably requested by the Administrative Agent or the Required Lenders to
perfect and maintain the validity and priority of the Liens granted pursuant to
the Security Documents and to effect, confirm or further assure or protect and
preserve the interests, rights and remedies of the Administrative Agent and the
Lenders under this Agreement and the other Credit Documents.

         9.15     Related Hedge Agreements. In the event that the Leverage Ratio
reflected in the Borrower's September 30, 2004 Compliance Certificate is greater
than 2.00 to 1.00, the Borrower shall, within ten Business Days after delivery
to the Administrative Agent of such Compliance Certificate, enter into and
maintain until the Maturity Date, Related Hedge Agreements reasonably acceptable
to the Administrative Agent, in an aggregate notional amount of not less than
the amount that is 50% of the Term Loan A Outstandings and the Term Loan B
Outstandings at any time, hedging interest rate fluctuation risk in respect of
the Loans.

         9.16     Shareholder's Agreement. The Borrower will perform a valuation
of its Capital Stock on an annual basis and determine if additional life
insurance coverage is required to satisfy its liability to repurchase its stock
with the proceeds of the life insurance maintained pursuant to the terms of the
Shareholder Agreement. The Administrative Agent will be provide with written
evidence that such valuation has been performed, and if necessary, additional
insurance has been obtained.

         9.17     Notice of Reportable Transaction. Within a reasonable time
prior to the treatment thereof, deliver notice to the Administrative Agent of
any intention to treat the Loans as a "reportable transaction" (within the
meaning of Treasury Regulation Section 1.6011-4).

                                    ARTICLE X

                              FINANCIAL COVENANTS

         The Borrower covenants and agrees that, until the termination of the
Revolving Credit Commitments, the termination or expiration of all Letters of
Credit and the payment in full of all principal and interest with respect to the
Loans and all Reimbursement Obligations together with all other amounts then due
and owing hereunder:

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<PAGE>

         10.1     Leverage Ratio. The Borrower will not permit the Leverage
Ratio as of the last day of any fiscal quarter ending during the applicable
period set forth below, for the four consecutive fiscal quarter period ending on
such date, to be greater than that ratio set forth opposite each such period:

<TABLE>
<CAPTION>
                                                              Leverage Ratio
           Period                                       Must Not Be Greater Than
           ------                                       ------------------------
<S>                                                     <C>
Effective  Date  through  and  including                       3.250 to 1.00
March 31, 2005

April   1,   2005   through  and  including                    3.000 to 1.00
September 30, 2005

October 1, 2005 through and including June                     2.875 to 1.00
30, 2006

July 1, 2006 through and including                             2.750 to 1.00
September 30, 2006

October 1, 2006 and thereafter                                 2.500 to 1.00
</TABLE>

         10.2     Fixed Charge Coverage Ratio. The Borrower shall not permit the
Fixed Charge Coverage Ratio, as determined for and at the end of each period of
four consecutive fiscal quarters to be less than 1.50 to 1.00.

         10.3     Interest Coverage Ratio. The Borrower shall not permit the
Interest Coverage Ratio, as determined for and at the end of each period of four
consecutive fiscal quarters to be less than 3.75 to 1.00.

         10.4     Consolidated Net Worth. The Borrower will not permit
Consolidated Net Worth as of the last day of any fiscal quarter to be less than
85% of the Consolidated Net Worth as of September 30,2003, plus 100% of
Consolidated Net Income (if positive) of the Borrower and its Subsidiaries for
each fiscal quarter after September 30, 2003, plus 100% of all Equity Issuances
or other capital investments less any Allowable Tax Distributions, less any
other distributions or payments permitted in accordance with SECTION 11.6.

                                   ARTICLE XI

                               NEGATIVE COVENANTS

        The Borrower covenants and agrees that, until the termination of the
 Revolving Credit Commitments, the termination or expiration of all Letters of
 Credit and the payment in full of all principal and interest with respect to
 the Loans and all Reimbursement Obligations together with all other amounts
 then due and owing hereunder:

         11.1     Merger; Consolidation. The Borrower will not, and will not
permit or cause any of its Subsidiaries (including any Excluded Subsidiary) to,
liquidate, wind up or dissolve, or

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<PAGE>

enter into any consolidation, merger or other combination, or agree to do any of
the foregoing; provided, however, that, subject to the limitations of SECTION
11.22:

                  (i)      the Borrower may merge, consolidate or combine with
         another Person so long as (x) the Borrower is the surviving entity, (y)
         unless such other Person is a Wholly Owned Subsidiary immediately prior
         to giving effect thereto, such merger or consolidation shall constitute
         a Permitted Acquisition and the applicable conditions and requirements
         of SECTIONS 9.9 and 9.10 shall be satisfied, and (z) immediately after
         giving effect thereto, no Default or Event of Default would exist; and

                  (ii)     any Subsidiary (including any Excluded Subsidiary)
         may merge, consolidate (including dissolution, as long as the assets of
         the dissolved Subsidiary are transferred to the Borrower or a Wholly
         Owned Subsidiary that is a Subsidiary Guarantor prior to or
         concurrently with such dissolution) or combine with another Person so
         long as (x) the surviving entity is the Borrower or a Wholly Owned
         Subsidiary that is a Subsidiary Guarantor, (y) unless such other Person
         is a Wholly Owned Subsidiary immediately prior to giving effect thereto
         such merger or consolidation shall constitute a Permitted Acquisition
         and the applicable conditions and requirements of SECTIONS 9.9 and 9.10
         shall be satisfied; and (z) immediately after giving effect thereto, no
         Default or Event of Default would exist,

         11.2     Indebtedness. The Borrower will not, and will not
permit or cause any of its Subsidiaries (including any Excluded Subsidiary) to
create, incur, assume or suffer to exist any Indebtedness other than:

                  (i)      Indebtedness incurred under this Agreement, the Notes
         and the Subsidiary Guaranty;

                  (ii)     Indebtedness existing on the Effective Date and
         described in SCHEDULE 11.2;

                  (iii)    accrued expenses (including salaries, accrued
         vacation and other compensation), current trade or other accounts
         payable and other current liabilities arising in the ordinary course of
         business and not incurred through the borrowing of money, provided that
         the same shall be paid when due except (i) to the extent being
         contested in good faith and by appropriate proceedings and (ii) as
         provided elsewhere in this Agreement;

                  (iv)     loans and advances by the Borrower or any Subsidiary
         to any other Subsidiary; provided that any such loan or advance is by
         an Intercompany Note, pledged to the Administrative Agent pursuant to
         the Security Agreement;

                  (v)      (A) purchase money Indebtedness of the Borrower and
         its Subsidiaries (including any Excluded Subsidiary) incurred solely to
         finance the payment of all or part of the purchase price of any
         equipment, real property or other fixed assets, (B) Indebtedness in
         respect of capital lease obligations, (C) Indebtedness of the Borrower
         owed to a Person owning Capital Stock (or a relative thereof) of the
         Borrower, as more particularly set forth on SCHEDULE 11.2 or incurred
         hereafter in accordance with this

                                       91
<PAGE>

        SECTION 11.2(v)(C), that is expressly subordinated and made junior in
        right and time of payment to the Obligations and that is evidenced by
        one or more written agreements or instruments having terms, conditions
        and provisions (including, without limitation, provisions relating to
        principal amount, maturity, covenants, defaults, interest, and
        subordination) satisfactory in form and substance to the Required
        Lenders in their sole discretion, (D) purchase money Indebtedness of the
        Borrower and its Subsidiaries (including any Excluded Subsidiary)
        incurred solely to finance the purchase price of a Permitted Acquisition
        that is expressly subordinated and made junior in right and time of
        payment to the Obligations and that is evidenced by one or more written
        agreements or instruments having terms, conditions and provisions
        (including, without limitation, provisions relating to principal amount,
        maturity, covenants, defaults, interest, and subordination) satisfactory
        in form and substance to the Required Lenders in their sole discretion,
        and (E) unsecured Indebtedness of the Borrower that is evidenced by one
        or more written agreements or instruments having terms, conditions and
        provisions (including, without limitation, provisions relating to
        principal amount, maturity, covenants, defaults and interest)
        satisfactory in form and substance to the Required Lenders in their sole
        discretion in each case referred to in clauses (A) through (E) above any
        renewals, refinancings or replacements thereof (subject to the
        limitations on the principal amount thereof set forth in this clause
        (v)) (collectively, the "Subordinated Indebtedness"); provided that all
        such Indebtedness referred to in this clause (v) (whether or not listed
        on SCHEDULE 11.2) shall not exceed an aggregate principal amount of
        $20,000,000 outstanding at any time;

                  (vi)     Contingent Obligations permitted as set forth in
                           SECTION 11.16;

                  (vii)    Indebtedness arising from any Hedge Agreement; and

                  (viii)   Indebtedness with respect to Permitted Excluded
                           Subsidiary Loans.

         11.3     Liens. The Borrower will not, and will not permit or cause any
of its Subsidiaries (including any Excluded Subsidiary) to, directly or
indirectly, make, create, incur, assume or suffer to exist, any Lien upon or
with respect to any part of Borrower's, any Subsidiaries' or any Excluded
Subsidiaries' property or assets. Whether now owned or hereafter acquired, or
file or permit the filing of, or permit to remain in effect, any financing
statement or other similar notice of any Lien with respect to any such property,
asset, income or profits under the Uniform Commercial Code of any state or under
any similar recording or notice statute, or agree to do any of the foregoing,
other than the following (collectively, "Permitted Liens"):

                  (i)      Liens created under the Security Documents;

                  (ii)     Liens imposed by law, such as Liens of carriers,
         warehousemen, mechanics, materialmen and landlords, and other similar
         Liens incurred in the ordinary course of business for sums not
         constituting borrowed money that are not overdue for a period of more
         than thirty (30) days or that are being contested in good faith by
         appropriate proceedings and for which adequate reserves have been
         established in accordance with GAAP (if so required);

                                       92
<PAGE>

                  (iii)    Liens (other than any Lien imposed by ERISA, the
         creation or incurrence of which would result in an Event of Default
         under SECTION 12.1(j)) incurred in the ordinary course of business in
         connection with worker's compensation, unemployment insurance or other
         forms of governmental insurance or benefits, or to secure the
         performance of letters of credit, bids, tenders, statutory obligations,
         surety and appeal bonds, leases, government contracts and other similar
         obligations (other than obligations for borrowed money) entered into in
         the ordinary course of business;

                  (iv)     Liens for taxes, assessments or other governmental
         charges or statutory obligations that are not delinquent or remain
         payable without any penalty or that are being contested in good faith
         by appropriate proceedings and for which adequate reserves have been
         established in accordance with GAAP (if so required);

                  (v)      Liens securing the Indebtedness permitted under
         clauses (vi)(A) and (vi)(B) of SECTION 11.2, provided that with respect
         to any such purchase money Indebtedness, any such Lien (a) shall attach
         to such property concurrently with or within ten (10) days after the
         acquisition thereof by the Borrower or such Subsidiary, (b) shall not
         exceed the lesser of (y) the fair market value of such property or (z)
         the cost thereof to the Borrower or such Subsidiary and (c) shall not
         encumber any other property of the Borrower or any of its Subsidiaries;

                  (vi)     any attachment or judgment Lien not constituting an
         Event of Default under SECTION 12.1 (h) that is being contested in good
         faith by appropriate proceedings and for which adequate reserves have
         been established in accordance with GAAP (if so required);

                  (vii)    Liens arising from the filing, for notice purposes
         only, of financing statements in respect of true leases;

                  (viii)   with respect to any real property owned by the
         Borrower or any of its Subsidiaries, all easements, rights of way,
         licenses and similar encumbrances on title that do not materially
         impair the use of such property for its intended purposes and those
         exceptions disclosed on the Title Policy delivered by the Borrower and
         accepted by the Administrative Agent under SECTION 7.1(a)(vi);

                  (ix)     Liens securing the Indebtedness permitted under
         clause (v)(A) of SECTION 11.2;

                  (x)      Liens set forth on SCHEDULE 11.3; and

                  (xi)     Liens in favor of the Borrower securing any Permitted
         Excluded Subsidiary Loan.

         11.4     Disposition of Assets. The Borrower will not, and will not
permit or cause any of its Subsidiaries (including any Excluded Subsidiary) to,
sell, assign, lease, convey, transfer or otherwise dispose of (whether in one or
a series of transactions) all or any portion of its assets, business or
properties (including, without limitation, any Capital Stock of any Subsidiary),
or enter into any arrangement with any Person providing for the lease by the
Borrower or any

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Subsidiary as lessee of any asset that has been sold or transferred by the
Borrower or such Subsidiary to such Person, or agree to do any of the foregoing,
except for:

                  (i)      sales of inventory in the ordinary course of
         business;

                  (ii)     the sale or exchange of used or obsolete equipment to
         the extent (y) the proceeds of such sale are applied towards, or such
         equipment is exchanged for, replacement equipment or (z) such equipment
         is no longer necessary for the operations of the Borrower or its
         applicable Subsidiary in the ordinary course of business; provided,
         however, that no such equipment referred to in this clause (z) may be
         sold if its fair market value exceeds $250,000 unless approved by the
         Required Lenders;

                  (iii)    the sale or other disposition by the Borrower and its
         Subsidiaries of any Borrower Margin Stock to the extent the fair market
         value thereof exceeds 25% of the fair market value of the assets of the
         Borrower and its Subsidiaries (including Borrower Margin Stock),
         provided that fair value is received in exchange therefor;

                  (iv)     the sale, lease or other disposition of assets by a
         Subsidiary of the Borrower to a Subsidiary Guarantor if, immediately
         after giving effect thereto, no Default or Event of Default would
         exist;

                  (v)      the sale or disposition of assets outside the
         ordinary course of business for fair value and for cash, provided that
         (w) the Net Cash Proceeds from such sales or dispositions, when
         aggregated with the Net Cash Proceeds from all other sales and
         dispositions not otherwise specifically permitted under this Section
         that are consummated during the same fiscal year do not exceed $400,000
         in the aggregate, (x) such Net Cash Proceeds are delivered to the
         Administrative Agent promptly after receipt thereof for application in
         prepayment of the Loans in accordance with the provisions of SECTIONS
         2.1(e) AND 3.6, (y) in no event shall the Borrower or any of its
         Subsidiaries sell or otherwise dispose of any of the Capital Stock of
         any Subsidiary, and (z) immediately after giving effect thereto no
         Default or Event of Default would exist;

                  (vi)     any other sale or disposition approved at the sole
         discretion of the Required Lenders such approval to be given within
         three Business Days from receipt of information satisfactory to the
         Administrative Agent and the other Lender in their reasonable
         discretion; and

                  (vii)    to the disposition of (a) certain assets owned by
         Maryland Radiation Therapy Management Services, Inc. to Atlantic Cancer
         Center Management, LLC ("Peninsula LLC") upon its creation and (b)
         49.9% of its equity interest in the Peninsula LLC to Peninsula Health
         Ventures, Inc., each such disposition to be in accordance with the
         terms of that certain Participation Rights Agreement dated as of
         October 1, 2002 between Maryland Radiation Therapy Management Services,
         Inc., the Borrower, and Peninsula Health Ventures., Inc., attached
         hereto as Exhibit I, any management agreement or service agreement
         executed in connection therewith, and the organizational documents of
         the Peninsula LLC.

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         11.5     Investments. The Borrower will not, and will not permit or
cause any of its Subsidiaries (including any Excluded Subsidiary) to, directly
or indirectly, purchase, own, invest in or otherwise acquire any Capital Stock,
evidence of Indebtedness or other obligation or security or any interest
whatsoever in any other Person, or make or permit to exist any loans, advances
or extensions of credit to, or any investment in cash or by delivery of property
in, any other Person, or purchase or otherwise acquire (whether in one or a
series of related transactions) any portion of the assets, business or
properties of another Person (including pursuant to an Acquisition), or create
or acquire any Subsidiary, or become a partner or joint venturer in any
partnership or joint venture (collectively, "Investments"), or make a commitment
or otherwise agree to do any of the foregoing, other than, subject, with respect
to the Borrower, the limitations of Section 11.22:

                  (i)      Cash Equivalents;

                  (ii)     Investments consisting of accounts receivable created
         and prepaid expenses incurred, in the ordinary course of business;

                  (iii)    Investments consisting of loans and advances to
         employees for reasonable travel, relocation and business expenses in
         the ordinary course of business;

                  (iv)     without duplication, Investments consisting of
         intercompany Indebtedness permitted under clause (iv) of SECTION 11.2;

                  (v)      Investments existing on the Effective Date in
         Subsidiaries and described in SCHEDULE 11.5;

                  (vi)     Investments by Borrower under the Related Hedge
         Agreements;

                  (vii)    Investments consisting of the making of capital
         contributions by the Borrower or any Subsidiary in (y) any other
         Subsidiary that is (or immediately after giving effect to such
         Investment will be) a Subsidiary Guarantor, and (z) in any Excluded
         Subsidiary, provided that (I) the Borrower complies with any applicable
         provisions of SECTION 9.10, (II) the aggregate amount of all such
         Investments (including Permitted Excluded Subsidiary Loans) made during
         any fiscal year shall not exceed $5,000,000 for each such Investment,
         and $15,000,000 in the aggregate per fiscal year (and in any case, not
         more than four (4) in each fiscal year); and (III) for each such
         Investment, the Borrower shall have delivered to the Administrative
         Agent the information required under clauses (i), (iii) and (iv) of
         SECTION 9.9(b) (as if such clauses are applicable to the Investments
         permitted under this clause (vii)); Investments consisting of
         Indebtedness in the form of notes issued by certain physicians,
         officers and other key personnel employed by Borrower or any Subsidiary
         Guarantor and made payable to the Borrower in order to finance the
         purchase of Capital Stock of the Borrower by any such physicians,
         officers and other key personnel (hereinafter "Physician Notes") which
         are existing as of the Effective Date and are described on SCHEDULE
         11.5 or are entered into after the Effective Date on terms and
         conditions satisfactory to the Administrative Agent, provided that the
         aggregate outstanding principal amount of all such Physician Notes
         shall not exceed $5,000,000;

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                  (viii)   Permitted Acquisitions;

                  (ix)     Investments in any partnership or joint venture which
         is not a Subsidiary or an Excluded Subsidiary, but which is reflected
         on the Borrower's financial statements in accordance with the equity
         method of accounting, such Investments not to exceed $2,000,000 in the
         aggregate per fiscal year; and

                  (x)      Other Investments not otherwise described in clauses
         (i)-(ix) above, the aggregate amount of such Investments which shall
         not exceed $1,000,000.

         11.6     Restricted Payments. (a) The Borrower will not, and will not
permit or cause any of its Subsidiaries (including any Excluded Subsidiary) to,
directly or indirectly, declare or make any Restricted Payment or enter into any
agreement to do any of the foregoing, except that:

                  (i)      the Borrower may declare and make Allowable Tax
         Distributions;

                  (ii)     if and to the extent that after giving effect
         thereto, (i) the Adjusted Leverage Ratio calculated for the period of
         four consecutive fiscal quarters most recently ended on or immediately
         prior to the date of each such distribution is less than or equal to
         2.00 to 1.00 and the Compliance Certificate for the fiscal year ending
         December 31, 2005, has been delivered, and (ii) no Event of Default,
         including any default under SECTION 10 hereunder shall have occurred
         and be continuing, the Borrower may declare and make cash distributions
         to its shareholders;

                  (iii)    the Borrower may make other distributions payable
         solely in its common stock;

                  (iv)     the Borrower may purchase for value (A) any shares of
         its Capital Stock that have been issued to certain physicians, officers
         and other key personnel in accordance with SECTION 11.5(vii); provided,
         however, in both cases that the Borrower shall have submitted to the
         Administrative Agent a copy of all material documents containing the
         terms and conditions of such purchase of Capital Stock of the Borrower
         prior to such purchase, and the Administrative Agent shall have
         approved such terms and conditions;

                  (v)      the Borrower shall make any Shareholder Life
         Insurance Payment;

                  (vi)     each Wholly Owned Subsidiary of the Borrower may
         declare and make dividend payments or other distributions to the
         Borrower or another Wholly Owned Subsidiary of the Borrower, to the
         extent not prohibited under applicable Requirements of Law;

                  (vii)    so long as no Event of Default has occurred or is
         continuing, each Excluded Subsidiary may declare and make dividend
         payments or other distributions, to the extent not prohibited under
         applicable Requirements of Law; and

                  (viii)   the Borrower may declare and make the Dividend
         Payment.

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<PAGE>

         (b)      Without the consent of the Required Lenders, the Borrower will
not, and will not permit or cause any of its Subsidiaries (including any
Excluded Subsidiary) to make (or give any notice in respect of) any voluntary or
optional payment or prepayment of principal on any Subordinated Indebtedness, or
directly or indirectly make any redemption (including pursuant to any change of
control provision), retirement, defeasance or other acquisition for value of any
Subordinated Indebtedness, or make any deposit or otherwise set aside funds for
any of the foregoing purposes; except that, for so long as no Default or Event
of Default has occurred and is continuing, the Borrower may make interest
payments with respect to the Subordinated Indebtedness in accordance with the
applicable provisions of the Subordinated Indebtedness.

         11.7     Transactions with Affiliates. The Borrower will not, and will
not permit or cause any of its Subsidiaries (including any Excluded Subsidiary)
to, enter into any transaction (including, without limitation, any purchase,
sale, lease or exchange of property or the rendering of any service) with any
officer, director, stockholder or other Affiliate of the Borrower or any
Subsidiary, except in the ordinary course of its business and upon fair and
reasonable terms that are no less favorable to it than would obtain in a
comparable arm's length transaction with a Person other than an Affiliate of the
Borrower or such Subsidiary; provided, however, that nothing contained in this
Section shall prohibit:

                  (i)      transactions described on SCHEDULE 11.7 or otherwise
         expressly permitted under this Agreement;

                  (ii)     transactions involving the purchase of Borrower's
         Capital Stock by certain physicians in accordance with SECTION
         11.5(viii); and

                  (iii)    the payment by the Borrower of reasonable and
         customary fees to members of its board of directors.

         11.8     Lines of Business. The Borrower will not, and will not permit
or cause any of its Subsidiaries (including any Excluded Subsidiary) to, engage
in any business other than the business of providing radiation oncology services
and services relating to the needs of cancer patients or other ancillary
business services to other physician practices, so long as such ancillary
business services represent no more than five percent (5%) of the revenue of the
Borrower and its Subsidiaries on a consolidated basis (including physician
management services, equipment leasing to medical practitioners and billing
services); provided that the primary business of the Borrower and its
Subsidiaries on a consolidated basis is radiation oncology services.
Notwithstanding the foregoing, Financial Services of Southwest Florida, Inc. may
engage in the business of administrative services for the Borrower and its
Subsidiaries and Radiation Therapy School for Radiation Therapy Technology, Inc.
may operate a radiation therapy school for the Borrower and its Subsidiaries,
provided that the primary focus of the Borrower and its Subsidiaries continues
to be providing radiation oncology services.

         11.9     Revenue. The Borrower shall not permit the percentage of the
total revenue of the Borrower, its Subsidiaries and its Excluded Subsidiaries
for any fiscal quarter that is derived from the Excluded Subsidiaries to exceed
15%.

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         11.10    Capital Expenditures. The Borrower will not permit the Capital
Expenditures of the Borrower and its Subsidiaries to be greater than $15,000,000
in the aggregate per fiscal year, excluding any Capital Expenditure for any
Permitted Acquisition during such fiscal year.

         11.11    Certain Amendments. The Borrower will not, and will not permit
or cause any of its Subsidiaries (including any Excluded Subsidiary) to, (i)
amend, modify or waive, or permit the amendment, modification or waiver of, any
provision of any agreement or instrument evidencing or governing any
Subordinated Indebtedness, the effect of which would be to (a) increase the
principal amount due thereunder, (b) shorten or accelerate the time of payment
of any amount due thereunder, (c) increase the applicable interest rate or
amount of any fees or costs due thereunder, (d) amend any of the subordination
provisions thereunder (including any of the definitions relating thereto), (e)
make any covenant therein more restrictive or add any new covenant; or (f)
otherwise materially and adversely affect the Lenders, or breach or otherwise
violate any of the subordination provisions applicable thereto, including,
without limitation, restrictions against payment of principal and interest
thereon, or (ii) amend, modify or change any provision of its articles or
certificate of incorporation or bylaws, or the terms of any class or series of
its Capital Stock, other than in a manner that could not reasonably be expected
to adversely affect the Lenders.

         11.12    Limitation on Certain Restrictions. The Borrower will not, and
will not permit or cause any of its Subsidiaries (including any Excluded
Subsidiary) to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any restriction or encumbrance on (i) the ability of
the Borrower and its Subsidiaries (including any Excluded Subsidiary) to perform
and comply with their respective obligations under the Credit Documents or (ii)
the ability of any Subsidiary of the Borrower (including any Excluded
Subsidiary) to make any dividend payments or other distributions in respect of
its Capital Stock, to repay Indebtedness owed to the Borrower or any other
Subsidiary, to make loans or advances to the Borrower or any other Subsidiary,
or to transfer any of its assets or properties to the Borrower or any other
Subsidiary, in each case other than such restrictions or encumbrances existing
under or by reason of the Credit Documents or applicable Requirements of Law.

         11.13    No Other Negative Pledges. The Borrower will not, and will not
permit or cause any of its Subsidiaries (including any Excluded Subsidiary) to,
directly or indirectly, enter into or suffer to exist any agreement or
restriction that prohibits or conditions the creation, incurrence or assumption
of any Lien upon or with respect to any part of its property or assets, whether
now owned or hereafter acquired, or agree to do any of the foregoing, other than
as set forth in (i) this Agreement and the Security Documents, (ii) any
agreement or instrument creating a Permitted Lien (but only to the extent such
agreement or restriction applies to the assets subject to such Permitted Lien),
and (iii) operating leases of real or personal property entered into by the
Borrower or any of its Subsidiaries as lessee in the ordinary course of
business.

         11.14    Fiscal Year. The Borrower will not, and will not permit or
cause any of its Subsidiaries (including any Excluded Subsidiary) to, change the
ending date of its fiscal year to a date other than December 31.

         11.15    Accounting Changes. The Borrower will not, and will not permit
or cause any of its Subsidiaries (including any Excluded Subsidiary) to make or
permit any material change in its accounting policies or reporting practices,
except as may be required by GAAP.

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         11.16    Restriction on Contingent Obligations. The Borrower will not,
and will not permit or cause any of its Subsidiaries (including any Excluded
Subsidiary) to, incur Contingent Obligations, other than (i) the endorsement of
negotiable instruments in the ordinary course of business, (ii) Contingent
Obligations incurred as a result of the Subsidiary Guaranty, (iii) guarantees of
Indebtedness permitted under SECTION 11.2, (iv) guarantees of other Indebtedness
in an aggregate amount not to exceed $1,000,000 at any time, which shall include
any Contingent Obligation incurred on behalf of any Excluded Subsidiary, and (v)
Contingent Obligations consisting of the Shareholder Life Insurance Payments,
(vi) the Contingent Obligation described in Footnote 13 of the December 31, 2002
audited financial statements, and (vii) the Contingent Obligation to purchase
certain property incurred in connection with the Acquisition of Universal Health
Systems, Inc. and Universal Treatment Centers, Inc., as evidenced by that
certain Amended and Restated Acquisition Agreement, dated as of September 30,
2003, provided, however, that such Contingent Obligation shall not exceed
$825,000, each such Contingent Obligation which is described on SCHEDULE 11.16
attached hereto.

         11.17    Hazardous Substances. The Borrower will not, and will not
permit any of its Subsidiaries (including any Excluded Subsidiary) to, permit
any Hazardous Substances, the removal of which is required or the maintenance of
which is restricted, prohibited or penalized by any Governmental Authority, to
be brought on or handled by the Borrower or any of its Subsidiaries (including
any Excluded Subsidiary) or any of their agents, Affiliates, employees,
contractors or invitees, on any real property owned or leased by the Borrower or
any of its Subsidiaries, except in compliance with all applicable Environmental
Laws; and if any such material is brought or handled in violation of any
applicable Environmental Law, it shall be immediately removed, with proper
disposal, and all required environmental cleanup procedures shall be diligently
undertaken pursuant to all Environmental Laws, and the obligations hereunder
with respect to any such materials brought on or handled while the Borrower or
any of its Subsidiaries owned or leased any such real property shall survive any
foreclosure of the Mortgages and other deeds of trust or mortgages. THE BORROWER
HEREBY ACKNOWLEDGES THAT FOR SO LONG AS THE LENDERS HAVE NOT FORECLOSED AND
TAKEN TITLE TO, AND POSSESSION AND CONTROL OF THE MORTGAGED PROPERTY, AND TAKEN
OVER CONTROL OF WASTE HANDLING PRACTICES, ALL HAZARDOUS WASTE HANDLING PRACTICES
AND ENVIRONMENTAL PRACTICES AND PROCEDURES ARE THE SOLE RESPONSIBILITY OF THE
BORROWER AND ITS SUBSIDIARIES (INCLUDING ANY EXCLUDED SUBSIDIARY) AND THE
BORROWER HAS FULL DECISION-MAKING POWER WITH RESPECT THERETO. THE BORROWER
FURTHER ACKNOWLEDGES THAT NEITHER THE ADMINISTRATIVE AGENT NOR ANY LENDER IS AN
ENVIRONMENTAL CONSULTANT, ENGINEER, INVESTIGATOR OR INSPECTOR OF ANY TYPE
WHATSOEVER. NO ACT (OR DECISION NOT TO ACT) OF THE ADMINISTRATIVE AGENT OR ANY
LENDER RELATED TO THIS AGREEMENT OR ANY CREDIT DOCUMENT SHALL GIVE RISE TO ANY
OBLIGATION OR LIABILITY ON THE PART OF THE ADMINISTRATIVE AGENT OR ANY LENDER
WITH RESPECT TO ENVIRONMENTAL MATTERS UNLESS SUCH ACTION IS AFTER THE LENDERS
HAVE FORECLOSED ON AND TAKEN POSSESSION AND CONTROL OF THE SUBJECT PROPERTY AND
SUCH ACTION PROXIMATELY RESULTS IN SUCH CONTAMINATION. IN NO EVENT SHALL ANY
INFORMATION OBTAINED FROM THE ADMINISTRATIVE AGENT OR ANY

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LENDER OR THEIR RESPECTIVE AGENTS PURSUANT TO THIS AGREEMENT OR ANY CREDIT
DOCUMENT CONCERNING THE ENVIRONMENTAL CONDITION OF THE MORTGAGED PROPERTY BE
CONSIDERED BY THE BORROWER OR ANY OF ITS SUBSIDIARIES (OR ANY OTHER RECIPIENT OF
SUCH INFORMATION) AS CONSTITUTING LEGAL OR ENVIRONMENTAL CONSULTING,
ENGINEERING, INVESTIGATING OR INSPECTING ADVICE, AND NEITHER THE BORROWER NOR
ANY OF ITS SUBSIDIARIES (NOR ANY OTHER RECIPIENT OF SUCH INFORMATION) SHALL RELY
ON SAID INFORMATION. THE RESPONSIBILITY FOR COMPLIANCE WITH VARIOUS FEDERAL,
STATE AND LOCAL ENVIRONMENTAL, HEALTH OR SAFETY LAWS AND REGULATIONS RESTS
SOLELY WITH THE BORROWER AND ITS SUBSIDIARIES FOR SO LONG AS THE LENDERS HAVE
NOT FORECLOSED AND TAKEN TITLE TO, AND POSSESSION AND CONTROL OF THE MORTGAGED
PROPERTY, AND TAKEN OVER CONTROL OF WASTE HANDLING PRACTICES.

         11.18    Pledge of Partnerships and Joint Ventures that are not
Subsidiaries. Borrower shall not, and shall not permit any Subsidiary (including
any Excluded Subsidiary) to, pledge any of its right, title or ownership
interest in (i) any partnership or joint venture that does not constitute a
Subsidiary, which ownership interest is permitted pursuant to SECTION 11.5(x)
hereunder other than the Liens in favor of the Administrative Agent conferred
under the Security Documents or (ii) any Excluded Subsidiary, other than the
Liens in favor of the Administrative Agent conferred under the Security
Documents.

         11.19    Foreign Subsidiaries. Borrower shall not, and shall not permit
any Subsidiary (including any Excluded Subsidiary) to, create or maintain an
interest in any foreign Subsidiary.

         11.20    Compliance with ERISA, the Code and Foreign Benefit Laws. With
respect to any Pension Plan, Employee Benefit Plan or Multiemployer Plan, the
Borrower shall not permit any Subsidiary (including Excluded Subsidiary) to:

                  (a)      permit the occurrence of any Termination Event which
         would result in a liability on the part of the Borrower or any ERISA
         Affiliate to the PBGC or to any Governmental Authority; or

                  (b)      permit the present value of all benefit liabilities
         under all Pension Plans to exceed the current value of the assets of
         such Pension Plans allocable to such benefit liabilities; or

                  (c)      permit any accumulated funding deficiency (as defined
         in Section 302 of ERISA and Section 412 of the Code) with respect to
         any Pension Plan, whether or not waived; or

                  (d)      fail to make any contribution or payment to any
         Multiemployer Plan which the Borrower or any ERISA Affiliate may be
         required to make under any agreement relating to such Multiemployer
         Plan, or any law pertaining thereto; or

                  (e)      engage, or permit any Borrower or any ERISA Affiliate
         to engage, in any prohibited transaction under Section 406 of ERISA or
         Sections 4975 of the Code for

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         which a civil penalty pursuant to Section 502(i) of ERISA or a tax
         pursuant to Section 4975 of the Code may be imposed; or

                  (f)      permit the establishment of any Employee Benefit Plan
         providing post-retirement welfare benefits or establish or amend any
         Employee Benefit Plan which establishment or amendment could result in
         liability to the Borrower or any ERISA Affiliate or increase the
         obligation of the Borrower or any ERISA Affiliate to a Multiemployer
         Plan; or

                  (g)      fail, or permit the Borrower or any ERISA Affiliate
         to fail, to establish, maintain and operate each Employee Benefit Plan
         in compliance in all material respects with the provisions of ERISA,
         the Code, all applicable Foreign Benefit Laws and all other applicable
         laws and the regulations and interpretations thereof.

         11.21    Subordinated Indebtedness. Amended, modify or change in any
manner any term or condition of any Subordinated Indebtedness (including without
limitation any of the documents evidencing such Subordinated Indebtedness) so
that the terms and conditions thereof are less favorable to the Administrative
Agent and the Lenders than the terms thereof as of the Effective Date.

         11.22    Status of Borrower. The Borrower shall not at any time operate
any of its lines of business other than through its Subsidiaries and Excluded
Subsidiaries, or own any assets other than (i) equity interests in Subsidiaries
and Excluded Subsidiaries and Physician Notes, (ii) cash and cash equivalents
and investments permitted under Section 11.5, and (iii) such other property as
is consistent with its sole function as a holding company.

         11.23    Shareholders' Agreement. The Borrower will not modify, amend,
terminate or replace the Shareholders' Agreement without the prior written
consent of the Required Lenders.

                                   ARTICLE XII

                                EVENTS OF DEFAULT

         12.1     Events of Default. The occurrence of any one or more of the
following events shall constitute an "Event of Default":

         (a)      The Borrower shall fail to pay any principal of or interest on
any Loan, any Reimbursement Obligation, any fee or any other Obligation when
due;

         (b)      The Borrower shall fail to observe, perform or comply with any
condition, covenant or agreement contained in any of SECTIONS 5.7, 9.1, 9,2,
9.3(i), 9.8, 9.9, 9.10 or in ARTICLE X or ARTICLE XI;

         (c)      The Borrower or any of its Subsidiaries (including any
Excluded Subsidiary) shall fail to observe, perform or comply with any
condition, covenant or agreement contained in this Agreement or any of the other
Credit Documents other than those enumerated in subsections (a) and (b) above,
and such failure (i) is deemed by the terms of the relevant Credit Document to
constitute an Event of Default or (ii) shall continue unremedied for any grace
period specifically

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applicable thereto or, if no such grace period is applicable, for a period of
thirty (30) days after the earlier of (y) the date on which a Authorized Officer
of the Borrower acquires knowledge thereof and (z) the date on which written
notice thereof is delivered by the Administrative Agent or any Lender to the
Borrower;

         (d)      Any representation or warranty made or deemed made by or on
behalf of the Borrower or any of its Subsidiaries (or any Excluded Subsidiary)
in this Agreement, any of the other Credit Documents or in any certificate,
instrument, report or other document furnished in connection herewith or
therewith or in connection with the transactions contemplated hereby or thereby
shall prove to have been false or misleading in any material respect as of the
time made, deemed made or furnished;

         (e)      The Borrower or any of its Subsidiaries (including any
Excluded Subsidiary) shall (i) fail to pay when due (whether by scheduled
maturity, acceleration or otherwise and after giving effect to any applicable
grace period) any principal of or interest on any Indebtedness (other than the
Indebtedness incurred pursuant to this Agreement) having an aggregate principal
amount or Hedge Termination Value of at least $250,000 (or nonpayment default
under any Indebtedness having a principal amount or Hedge Termination Value in
excess of $100,000 individually or all such Indebtedness having an aggregate
principal amount or Hedge Termination Value in excess of $250,000 in aggregate),
or (ii) fail to observe, perform or comply with any condition, covenant or
agreement contained in any agreement or instrument evidencing or relating to any
such Indebtedness referred to in clause (i) immediately above, or any other
event shall occur or condition exist in respect thereof, and the effect of such
failure, event or condition is to cause, or permit the holder or holders of such
Indebtedness (or a trustee or agent on its or their behalf) to cause (with the
giving of notice, lapse of time, or both), such Indebtedness to become due, or
to be terminated, prepaid, redeemed, purchased or defeased prior to its stated
maturity;

         (f)      The Borrower or any of its Subsidiaries (including any
Excluded Subsidiary) shall (i) file a voluntary petition or commence a voluntary
case seeking liquidation, winding-up, reorganization, dissolution, arrangement,
readjustment of debts or any other relief under the Bankruptcy Code or under any
other applicable bankruptcy, insolvency or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to controvert in a timely
and appropriate manner, any petition or case of the type described in subsection
(g) below, (iii) apply for or consent to the appointment of or taking possession
by a custodian, trustee, receiver or similar official for or of itself or all or
a substantial part of its properties or assets, (iv) fail generally, or admit in
writing its inability, to pay its debts generally as they become due, (v) make a
general assignment for the benefit of creditors or (vi) take any corporate
action to authorize or approve any of the foregoing;

         (g)      Any involuntary petition or case shall be filed or commenced
against the Borrower or any of its Subsidiaries (including any Excluded
Subsidiary) seeking liquidation, winding-up, reorganization, dissolution,
arrangement, readjustment of debts, the appointment of a custodian, trustee,
receiver or similar official for it or all or a substantial part of its
properties or any other relief under the Bankruptcy Code or under any other
applicable bankruptcy, insolvency or similar law now or hereafter in effect, and
such petition or case shall continue undismissed and unstayed for a period of
sixty (60) days; or an order, judgment or decree approving or ordering any of
the foregoing shall be entered in any such proceeding;

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         (h)      Any one or more money judgments, writs or warrants of
attachment, executions or similar processes involving an aggregate amount
(exclusive of amounts fully bonded or covered by insurance as to which the
surety or insurer, as the case may be, has acknowledged its liability in
writing) in excess of $100,000 shall be entered or filed against the Borrower or
any of its Subsidiaries(including any Excluded Subsidiary) or any of their
respective properties and the same shall not be dismissed, stayed or discharged
for a period of thirty (30) days or in any event later than five days prior to
the date of any proposed sale thereunder;

         (i)      Any Security Document to which the Borrower or any of its
Subsidiaries is now or hereafter a party shall for any reason cease to be in
full force and effect or cease to be effective to give the Administrative Agent
a valid and perfected security interest in and Lien upon the Collateral
purported to be covered thereby, subject to no Liens other than Permitted Liens
or unpermitted Liens securing Indebtedness in an aggregate amount not exceeding
$100,000, in each case unless any such cessation occurs in accordance with the
terms thereof or is due to any act or failure to act on the part of the
Administrative Agent or any Lender; or the Borrower or any such Subsidiary shall
assert any of the foregoing; or any Subsidiary of the Borrower or any Person
acting on behalf of any such Subsidiary shall deny or disaffirm such
Subsidiary's obligations under the Subsidiary Guaranty;

         (j)      Any ERISA Event or any other event or condition shall occur or
exist with respect to any Plan or Multiemployer Plan and, as a result thereof,
together with all other ERISA Events and other events or conditions then
existing, the Borrower and its ERISA Affiliates have incurred or would be
reasonably likely to incur liability to any one or more Plans or Multiemployer
Plans or to the PBGC (or to any combination thereof in excess of $100,000;

         (k)      There shall occur a Limitation with respect to any one or more
Licenses or Reimbursement Approvals of the Borrower, or any Managed Practice, or
any other action shall be taken by any Governmental Authority or other Person in
response to any alleged failure by the Borrower, such Subsidiary or such Managed
Practice to be in compliance with applicable Requirements of Law, and such
Limitation or other action, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect; or there shall occur any
introduction of or change in any Requirement of Law (or in the interpretation or
administration thereof by any Governmental Authority) governing or affecting the
Borrower and such introduction or change, individually or in the aggregate, has
or would be reasonably likely to have a Material Adverse Effect;

         (l)      Any one or more Environmental Claims shall have been asserted
against the Borrower or any of its Subsidiaries (including any Excluded
Subsidiary) (or a reasonable basis shall exist therefor); the Borrower and its
Subsidiaries (including any Excluded Subsidiary) have incurred or would be
reasonably likely to incur liability as a result thereof; and such liability,
individually or in the aggregate, has or would be reasonably likely to have a
Material Adverse Effect;

         (m)      The Borrower or any of its Subsidiaries (including any
Excluded Subsidiary) shall be in breach of or default under the terms of any one
or more agreements for the lease of real property upon which Collateral having
an aggregate fair market value in excess of $50,000 is maintained, and the
effect of such breach or default is to terminate, or permit the other party or
parries thereto to terminate, such lease or leases; or any agreement or contract
to which the

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Borrower or any of its Subsidiaries (including any Excluded Subsidiary) is a
party shall be terminated or shall, for any other reason, fail to be in full
force and effect and enforceable in accordance with its terms, and such event or
condition, together with all other such events or conditions, if any, has or
would be reasonably likely to have a Material Adverse Effect;

         (n)      There shall occur (i) any uninsured damage to, or loss, theft
or destruction of, any Collateral or other properties of the Borrower and its
Subsidiaries (including any Excluded Subsidiary) that has or would be reasonably
likely to have a Material Adverse Effect or (ii) any labor dispute, act of God
or other casualty that has or would be reasonably likely to have a Material
Adverse Effect;

         (o)      Any of the following shall occur: (i) prior to the occurrence
of a Qualified IPO, any Person or group of Persons acting in concert as a
partnership or other group, other than Dr. Daniel E. Dosoretz, Dr. Michael J.
Katin, Dr. Peter H. Blitzer, Dr. James H. Rubenstein, Dr. Graciela R. Carton or
Dr. Howard M. Sheridan or a group comprised solely of such Persons (the
"Qualified Group") shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become, after the
date hereof, the "beneficial owner" (within the meaning of such term under Rule
13d-3 under the Exchange Act) of securities of the Borrower representing 20% or
more of the combined voting power of the then outstanding securities of the
Borrower ordinarily (and apart from rights accruing under special circumstances)
having the right to vote in the election of directors; (ii) after the occurrence
of a Qualified IPO, the Qualified Group shall own securities of the Borrower
representing less than 40% of the combined voting power of the then outstanding
securities of the Borrower ordinarily (and a part from rights accruing under
special circumstances) having the right to vote in the election of directors; or
(iii) the Board of Directors of the Borrower shall cease to consist of a
majority (or such lesser percentage as may be required by federal securities
laws or NASDAQ rules and regulations) of the individuals who constituted the
Board of Directors as of the date hereof or who shall have become a member
thereof subsequent to the date hereof after having been nominated, or otherwise
approved in writing, by at least a majority of individuals who constituted the
Board of Directors of the Borrower as of the date hereof (or those replacements
approved as herein required); or

         (p)      The Borrower or any of its Subsidiaries (including any
Excluded Subsidiary) shall fail to be eligible for any reason (other than
voluntary withdrawal where participation is not otherwise a Requirement of Law)
to participate in Medicaid or Medicare programs or to accept assignments or
rights to reimbursement under Medicaid Regulations or Medicare Regulations
(other than voluntary withdrawal where participation is not otherwise a
Requirement of Law).

         12.2     Remedies: Termination of Term Loan A Commitments, Term Loan B
Commitments and Revolving Credit Commitments, Acceleration, etc. Upon and at any
time after the occurrence and during the continuance of any Event of Default
(unless waived in writing by the Required Lenders), the Administrative Agent
shall at the direction, or may with the consent, of the Required Lenders, take
any or all of the following actions at the same or different times:

         (a)      Declare the Term Loan A Facility, the Term Loan B Facility and
the Revolving Credit Commitments, the Swing Line and the Issuing Lender's
obligation to issue Letters of Credit, to be terminated, whereupon the same
shall terminate (provided that, upon the occurrence

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of an Event of Default pursuant to SECTION 12.1(f) or SECTION 12.1(g), the
Revolving Credit Commitments, the Swing Line and the Issuing Lender's obligation
to issue Letters of Credit shall automatically be terminated);

         (b)      Declare all or any part of the outstanding principal amount of
the Loans and the Swing Line Outstandings to be immediately due and payable,
whereupon the principal amount so declared to be immediately due and payable,
together with all interest accrued thereon and all other amounts payable under
this Agreement, the Notes and the other Credit Documents (other than any Hedge
Agreement), shall become immediately due and payable without presentment,
demand, protest, notice of intent to accelerate or other notice or legal process
of any kind, all of which are hereby knowingly and expressly waived by the
Borrower (provided that, upon the occurrence of an Event of Default pursuant to
SECTION 12.1(f) or SECTION 12.1(g), all of the outstanding principal amount of
the Loans and all other amounts described in this subsection (b) shall
automatically become immediately due and payable without presentment, demand,
protest, notice of intent to accelerate or other notice or legal process of any
kind, all of which are hereby knowingly and expressly waived by the Borrower);

         (c)      Direct the Borrower to deposit (and the Borrower hereby
agrees, forthwith upon receipt of notice of such direction from the
Administrative Agent, to deposit) with the Administrative Agent from time to
time such additional amount of cash as is equal to the aggregate Stated Amount
of all Letters of Credit then outstanding (whether or not any beneficiary under
any Letter of Credit shall have drawn or be entitled at such time to draw
thereunder), such amount to be held by the Administrative Agent in the Cash
Collateral Account as security for the Letter of Credit Exposure as described in
SECTION 4.8; and

         (d)      Exercise all rights and remedies available to it under this
Agreement, the other Credit Documents and applicable law.

         12.3     Remedies: Set-Off. In addition to all other rights and
remedies available under the Credit Documents or applicable law or otherwise,
upon and at any time after the occurrence and during the continuance of any
Event of Default, each Lender may, and each is hereby authorized by the
Borrower, at any such time and from time to time, to the fullest extent
permitted by applicable law, without presentment, demand, protest or other
notice of any kind, all of which are hereby knowingly and expressly waived by
the Borrower, to set off and to apply any and all deposits (general or special,
time or demand, provisional or final) and any other property at any time held
(including at any branches or agencies, wherever located), and any other
indebtedness at any time owing, by such Lender to or for the credit or the
account of the Borrower against any or all of the Obligations to such Lender now
or hereafter existing, whether or not such Obligations may be contingent or
unmatured, the Borrower hereby granting to each Lender a continuing security
interest in and, Lien upon all such deposits and other property as security for
such Obligations. Each Lender agrees promptly to notify the Borrower and the
Administrative Agent after any such set-off and application; provided, however,
that the failure to give such notice shall not affect the validity of such
set-off and application.

         12.4     Application of Funds. After the exercise of remedies provided
for in SECTION 12.2 (of after the Loans have automatically become due and
payable) any amounts received on account of the Obligations shall be applied by
the Administrative Agent in the following order:

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         First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including attorneys fees amounts
payable under ARTICLE V) payable to the Administrative Agent in its capacity as
such;

         Second, to payment of that portion of the Obligations constituting
fees, indemnities and other amounts (other than principal and interest) payable
to the Lenders (including attorneys fees amounts payable under ARTICLE V),
ratably among them in proportion to the amounts described in this clause Second
payable to them;

         Third, to payment of that portion of the Obligations constituting
accrued and unpaid interest on the Loans or with respect to Letters of Credit or
with respect to Related Hedge Agreements, ratably among the Lenders in
proportion to the respective amounts described in this clause Third payable to
them;

         Fourth, to payment of that portion of the Obligations constituting
unpaid principal of the Loans or with respect to Letters of Credit or
termination payments with respect to Related Hedge Agreements, ratably among the
Lenders in proportion to the respective amounts described in this clause Fourth
held by them;

         Fifth, to the Administrative Agent for the account of the Issuing Bank,
to cash collateralize the Letters of Credit as described above; and

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

Subject to ARTICLE IV, amounts used to cash collateralize the aggregate undrawn
amount of Letters of Credit pursuant to clause Fifth above shall be applied to
satisfy drawings under such Letters of Credit as they occur. If any amount
remains on deposit as cash collateral after all Letters of Credit have either
been fully drawn or expired, such remaining amount shall be applied to the other
Obligations, if any, in the order set forth above.

                                  ARTICLE XIII

                            THE ADMINISTRATIVE AGENT

         13.1     Appointment and Authorization of Administrative Agent. Each
Lender hereby irrevocably appoints, designates and authorizes the Administrative
Agent to take such action on its behalf under the provisions of this Agreement
and each other Credit Document and to exercise such powers and perform such
duties as are expressly delegated to it by the terms of this Agreement or any
other Credit Document, together with such powers as are reasonably incidental
thereto. Notwithstanding any provision to the contrary contained elsewhere
herein or in any other Credit Document, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein, nor
shall the Administrative Agent have or be deemed to have any fiduciary
relationship with any Lender or participant, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Credit Document or otherwise exist against the
Administrative Agent. Without limiting the generality of the foregoing sentence,
the use of the terms "administrative agent" or "Administrative Agent" herein and
in the other Credit Documents with reference to the

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<PAGE>

Administrative Agent is not intended to connote any fiduciary or other implied
(or express) obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom, and is intended
to create or reflect only an administrative relationship between independent
contracting parties.

         The Issuing Lender shall act on behalf of the Lenders with respect to
any Letter of Credit issued by it and the documents associated therewith, and
the Issuing Lender shall have all of the benefits and immunities (i) provided to
the Administrative Agent in this ARTICLE XIII with respect to any acts taken or
omissions suffered by the Issuing Lender in connection with Letters of Credit
issued by it or proposed to be issued by it and the applications and agreements
for Letters of Credit pertaining to the Letters of Credit as fully as if the
term "Agent" or "Administrative Agent" as used in this ARTICLE XIII and in the
definition of "Agent-Related Person" included the Issuing Lender with respect to
such acts or omissions, and (ii) as additionally provided herein with respect to
the Issuing Lender.

         13.2     Delegation, of Duties. The Administrative Agent may execute
any of its duties under the Agreement or any other Credit Document by or through
agents, employees or attorneys-in-fact and shall be entitled to advice of
counsel and other consultants or experts concerning all matters pertaining to
such duties. The Administrative Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects in the
absence of gross negligence or willful misconduct.

         13.3     Liability of Administrative Agent. No Agent-Related Person
shall (a) be liable for any action taken or omitted to be taken by any of them
under or in connection with this Agreement or any other Credit Document or the
transactions contemplated hereby (except for its own gross negligence or willful
misconduct in connection with its duties expressly set forth herein), or (b) be
responsible in any manner to any Lender or participant for any recital,
statement, representation or warranty made by the Borrower, its Subsidiaries or
any officer thereof, contained herein or in any other Credit Document, or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Administrative Agent under or in connection with, this
Agreement or any other Credit Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Credit
Document, or for any failure of the Borrower or any other party to any Credit
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Lender or participant to ascertain
or to inquire as to the observance or performance of any of the agreements
contained in, or conditions of, this Agreement or any other Credit Document, or
to inspect the properties, books or records of the Borrower or any Affiliate
thereof.

         13.4     Reliance by Administrative Agent. (a) The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, communication, signature, resolution, representation, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephonic
message, statement 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,
and upon advice and statements of legal counsel, independent accountants, and
other experts selected by the Administrative Agent. The Administrative Agent
shall be fully justified in failing or refusing to take any action under any
Credit Document unless it shall first receive such advice or concurrence of the
Required Lenders as it deems appropriate and, if it so requests, it shall first
be

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<PAGE>

indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, under this Agreement or any other
Credit Document in accordance with a request or consent of the Required Lenders
or all the Lenders, if required hereunder, and such request and any action taken
or failure to act pursuant thereto shall be binding upon all the Lenders and
participants. Where this Agreement or any other Credit Document expressly
permits or prohibits an action unless the Required Lenders otherwise determine,
the Administrative Agent shall, and in all other instances, the Administrative
Agent may, but shall not be required to, initiate any solicitation for the
consent or a vote of the Lenders thereon.

         (b)      For purposes of determining compliance with the conditions
specified in SECTION 7.1, each Lender that has signed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with, each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to a Lender unless the Administrative Agent shall
have received notice from such Lender prior to the Effective Date specifying its
objection thereto.

         13.5     Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default, except with respect to the defaults in the payment of principal,
interest and fees required to be paid to the Administrative Agent for the
account of the Lenders, unless the Administrative Agent shall have received
written 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." The Administrative Agent will notify the Lenders of its
receipt of any such notice. The Administrative Agent shall take such action with
respect to such Default or Event of Default as may be directed by the Required
Lenders in accordance with ARTICLE XII; provided, however, that unless and until
the Administrative Agent has received any such direction, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable or in the best interest of the Lenders.

         13.6     Credit Decision; Disclosure of Information by Administrative
Agent. Each Lender acknowledges that no Agent-Related Person has made any
representation or warranty to it, and that no act by the Administrative Agent
hereinafter taken, including any consent to and acceptance of any assignment or
review of the affairs of any Affiliate thereof, shall be deemed to constitute
any representation or warranty by any Agent-Related Person to any Lender as to
any matter, including whether any Agent-Related Persons have disclosed material
information in their possession. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon any Agent-Related
Person and based on such documents and information as it has deemed appropriate,
made its own appraisal of and investigation into the business, prospects,
operations, property, financial and other condition and creditworthiness of any
person and its respective subsidiaries, and all applicable bank or other
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Borrower
and any other Person hereunder. Each Lender also represents that it will,
independently and without reliance upon any Agent-Related Person and based on
such documents and information as it shall deem appropriate at the time,
continue

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to make its own credit analysis, appraisals and decisions in taking or not
taking action under this Agreement and the other Credit Documents, and to make
such investigations as it deems necessary to inform itself as to the business,
prospects, operations, property, financial and other condition and
creditworthiness of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent herein, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of any other Person which may come into the
possession of any Agent-Related Person.

         13.7     Indemnification of Administrative Agent. Whether or not the
transactions contemplated hereby are consummated, the Lenders shall indemnify
upon demand each Agent- Related Person (to the extent not reimbursed by or on
behalf of any Person and without limiting the obligation of any Person to do
so), pro rata, and hold harmless each Agent-Related Person from and against any
and all Indemnified Liabilities incurred by it; provided, however, that no
Lender shall be liable for the payment to any Agent-Related Person of any
portion of such Indemnified Liabilities resulting from such Person's gross
negligence or willful misconduct; provided, further, however, that no action
taken in accordance with the directions of the Required Lenders shall be deemed
to constitute gross negligence or willful misconduct for purposes of this
SECTION 13.7. Without limitation of the foregoing, each Lender shall reimburse
the Administrative Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including the reasonable fees and expenses of counsel
for the Administrative Agent and including the cost of internal counsel)
incurred by the Administrative Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or enforcement
(whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement, any other
Credit Document, or any document contemplated by or referred to herein, to the
extent that the Administrative Agent is not reimbursed for such expenses by or
on behalf of the Borrower. The undertaking in this SECTION 13.7 shall continue
in effect notwithstanding the Termination Date or the Term Loan B Termination
Date and the resignation or replacement of the Administrative Agent.

         13.8     Administrative Agent in Its Individual Capacity. Bank of
America and its Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory, underwriting or other
business with the Borrower as though Bank of America were not the Administrative
Agent or the Issuing Lender hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such activities, Bank of
America or its Affiliates may receive information regarding the Borrower or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Borrower or such Affiliate) and acknowledge that the
Administrative Agent shall be under no obligation to provide such information to
them. With respect to its Loans, Bank of America shall have the same rights and
powers under this Agreement as any other Lender and may exercise such rights and
powers as though it were not the Administrative Agent or the Issuing Lender, and
the terms "Lender" and "Lenders" include Bank of America in its individual
capacity.

         13.9     Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 30 days' notice to the Lenders; provided
that any such resignation by

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Bank of America shall also constitute its resignation as Issuing Lender and
Swing Line Lender. If the Administrative Agent resigns under this Agreement, the
Required Lenders shall appoint from among the Lenders a successor administrative
agent for the Lenders which successor administrative agent shall be consented to
by the Borrower at all times other than during the existence of an Event of
Default (which consent of the Borrower shall not be unreasonably withheld or
delayed). If no successor administrative agent is appointed prior to the
effective date of the resignation of the Administrative Agent, the
Administrative Agent may appoint, after consulting with the Lenders and the
Borrower, a successor administrative agent from among the Lenders. Upon the
acceptance of its appointment as successor administrative agent hereunder, such
successor administrative agent shall succeed to all the rights, power and duties
of the retiring Administrative Agent, Issuing Lender and Swing Line Lender and
the respective terms "Administrative Agent", Issuing Lender" and "Swing Line
Lender" shall mean such successor administrative agent Letter of Credit issuer
and Swing Line Lender, and the retiring Administrative Agent's appointment,
powers and duties as Administrative Agent shall be terminated and the retiring
Issuing Lender's and Swing Line Lender's rights, powers and duties as such shall
be terminated, without any other or further act or deed on the part of such
retiring Issuing Lender or Swing Line Lender or any other Lender, other than the
obligation of the successor Issuing Lender to issue letters of credit in
substitution for the Letters of Credit, if any, outstanding at the time of such
succession or to make other arrangements satisfactory to the retiring Issuing
Lender to effectively assume the obligations of the retiring Issuing Lender with
respect to such Letters of Credit. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the provisions of this ARTICLE
XIII and SECTIONS 14.2 and 14.9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement. If no successor administrative agent has accepted appointment as
Administrative Agent by the date which is 30 days following a retiring
Administrative Agent's notice of resignation, the retiring Administrative
Agent's resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of the Administrative Agent hereunder
until such time, if any, as the Required Lenders appoint a successor
administrative agent as provided for above.

         13.10    Administrative Agent May File Proofs of Claim. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to any the Borrower or any Guarantor, the Administrative
Agent (irrespective of whether the principal of any Loan or Reimbursement
Obligation shall then be due and payable as herein expressed or by declaration
or otherwise and irrespective of whether the Administrative Agent shall have
made any demand on the Borrower) shall be entitled and empowered, by
intervention in such proceeding or otherwise

                  (a)      to file and prove a claim for the whole amount of the
         principal and interest owing and unpaid in respect of the Loans,
         Reimbursement Obligations and all other Obligations that are owing and
         unpaid and to file such other documents as may be necessary or
         advisable in order to have the claims of the Lenders and the
         Administrative Agent (including any claim for the reasonable
         compensation, expenses, disbursements and advances of the Lenders and
         the Administrative Agent and their respective agents and counsel and
         all other amounts due the Lenders and the Administrative Agent under
         SECTIONS 4.1, 5.2 and 14.1) allowed in such judicial proceeding; and

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

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender to make such payments to the Administrative Agent and, in the event
that the Administrative Agent shall consent to the making of such payments
directly to the Lenders, to pay to the Administrative Agent any amount due for
the reasonable compensation, expenses, disbursements and advances of the
Administrative Agent and its agents and counsel, and any other amounts due the
Administrative Agent under SECTIONS 5.2 and 14.1.

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

         13.11    Collateral and Guaranty Matters. The Lenders irrevocably
authorize the Administrative Agent, at its option and in its discretion,

                  (i)      to release any Lien on any property granted to or
         held by the Administrative Agent under any Credit Document (i) upon
         termination of the Commitments and payment in full of all Obligations
         (other than contingent indemnification obligations) and the expiration
         or termination of all Letters of Credit, (ii) that is sold or to be
         sold as part of or in connection with any sale permitted hereunder or
         under any other Credit Document, or (iii) subject to SECTION 14.6, if
         approved, authorized or ratified in writing by the Required Lenders;

                  (ii)     to subordinate any Lien on any property granted to or
                  held by the Administrative Agent under any Credit Document to
                  the holder of any Lien on such property that is permitted by
                  SECTION 11.3(ix)); and

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

Upon request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent's authority to release or
subordinate its interest in particular types or items of property, or to release
any Guarantor from its obligations under the Guaranty pursuant to this SECTION
13.11.

         13.12    Other Agents; Lead Managers. None of the Lenders identified
on the facing page or signature pages of this Agreement as a "syndication
agent," "documentation agent," "co-agent", "lead arranger" or "book manager",
if any, shall have any right, power, obligation, liability, responsibility or
duty under this Agreement other than those applicable to all Lenders as such.
Without limiting the foregoing, none of the Lenders so identified shall have or
be deemed to have any fiduciary relationship with any Lender. Each Lender
acknowledges that it has not relied, and will not rely, on any of the Lenders so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.

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                                   ARTICLE XIV

                                  MISCELLANEOUS

         14.1     Fees and Expenses. The Borrower agrees (i) whether or not the
transactions contemplated by this Agreement shall be consummated, to pay upon
demand all reasonable out-of-pocket costs and expenses of the Administrative
Agent (including, without limitation, the reasonable fees and expenses of
counsel to the Administrative Agent) in connection with (y) the Administrative
Agent's due diligence investigation in connection with, and the preparation,
negotiation, execution, delivery and syndication of, this Agreement and the
other Credit Documents, and any amendment, modification or waiver hereof or
thereof or consent with respect hereto or thereto, and (z) the creation,
perfection and maintenance of the perfection of the Administrative Agent's Liens
upon the Collateral, including, without limitation, Lien search, filing and
recording fees, title insurance and appraisal charges and fees and taxes
relating thereto, (ii) to pay upon demand all reasonable out-of-pocket costs and
expenses of the Administrative Agent and each Lender (including, without
limitation, reasonable attorneys' fees and expenses and the cost of independent
public accountants and other outside experts retained by the Administrative
Agent or any Lender) in connection with (y) any refinancing or restructuring of
the credit arrangement provided under this Agreement, whether in the nature of a
"work-out," in any insolvency or bankruptcy proceeding or otherwise and whether
or not consummated, and (z) the enforcement, attempted enforcement or
preservation of any rights or remedies under this Agreement or any of the other
Credit Documents, whether in any action, suit or proceeding (including any
bankruptcy or insolvency proceeding) or otherwise, and (iii) to pay and hold the
Administrative Agent and each Lender harmless from and against all liability for
any intangibles, documentary, stamp or other similar taxes, fees and excises, if
any, including any interest and penalties and any finder's or brokerage fees,
commissions and expenses (other than any fees, commissions or expenses of
finders or brokers engaged by the Administrative Agent or any Lender), that may
be payable in connection with the transactions contemplated by this Agreement
and the other Credit Documents. All amounts due under this SECTION 14.1 shall be
payable within ten (10) Business Days after demand therefor. The agreements in
this Section shall survive the termination of the Commitments and the repayment
of all other Obligations.

         14.2     Indemnification; Limitation of Liability. Whether or not the
transactions contemplated herein are consummated, the Borrower shall indemnify
and hold harmless each Agent-Related Person and each Lender and each of their
Affiliates and their respective officers, directors, employees, agents, and
attorneys-in-fact (each, an "Indemnified Party") from and against any and all
claims, damages, losses, liabilities, costs, and expenses (including, without
limitation, reasonable attorneys' fees) of any kind or nature that may be
incurred by or asserted or awarded against any Indemnified Party, in any way
arising out of or in connection with or by reason of (including, without
limitation, in connection with any investigation, litigation, or proceeding or
preparation of defense in connection therewith) the Credit Documents, any of the
transactions contemplated herein or the actual or proposed use of the proceeds
of the Loans or any actual or alleged presence or release of Hazardous
Substances on or from any property currently or formerly owned or operated by
the Borrower or any Subsidiary (including any Excluded Subsidiary), or any
Environmental Claim related in any way to the Borrower or any Subsidiary
(including any Excluded Subsidiary) (all of the foregoing, collectively, the
"Indemnified Liabilities"), except to the extent such claim, damage, loss,
liability, cost, or

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expense is found in a final, non-appealable judgment by a court of competent
jurisdiction to have resulted from such Indemnified Party's gross negligence or
willful misconduct. In the case of an investigation, litigation or other
proceeding to which the indemnity in this SECTION 14.2 applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by the Borrower, its directors, shareholders or creditors or an
Indemnified Party or any other Person or any Indemnified Party is otherwise a
party thereto. The Borrower agrees that no Indemnified Party shall be liable for
any damages arising from the use by others of any information or other materials
obtained through IntraLinks or other similar information transmission systems in
connection with this Agreement, nor shall any Indemnified Party have any
liability for any indirect or consequential damages relating to this Agreement
or any other Credit Document or arising out of its activities in connection
herewith or therewith (whether before or after the Effective Date). All amounts
due under this SECTION 14.2 shall be payable within ten Business Days after
demand therefor. The agreements in this Section shall survive the resignation of
the Administrative Agent, the replacement of any Lender, the termination of the
Commitments and the repayment, satisfaction or discharge of all the other
Obligations.

         14.3     GOVERNING LAW; WAIVER OF JURY TRIAL.

         (a)      THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS (OTHER THAN
THOSE SECURITY INSTRUMENTS WHICH EXPRESSLY PROVIDE THAT THEY SHALL BE GOVERNED
BY THE LAWS OF ANOTHER JURISDICTION) SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF FLORIDA APPLICABLE TO CONTRACTS
EXECUTED, AND TO BE FULLY PERFORMED, IN SUCH STATE.

         (b)      THE BORROWER HEREBY EXPRESSLY AND IRREVOCABLY AGREES AND
CONSENTS THAT ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREIN MAY BE INSTITUTED IN ANY
STATE OR FEDERAL COURT SITTING IN THE COUNTY OF LEE, STATE OF FLORIDA, UNITED
STATES OF AMERICA AND, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, THE
BORROWER EXPRESSLY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE IN, OR TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY
BY, ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING, AND THE BORROWER
HEREBY IRREVOCABLY SUBMITS GENERALLY AND UNCONDITIONALLY TO THE JURISDICTION OF
ANY SUCH COURT IN ANY SUCH SUIT, ACTION OR PROCEEDING.

         (c)      THE BORROWER AGREES THAT SERVICE OF PROCESS MAY BE MADE BY
PERSONAL SERVICE OF A COPY OF THE SUMMONS AND COMPLAINT OR OTHER LEGAL PROCESS
IN ANY SUCH SUIT, ACTION OR PROCEEDING, OR BY REGISTERED OR CERTIFIED MAIL
(POSTAGE PREPAID) TO THE ADDRESS OF THE BORROWER PROVIDED IN SECTION 14.5, OR BY
ANY OTHER METHOD OF SERVICE PROVIDED FOR UNDER THE APPLICABLE LAWS IN EFFECT IN
THE STATE OF FLORIDA.

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         (d)      NOTHING CONTAINED IN SUBSECTIONS (b) OR (c) HEREOF SHALL
PRECLUDE THE ADMINISTRATIVE AGENT OR ANY LENDER FROM BRINGING ANY SUIT, ACTION
OR PROCEEDING ARISING OUT OF OR RELATING TO ANY CREDIT DOCUMENT IN THE COURTS OF
ANY JURISDICTION WHERE THE BORROWER OR ANY OF THE BORROWER'S PROPERTY OR ASSETS
MAY BE FOUND OR LOCATED. TO THE EXTENT PERMITTED BY THE APPLICABLE LAWS OF ANY
SUCH JURISDICTION, THE BORROWER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF ANY SUCH COURT AND EXPRESSLY WAIVES, IN RESPECT OF ANY SUCH SUIT, ACTION OR
PROCEEDING, OBJECTION TO THE EXERCISE OF JURISDICTION OVER IT AND ITS PROPERTY
BY ANY SUCH OTHER COURT OR COURTS WHICH NOW OR HEREAFTER MAY BE AVAILABLE UNDER
APPLICABLE LAW.

         (e)      IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR
REMEDIES UNDER OR RELATED TO ANY CREDIT DOCUMENT OR ANY AMENDMENT, INSTRUMENT,
DOCUMENT OR AGREEMENT DELIVERED OR THAT MAY IN THE FUTURE BE DELIVERED IN
CONNECTION THEREWITH, OR IN ANY WAY CONNECTED WITH OR INCIDENTAL TO THE DEALINGS
OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO ANY CREDIT DOCUMENT,
WHETHER NOW EXISTING OR HEREAFTER ARISING, THE BORROWER, THE ADMINISTRATIVE
AGENT AND THE LENDERS HEREBY AGREE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
THAT ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY AND HEREBY IRREVOCABLY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT SUCH PERSON MAY HAVE TO TRIAL BY JURY IN ANY SUCH
ACTION, SUIT OR PROCEEDING. ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

         (f)      THE BORROWER HEREBY EXPRESSLY WAIVES ANY OBJECTION IT MAY HAVE
THAT ANY COURT TO WHOSE JURISDICTION IT HAS SUBMITTED PURSUANT TO THE TERMS
HEREOF IS AN INCONVENIENT FORUM.

         14.4     Arbitration; Preservation and Limitation of Remedies, (a) Upon
demand of any party hereto, whether made before or after institution of any
judicial proceeding, any dispute, claim or controversy arising out of, connected
with or relating to this Agreement or any other Credit Document ("Disputes")
between or among the Borrower, its Subsidiaries, the Administrative Agent and
the Lenders, or any of them, 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 documents executed in the future, disputes as to whether a
matter is subject to arbitration or claims arising out of or connected with the
transactions contemplated by this Agreement and the other Credit Documents.
Arbitration shall be conducted under and governed by the Commercial Financial

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Disputes Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association (the "AAA"), as in effect from time to time, and the Federal
Arbitration Act, Title 9 of the U.S. Code, as amended. All arbitration hearings
shall be conducted in the city in which the principal office of the
Administrative Agent is located. A hearing shall begin within ninety (90) days
of demand for arbitration and all hearings shall be concluded within 120 days of
demand for arbitration. These time limitations may not be extended unless a
party shows cause for extension and then for no more than a total of sixty (60)
days. 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 selected from
the Commercial Financial Dispute Arbitration Panel of the AAA. 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. Notwithstanding the foregoing, this arbitration
provision does not apply to Disputes under or related to any Hedge Agreement
that is a Credit Document. The parties do not waive applicable federal or state
substantive law except as provided herein.

         (b)      Notwithstanding the preceding binding arbitration provisions,
the parties hereto agree to preserve, without diminution, certain remedies that
any party hereto may employ or exercise freely, either alone, in conjunction
with or during a Dispute. Any party hereto shall have the right to proceed in
any court of proper jurisdiction or by self-help to exercise or prosecute the
following remedies, as applicable: (i) all rights to foreclose against any
Collateral by exercising a power of sale granted pursuant to any of the Credit
Documents or under applicable law or by judicial foreclosure and sale, including
a proceeding to confirm the sale; (ii) all rights of self-help, including
peaceful occupation of real property and collection of rents, set-off, and
peaceful possession of personal property; (iii) obtaining provisional or
ancillary remedies, including injunctive relief, sequestration, garnishment,
attachment, appointment of a receiver and filing an involuntary bankruptcy
proceeding; and (iv) when applicable, a judgment by confession of judgment. Any
claim or controversy with regard to any party's entitlement to such remedies is
a Dispute, 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. The parties hereto agree that no party shall have a remedy of punitive
or exemplary damages against any other party in any Dispute, and each party
hereby waives any right or claim to punitive or exemplary damages that it has
now or that may arise in the future in connection with any Dispute, whether such
Dispute is resolved by arbitration or judicially. The parties acknowledge that
by agreeing to binding arbitration they have irrevocably waived any right they
may have to a jury trial with regard to a Dispute.

         14.5     Notices. AH notices and other communications provided for
hereunder shall be in writing (including telegraphic, telex, facsimile
transmission or cable communication) and mailed, telegraphed, telexed,
telecopied, cabled or delivered to the party to be notified at the following
addresses:

         (a)      if to the Borrower, to Radiation Therapy Services, Inc., 2234
Colonial Boulevard, Fort Myers, Florida 33907, Attention: David M. Koeninger,
Telecopy No. (239) 931-7380;

         (b)      if to the Administrative Agent, to Bank of America, N.A., 231
South LaSalle Street, IL1-231-08-30, Attention: Kristine Thennes, Telecopy No.
(877) 206-8412; and

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         (c)      if to any Lender, to it at the address set forth on its
signature page hereto (or if to any Lender not a party hereto as of the date
hereof, at the address set forth in its Assignment and Assumption);

or in each case, to such other address as any party may designate for itself by
like notice to all other parties hereto. All such notices and communications
shall be deemed to have been given (i) if mailed as provided above by any method
other than overnight delivery service, on the third Business Day after deposit
in the mails, (ii) if mailed by overnight delivery service, telegraphed,
telexed, telecopied or cabled, the Business Day following delivery for overnight
delivery, delivered to the telegraph company, confirmed by telex answerback,
transmitted by telecopier or delivered to the cable company, respectively, or
(iii) if delivered by hand, upon delivery.

         14.6     Amendments, Waivers, etc. No amendment, modification, waiver
or discharge or termination of, or consent to any departure by the Borrower
from, any provision of this Agreement or any other Credit Document (other than
any Hedge Agreement), shall be effective unless in a writing signed by the
Required Lenders (or by the Administrative Agent at the direction or with the
consent of the Required Lenders), and then the same shall be effective only in
the specific instance and for the specific purpose for which given; provided,
that that no such amendment, modification, waiver, discharge, termination or
consent shall:

         (a)      unless agreed to by all of the Lenders, (i) except as may be
otherwise specifically provided in this Agreement or in any other Credit
Document, release all or substantially all of the Collateral or release any
Subsidiary Guarantor from its obligations under the Subsidiary Guaranty, or (ii)
change any provision of SECTION 5.8 or this SECTION 14.6; and

         (b)      unless agreed to by those Lenders holding at least 66 2/3% of
the sum of the Revolving Credit Commitment, the Term Loan A Outstandings and the
Term Loan B Outstandings, increase any Revolving Credit Commitment, Term Loan A
Commitment, or Term Loan B Commitment of any Lender; and

         (c)      unless agreed to by all of the Revolving Lenders, (i) increase
or extend any Revolving Credit Commitment of any Lender (it being understood
that a waiver of any Event of Default, if agreed to by the requisite Lenders
hereunder, shall not constitute such an increase), (ii) reduce or forgive the
principal amount of any Revolving Loan, reduce the rate of or forgive any
interest thereon, or reduce any fees or other Obligations (other than fees
payable to the Administrative Agent for its own account and other than any Hedge
Agreement), (iii) change the percentage of the aggregate Revolving Credit
Commitments of all Revolving Lenders or of the aggregate unpaid principal amount
of the Revolving Loans, or the number or percentage of Revolving Lenders, that
shall be required for the Revolving Lenders or any of them to take or approve,
or direct the Administrative Agent to take, any action hereunder (including as
set forth in the definition of "Required Revolving Lenders"), or (iv) extend the
Maturity Date or time for any scheduled payment hereunder with respect to the
Revolving Credit Facility; and

         (d)      unless agreed to by all of the Term Loan A Lenders, (i)
increase or extend any Term Loan A Commitment of any Term Loan A Lender (it
being understood that a waiver of any Event of Default, if agreed to by the
requisite Lenders hereunder, shall not constitute such an increase), (ii) reduce
or forgive the principal amount of the Term Loan A, reduce the rate of or
forgive any interest thereon, or reduce any fees or other Obligations (other
than fees payable to

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the Administrative Agent for its own account and other than any Hedge
Agreement), (iii) change the percentage of the aggregate Term Loan A Commitments
of all Term Loan A Lenders or of the aggregate unpaid principal amount of the
Term Loan A, or the number or percentage of Term Loan A Lenders, that shall be
required for the Term Loan A Lenders or any of them to take or approve, or
direct the Administrative Agent to take, any action hereunder (including as set
forth in the definition of "Required Term Loan A Lenders"), (iv) extend the
Maturity Date or time for any scheduled payment hereunder with respect to the
Term Loan A Facility or (v) waive or extend, reduce or postpone any mandatory
prepayment in respect of the Term Loan A; and

         (e)      unless agreed to by all of the Term Loan B Lenders, (i)
increase or extend any Term Loan B Commitment of any Term Loan B Lender (it
being understood that a waiver of any Event of Default, if agreed to by the
requisite Lenders hereunder, shall not constitute such an increase), (ii) reduce
or forgive the principal amount of the Term Loan B, reduce the rate of or
forgive any interest thereon, or reduce any fees or other Obligations (other
than fees payable to the Administrative Agent for its own account and other than
any Hedge Agreement), (iii) change the percentage of the aggregate Term Loan B
Commitments of all Term Loan B Lenders or of the aggregate unpaid principal
amount of the Term Loan B, or the number or percentage of Term Loan B Lenders,
that shall be required for the Term Loan B Lenders or any of them to take or
approve, or direct the Administrative Agent to take, any action hereunder
(including as set forth in the definition of "Required Term Loan B Lenders"),
(iv) extend the Term Loan B Maturity Date or time for any scheduled payment
hereunder with respect to the Term Loan B Facility or (v) waive, extend, reduce
or postpone any mandatory prepayment in respect of the Term Loan B; and

         (f)      Unless agreed to by the Required Revolving Lenders and the
Swing Line Lender and the Issuing Bank, the effect of enabling the Borrower to
satisfy any condition to a Borrowing contained in SECTION 7.2 hereof which, but
for such amendment, waiver or consent would not otherwise be satisfied, or shall
be effective to require the Revolving Lenders, the Swing Line Lender or the
Issuing Bank to make any additional Revolving Loans or Swing Line Loan, or to
issue any additional or renew any existing Letter of Credit; and

         (g)      unless agreed to by the Issuing Lender or the Administrative
Agent in addition to the Lenders required as provided hereinabove to take such
action, affect the respective rights or obligations of the Issuing Lender or the
Administrative Agent, as applicable, hereunder or under any of the other Credit
Documents (other than any Hedge Agreement); and

         (h)      impose any greater restriction on the ability of any Lender to
assign any of its rights or obligations hereunder without the written consent of
Lenders having more, in the aggregate, than 50% of the Credit Exposures then in
effect within each of the following classes of commitments, Loans and other
Obligations: (i) the class consisting of the Revolving Credit Commitment and the
Term Loan A Commitment combined on an aggregate basis, and (ii) the class
consisting of the Term Loan B Commitment. For purposes of this clause, the
aggregate amount of each Lender's risk participation and funded participation in
Letter of Credit Exposure and Swing Line Loans shall be deemed to be held by
such Lender;

and provided further that any Hedge Agreement to which any Lender is a party may
be amended or modified, and any rights thereunder waived, in a writing signed by
the parties thereto.

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         14.7     Successors and Assigns. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender and no Lender may assign or
otherwise transfer any of its rights or obligations hereunder except (i) to an
Eligible Assignee in accordance with the provisions of paragraph (b) of this
SECTION 14.7, (ii) by way of participation in accordance with the provisions of
paragraph (d) of this SECTION 14.7 or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of paragraph (f) of this SECTION
14.7 (and any other attempted assignment or transfer by any party hereto shall
be null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent
provided in paragraph (d) of this SECTION 14.7 and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent and
the Lenders) any legal or equitable right, remedy or claim under or by reason of
this Agreement.

         (b)      Any Lender may at any time assign to one or more Eligible
Assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Term Loan A Commitment and Term Loan A and
Revolving Credit Commitments and Revolving Loans and Term Loan B Commitment and
Term Loan B at the time owing to it); provided that (i) except in the case of an
assignment of the entire remaining amount of the assigning Lender's Term Loan A
Commitment and Term Loan A and Revolving Credit Commitments and Revolving Loans
and Term Loan B Commitment and Term Loan B at the time owing to it or in the
case of an assignment to a Lender or an Affiliate of a Lender or an Approved
Fund with respect to a Lender, the aggregate amount of the Term Loan A
Commitment and Revolving Credit Commitments and Term Loan B Commitments (which
for this purpose includes Loans outstanding thereunder) or, if the applicable
Term Loan A Commitment or Revolving Credit Commitment or Term Loan B Facility is
not then in effect, the principal outstanding balance of the Loans of the
assigning Lender subject to each such assignment (determined as of the date the
Assignment and Assumption with respect to such assignment is delivered to the
Administrative Agent or, if "Trade Date" is specified in the Assignment and
Assumption, as of the Trade Date) shall not be less than $5,000,000, in the case
of any assignment in respect of the Revolving Credit Facility, or $1,000,000, in
the case of any assignment in respect of the Term Loan A Facility or Term Loan B
Facility, unless each of the Administrative Agent and, so long as no Event of
Default has occurred and is continuing, the Borrower otherwise consent (each
such consent not to be unreasonably withheld or delayed); (ii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement with respect to
the Loans or the Term Loan A Commitment or Revolving Credit Commitments or Term
Loan B Commitments assigned, except that this clause (ii) shall not prohibit any
Lender from assigning all or a portion of its rights and obligations among
separate tranches on a non-pro rata basis; (iii) any assignment of a Revolving
Credit Commitment must be approved by the Administrative Agent and the Issuing
Lender unless the proposed assignee is itself a Lender with a Revolving Credit
Commitment (whether or not the proposed assignee would otherwise qualify as an
Eligible Assignee); and (iv) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee of 53,500.00, and the Eligible Assignee, if it
shall not be a Lender, shall deliver to the Administrative Agent an
Administrative Questionnaire, Subject to acceptance and recording thereof by the
Administrative Agent

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pursuant to paragraph (c) of this SECTION 14.7, from and after the effective
date specified in each Assignment and Assumption, the Eligible Assignee
thereunder shall be a party to this Agreement and, to the extent of the interest
assigned by such Assignment and Assumption, have the rights and obligations of a
Lender under this Agreement, and the assigning Lender thereunder shall, to the
extent of the interest assigned by such Assignment and Assumption, be released
from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of SECTIONS 5.9, 5.10 AND 14.2 with respect to
facts and circumstances occurring prior to the effective date of such
assignment. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with paragraph (d) of this SECTION
14.7.

         (c)      The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at one of its offices in North Carolina a
copy of each Assignment and Assumption delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Term Loan A
Commitment, the Term Loan B Commitment and Revolving Credit Commitments of, and
principal amounts of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.

         (d)      Any Lender may at any time, without the consent of, or notice
to, the Borrower or the Administrative Agent, sell participations to any Person
(other than a natural person or the Borrower or any of the Borrower's Affiliates
or Subsidiaries) (each, a "Participant") in all or a portion of such Lender's
rights and/or obligations under this Agreement (including all or a portion of
its Term Loan A Commitment, Revolving Credit Commitments, Term Loan B
Commitments and/or the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative 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. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in SECTION 14.6 that affects such
Participant. Subject to paragraph (e) of this SECTION 14.7, the Borrower agrees
that each Participant shall be entitled to the benefits of SECTIONS 5.9, 5.10
AND 14.2 to the same extent as if it were a Lender and had acquired its interest
by assignment pursuant to paragraph (b) of this Section. To the extent permitted
by law, each Participant also shall be entitled to the benefits of SECTION 12.3
as though it were a Lender, provided such Participant agrees to be subject to
SECTION 12.3 as though it were a Lender.

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         (e)      A Participant shall not be entitled to receive any greater
payment under SECTIONS 5.9 AND 5.10 than the applicable Lender would have been
entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the
Borrower's prior written consent. A Participant that would be a Foreign Lender
if it were a Lender shall not be entitled to the benefits of SECTION 5.10 unless
the Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with SECTION
5.10(d) as though it were a Lender.

         (f)      Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including without limitation any pledge or
assignment to secure obligations to a Federal Reserve Bank; provided that no
such pledge or assignment shall release such Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

         (g)      Upon its receipt of a duly completed Assignment and Assumption
executed by an assigning Lender and an Eligible Assignee and, if required,
counterexecuted by the Borrower, together with the Note or Notes subject to such
assignment and the processing fee referred to in subsection (a) above, the
Administrative Agent will (i) accept such Assignment and Assumption, (ii) on the
effective date thereof, record the information contained therein in the Register
and (ii) give notice thereof to the Borrower and the Lenders. Within five (5)
Business Days after its receipt of such notice, the Borrower, at its own
expense, will execute and deliver to the Administrative Agent, in exchange for
the surrendered Note or Notes, a new Note or Notes to the order of the Eligible
Assignee (and, if the assigning Lender has retained any portion of its rights
and obligations hereunder, to the order of the assigning Lender), prepared in
accordance with the provisions of SECTION 2.2 AND 3.4 as necessary to reflect,
after giving effect to the assignment, the Commitments of the Assignee and (to
the extent of any retained interests) the assigning Lender, dated the date of
the replaced Note and Notes and otherwise in substantially the form of EXHIBITS
A-1 AND A-2. The Administrative Agent will return canceled Notes to the
Borrower.

         (h)      Any Lender or Participant may, in connection with any
assignment or participation or proposed assignment or participation pursuant to
this Section, disclose to the Eligible Assignee or Participant or proposed
Eligible Assignee or Participant any information relating to the Borrower and
its Subsidiaries furnished to it by or on behalf of any other party hereto,
provided that such Eligible Assignee or Participant or proposed Eligible
Assignee or Participant agrees in writing to keep such information confidential
to the same extent required of the Lenders under SECTION 14.12.

         14.8     No Waiver. The rights and remedies of the Administrative Agent
and the Lenders expressly set forth in this Agreement and the other Credit
Documents are cumulative and in addition to, and not exclusive of, all other
rights and remedies available at law, in equity or otherwise. No failure or
delay on the part of the Administrative Agent 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 be construed to be a waiver of any Default or Event of Default. No
course of dealing between any of the Borrower and the Administrative Agent or
the Lenders or their agents or employees shall be effective to amend, modify or
discharge any provision of this Agreement or any other Credit Document or to
constitute a waiver of any Default or Event of Default. No notice to or demand
upon the Borrower in any

                                      120
<PAGE>

case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances or constitute a waiver of the right of the
Administrative Agent or any Lender to exercise any right or remedy or take any
other or further action in any circumstances without notice or demand.

         14.9     Survival. All representations, warranties and agreements made
by or on behalf of the Borrower or any of its Subsidiaries in this Agreement and
in the other Credit Documents shall survive the execution and delivery hereof or
thereof, the making and repayment of the Loans and the issuance and repayment of
the Letters of Credit. In addition, notwithstanding anything herein or under
applicable law to the contrary, the provisions of this Agreement and the other
Credit Documents relating to indemnification or payment of fees, costs and
expenses, including, without limitation, the provisions of SECTIONS 5.9(a),
5.9(b), 5.10, 5.11, 13.7, 14.1 and 14.2, shall survive the payment in full of
all Loans and Letters of Credit, the termination of the Term Loan A Commitment,
Revolving Credit Commitments and all Letters of Credit and any termination of
this Agreement or any of the other Credit Documents.

         14.10    Severability. To the extent any provision of this Agreement is
prohibited by or invalid under the applicable law of any jurisdiction such
provision shall be ineffective only to the extent of such prohibition or
invalidity and only in such jurisdiction, without prohibiting or invalidating
such provision in any other jurisdiction or the remaining provisions of this
Agreement in any jurisdiction.

         14.11    Construction. The headings of the various articles, sections
and subsections of this Agreement have been inserted for convenience only and
shall not in any way affect the meaning or construction of any of the provisions
hereof. Except as otherwise expressly provided herein and in the other Credit
Documents, in the event of any inconsistency or conflict between any provision
of this Agreement and any provision of any of the other Credit Documents, the
provision of this Agreement shall control.

         14.12    Confidentiality. Each Lender agrees to keep confidential,
pursuant to its customary procedures for handling confidential information of a
similar nature and in accordance with safe and sound banking practices, all
nonpublic information provided to it by or on behalf of the Borrower or any of
its Subsidiaries in connection with this Agreement or any other Credit Document;
provided, however, that any Lender may disclose such information (i) to its
directors, employees and agents and to its auditors, counsel and other
professional advisors or to an Affiliate and its directors, (ii) at the demand
or request of any bank regulatory authority, court or other Governmental
Authority having or asserting jurisdiction over such Lender, as may be required
pursuant to subpoena or other legal process, or otherwise in order to comply
with any applicable Requirement of Law, (iii) in connection with any proceeding
to enforce its rights hereunder or under any other Credit Document or any other
litigation or proceeding related hereto or to which it is a party, (iv) to the
Administrative Agent or any other Lender and (v) to the extent the same has
become publicly available other than as a result of a breach of this Agreement.

         14.13    Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument.

                                      121
<PAGE>

         14.14    Disclosure of Information. The Borrower agrees and consents to
the Administrative Agent's disclosure of information relating to this
transaction to Gold Sheets and other similar bank trade publications. Such
information will consist of deal terms and other information customarily found
in such publications.

         14.15    Entire Agreement. THIS AGREEMENT AND THE OTHER DOCUMENTS AND
INSTRUMENTS EXECUTED AND DELIVERED IN CONNECTION HEREWITH (a) EMBODY THE ENTIRE
AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES HERETO AND THERETO RELATING TO
THE SUBJECT MATTER HEREOF AND THEREOF, (b) SUPERSEDE ANY AND ALL PRIOR
AGREEMENTS AND UNDERSTANDINGS OF SUCH PERSONS, ORAL OR WRITTEN, RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF, INCLUDING, WITHOUT LIMITATION, THE SECOND
AMENDED CREDIT AGREEMENT AND THE COMMITMENT LETTER FROM BANK OF AMERICA TO THE
BORROWER DATED DECEMBER 13, 2001, AND (c) MAY NOT BE AMENDED, SUPPLEMENTED,
CONTRADICTED OR OTHERWISE MODIFIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.

         14.16    USA PATRIOT Act Notice. Each Lender and the Administrative
Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower
that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the "Act"), it is required to
obtain, verify and record information that identifies the Borrower, which
information includes the name and address of the Borrower and other information
that will allow such Lender or the Administrative Agent, as applicable, to
identify the Borrower in accordance with the Act.

                             (Signatures to follow)

                                      122
<PAGE>

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

                                 RADIATION THERAPY SERVICES, INC.

                                 By:/s/ David M. Koeninger
                                    ------------------------------------
                                 Name: David M. Koeninger
                                 Title: CFO and Executive Vice President

<PAGE>

                                 BANK OF AMERICA, N.A., as Administrative
                                 Agent

                                 By: /s/ KRISTINE THENNES
                                     -------------------------------------
                                 Name: KRISTINE THENNES
                                 Title: Vice President

                                 BANK OF AMERICA, N.A., as Lender, as
                                 Swingline Lender and as Issuing Bank

                                 By: /s/ Alexander L. Rody
                                     ------------------------------------------
                                 Name:  Alexander L. Rody
                                 Title: Senior Vice President

                                 Instructions for wire transfers to the
                                 Administrative Agent:

                                 Bank of America, N.A.
                                 ABA Routing No. 026-009-593
                                 New York, New York
                                 Account Number: 136-621-225-0600
                                 Account Name: Radiation Therapy Services, Inc.
                                 Attention: Corporate Credit Services

                                 Address for notices as a Lender:

                                 Bank of America, N.A.
                                 401 East Las Olas Blvd, 8th Floor
                                 Fort Lauderdale, Florida
                                 Attention: Alex Rody
                                 Telephone: 954.765.2579
                                 Telecopy: 954.765.2133

                                 Lending Office:

                                 231 S. LaSalle Street, MC: IL1-231-08-30
                                 Chicago, Illinois 60604
                                 Attention: Kristine Thennes, Agency Management
                                 Telephone: 312.828.1657
                                 Telecopy: 877.206.8412

                             (signatures continued)

                                      S-2
<PAGE>

                               WACHOVIA BANK NATIONAL ASSOCIATION, as a Lender

                               By: /s/ Scott Santa Cruz
                                   ---------------------------
                               Name:   Scott Santa Cruz
                               Title:  Director

                               Address for notices as a Lender:

                               Wachovia Bank, National Association
                               301 South College Street, 5th Floor
                               Charlotte, North Carolina 28288
                               Attention: Scott Santa Cruz
                               Telephone: 704.383.1988
                               Telecopy: 704.383.7611

                               Leading Office:

                               Wachovia Bank, National Association
                               301 South College Street, 5th Floor
                               Charlotte, North Carolina 28288
                               Attention: Healthcare, NC-0760
                               Telephone: 704.383.1988
                               Telecopy: 704.383.7611

                           (signatures continued)
<PAGE>

                                 FIFTH THIRD BANK, A MICHIGAN BANKING
                                 CORPORATION, as a Lender

                                 By: /s/ Kenneth J. Iglesias
                                     -------------------------------------------
                                 Name:  Kenneth J. Iglesias
                                 Title: Vice President

                                 Address for notices:

                                 Fifth Third Bank, a Michigan Banking
                                 corporation
                                 5050 Kingsley Drive
                                 Cincinnati, OH 45263
                                 MD: 1MOC2B
                                 Attention: Thomas Hughes
                                 Telephone: 513.358.9202
                                 Telecopy: 513.358.0221

                                 Lending Office:

                                 Fifth Third Bank, a Michigan Banking
                                 corporation
                                 13350 Metro Parkway
                                 Fort Myers, FL 33912
                                 MD:B21811
                                 Attention: Kenneth J. Iglesias
                                 Telephone: 239-225-2003
                                 Telecopy: 239-225-2022

                                      S-1
<PAGE>

                                 SUNTRUST BANK

                                 By: /s/ PAMELA W PETERS
                                     -------------------------------
                                 Name PAMELA W PETERS
                                 Title: SVP

                                 Address for notices:

                                 SunTrust Bank
                                 12751 New Brittany Boulevard
                                 Post Office Box 3454
                                 Fort Myers, FL 33918-3454
                                 Attention: Pamela W Peters
                                 Telephone: 239.277.2505
                                 Telecopy: 239.277.2576

                                 Lending Office:

                                 SunTrust Bank
                                 12751 New Brittany Boulevard
                                 Post Office Box 3454
                                 Fort Myers, FL 33918-3454
                                 Attention: Pamela W Peters
                                 Telephone: 239.277.2505
                                 Telecopy: 239.277.2576

                                      S-1
<PAGE>

                                 CAROLINA FIRST BANK

                                 By: /s/ Kevin M. Short
                                     ----------------------------------
                                 Name:  Kevin M. Short
                                 Title: Senior Vice President

                                 Address for notices:

                                 Carolina First Bank
                                 104 S. Main Street
                                 Greenville, SC  29601
                                 Attention: Kevin Short
                                 Telephone: 864.255.8965
                                 Telecopy: 865.255.8991

                                 Lending Office:

                                 Carolina First Bank
                                 104 S. Main Street
                                 Greenville, SC 29601
                                 Attention: Jennifer Schlansker
                                 Telephone: 864.239.6481
                                 Telecopy: 865.255.8920

<PAGE>

                                 NATIONAL CITY BANK OF KENTUCKY

                                 By: /s/ Robert J. Lehman III
                                     -------------------------------------
                                 Name:  Robert J. Lehman III
                                 Title: Senior Vice President

                                 Address for notices:

                                 National City Bank of Kentucky
                                 101 South Fifth Street
                                 Louisville, KY 40202
                                 Attention: Deroy Scott
                                 Telephone: 502.581.7821
                                 Telecopy: 502.581.4424

                                 Lending Office:

                                 National City Bank of Kentucky
                                 101 South Fifth Street
                                 Louisville, KY  40202
                                 Attention: Mary Vincent
                                 Telephone: 502.581.7771
                                 Telecopy: 502.581.6794

<PAGE>

                                 THE INTERNATIONAL BANK OF
                                 MIAMI, N.A.

                                 By: /s/ Eduardo Hornero
                                     --------------------------------
                                 Name:  Eduardo Hornero
                                 Title: Vice President

                                 Address for notices:

                                 The International Bank of Miami, N.A.
                                 121 Alhambra Plaza, PH-2
                                 Coral Gables, FL  33134
                                 Attention: Eduardo Hornero
                                 Telephone: 305.459.8499
                                 Telecopy: 305.569.0544

                                 Lending Office:

                                 The International Bank of Miami, N.A.
                                 121 Alhambra Plaza, PH-2
                                 Coral Gables, FL  33134
                                 Attention: Gretel Murado
                                 Telephone: 305.459.8500
                                 Telecopy: 305.569.0544

<PAGE>

                                 METROPOLITAN LIFE INSURANCE COMPANY

                                 By:   /s/ JAMES A. WIVIOTS
                                       ------------------------------------
                                 Name: JAMES A. WIVIOTS
                                 Title: DIRECTOR

                                 Address for notices:

                                 MetLife
                                 10 Park Avenue
                                 P.O. Box 1902
                                 Morristown, NJ  07962
                                 Attention: Marek Kuzdra
                                            Kate Kelly
                                 Telephone: 973.355.4364
                                 Telecopy: 212.631.3950

                                 Lending Office:

                                 MetLife
                                 10 Park Avenue
                                 P.O. Box 1902
                                 Morristown, NJ  07962
                                 Attention: Marek Kuzdra
                                 Telephone: 973.355.4793
                                 Telecopy: 973.355.4780

<PAGE>

                                 SOCIETE GENERALE

                                 By: Kimberly A. Metzger
                                     -----------------------------------------
                                 Name: Kimberly A. Metzger
                                 Title: Vice President

                                 Address for notices:

                                 Societe Generale
                                 4 Embarcadero Center
                                 #1200
                                 San Francisco, CA  94111
                                 Attention: David Grant
                                 Telephone: 415.646.7269
                                 Telecopy: 415.929.9922

                                 Lending Office:

                                 Societe Generale
                                 560 Lexington Avenue
                                 New York, NY   10022
                                 Attention: Pankaj Mathur
                                 Telephone: 212.278.6164
                                 Telecopy: 212.278.7490

<PAGE>

                                 GENERAL ELECTRIC CAPITAL
                                 CORPORATION

                                 By: /s/ Don C. Lee
                                     ----------------------------------------
                                 Name: Don C. Lee
                                 Title: Duly Authorized Signatory

                                 Address for notices:

                                 GECC
                                 500 West Monroe, 13th Floor
                                 Chicago, IL 60661-3671
                                 Attention: Ryan Glaws
                                 Telephone: 312.441.7761
                                 Telecopy: 312.441.7755

                                 Lending Office:

                                 GECC
                                 500 West Monroe, 13th Floor
                                 Chicago, IL 60661-3671
                                 Attention: Ryan Glaws
                                 Telephone: 312.441.7761
                                 Telecopy: 312.441.7755

<PAGE>

                                 REGIONS BANK

                                 By: /s/ Mark J. Nyland
                                     ----------------------------------------
                                 Name:  Mark J. Nyland
                                 Title: Vice President

                                 Address for notices:

                                 Regions Bank
                                 1555 Palm Beach Lakes Blvd.
                                 Suite 155
                                 West Palm Beach, FL 33401
                                 Attention: Mark Nyland, Vice President
                                 Telephone: 561-712-4019
                                 Telecopy: 561-697-8458

                                 Lending Office:

                                 Regions Bank
                                 417 North 20th Street
                                 Birmington, AL 35203
                                 Attention: Kim Hassell
                                 Telephone: 205.326.7038
                                 Telecopy: 205.326.7746

<PAGE>

                                   EXHIBIT A-1

                            FORM OF TERM LOAN A NOTE

                                 Promissory Note
                                  (Term Loan A)

$_________________________                                     _____,___________

                                                               _________,_______

         FOR VALUE RECEIVED, RADIATION THERAPY SERVICES, INC., a Florida
corporation having its principal place of business located in Fort Myers,
Florida (the "Borrower"), hereby promises to pay to the order
of____________________________________________ (the "Lender"), in its individual
capacity, at the office of BANK OF AMERICA, N.A., as administrative agent for
the Lenders (the "Administrative Agent"), located at 101 North Tryon Street,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places
as the Administrative Agent may designate in writing) at the times set forth in
the Third Amended and Restated Credit Agreement dated as of March 31, 2004 among
the Borrower, the financial institutions party thereto (collectively, the
"Lenders"), the Administrative Agent and Wachovia Bank, National Association, as
Documentation Agent (as amended, restated, modified or amended and restated from
time to time, the "Agreement" -- all capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Agreement), in lawful
money of the United States of America, in immediately available funds, the
principal amount of _________________________________ DOLLARS
($__________________) as required pursuant to the terms of the Agreement, and to
pay interest from the date hereof on the unpaid principal amount hereof, in like
money, at said office, on the dates and at the rates provided in ARTICLE V of
the Agreement. All or any portion of the principal amount of Loans may be
prepaid or required to be prepaid as provided in the Agreement.

         If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Credit Documents executed in
connection with the Agreement, the then remaining principal amount hereof and
accrued but unpaid interest thereon evidenced by this Term Loan A Note shall
become immediately due and payable, without presentation, demand, protest or
notice of any kind, all of which are hereby waived by the Borrower.

         In the event this Term Loan A Note is not paid when due at any stated
or accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest due hereunder, all costs of collection, including
reasonable attorneys' fees, and interest thereon at the rates set forth above.

         Interest hereunder shall be computed as provided in the Agreement.

         This Term Loan A Note is one of the Term Loan A Notes referred to in
the Agreement and is issued pursuant to and entitled to the benefits and
security of the Agreement to which

                                     A-1-1
<PAGE>

reference is hereby made for a more complete statement of the terms and
conditions upon which the Term Loan A evidenced hereby was made and is to be
repaid. [The Term Loan A Note is issued in replacement of a Term Loan Note
issued to the Lender pursuant to the Second Amended Credit Agreement, as defined
in the Credit Agreement, and does not effect any refinancing or extinguishment
of the indebtedness and obligations of such note, and is not a novation but is a
replacement of such note.] This Term Loan A Note is subject to certain
restrictions on transfer or assignment as provided in the Agreement.

         This Term Loan A Note shall be governed by and construed in accordance
with the laws of the State of Florida.

         All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law all defenses based on suretyship or
impairment of collateral and the benefits of all provisions of law for stay or
delay of execution or sale of property or other satisfaction of judgment against
any of them on account of liability hereon until judgment be obtained and
execution issued against any other of them and returned unsatisfied or until it
can be shown that the maker or any other party hereto had no property available
for the satisfaction of the debt evidenced by this instrument, or until any
other proceedings can be had against any of them, also their right, if any, to
require the holder hereof to hold as security for this Term Loan A Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.

                            [SIGNATURE PAGE FOLLOWS.]

                                     A-1-2

<PAGE>

         IN WITNESS WHEREOF, the Borrower has caused this Term Loan A Note to
be made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.

                                       RADIATION THERAPY SERVICES, INC.

             WITNESS:

_________________________________      By:______________________________________
                                       Name: ___________________________________
_________________________________      Title: __________________________________

                                     A-1-3
<PAGE>

                    ACKNOWLEDGEMENT OF EXECUTION ON BEHALF OF
                        RADIATION THERAPY SERVICES, INC.

STATE OF NORTH CAROLINA

COUNTY OF MECKLENBURG

         Before me, the undersigned, a Notary Public in and for said County and
State on this ___ day of March, 2004, personally appeared David M. Koeninger,
known to be the Chief Financial Officer of Radiation Therapy Services, Inc. (the
"Borrower"), who, being by me duly sworn, says he works at 2234 Colonial
Boulevard, Fort Myers, Florida 33907, and that by authority duly given by, and
as the act of, the Borrower, the foregoing Term Loan A Note dated as of
March ___, 2004 was signed by him as said _____ on behalf of the Borrower.

         Witness my hand and official seal this______day of March, 2004.

                                           _____________________________________
                                                        Notary Public

(SEAL)

My commission expires: ____________________

                                     A-1-4
<PAGE>

                          AFFIDAVIT OF A. BRITT CANADY

         The undersigned, being first duly sworn, deposes and says that:

         1.       He is a Principal of Bane of America Securities, LLC, and
works at 100 North Carolina Street, Charlotte, North Carolina 28202.

         2.       The Term Loan A Note of Radiation Therapy Services, Inc. dated
March _____, 2004 was executed before him and delivered to him on behalf of the
Administrative Agent in Charlotte, North Carolina on March __, 2004.

         This the_______day of March, 2004.

                                       _________________________________________
                                       A. Britt Canady

                          Acknowledgement of Execution

STATE OF NORTH CAROLINA

COUNTY OF MECKLENBURG

         Before me, the undersigned, a Notary Public in and for said County and
State on this __ day of March, 2004 A.D., personally appeared A. Britt Canady
who before me affixed his signature to the above Affidavit.

         Witness my hand and official seal this______day of March, 2004.

                                       ________________________________________
                                                    Notary Public

(SEAL)

My Commission Expires:_____________

                                     A-1-5
<PAGE>

                                   EXHIBIT A-2

                             Form of Revolving Note

                                 Promissory Note
                                (Revolving Loan)

$_________________                                      _______,________________

                                                                _________,______

         FOR VALUE RECEIVED, RADIATION THERAPY SERVICES, INC., a Florida
corporation having its principal place of business located in Fort Myers,
Florida (the "Borrower"), hereby promises to pay to the order of
_______________________________________________________________ (the "Lender"),
in its individual capacity, at the office of BANK OF AMERICA, N.A., as
administrative agent for the Lenders (the "Administrative Agent"), located at
101 North Tryon Street, NC1-001-15-04, Charlotte, North Carolina 28255 (or at
such other place or places as the Administrative Agent may designate in writing)
at the times set forth in the Third Amended and Restated Credit Agreement dated
as of March 31, 2004 among the Borrower, the financial institutions party
thereto (collectively, the "Lenders"), the Administrative Agent and Wachovia
Bank, National Association, as Documentation Agent (as amended, restated,
modified or amended and restated from time to time, the "Agreement" -- all
capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Agreement), in lawful money of the United States of
America, in immediately available funds, the principal amount of
_______________________________________________ DOLLARS ($________________) or,
if less than such principal amount, the aggregate unpaid principal amount of all
Revolving Loans made by the Lender to the Borrower pursuant to the Agreement, on
the Termination Date or such earlier date as may be required pursuant to the
terms of the Agreement, and to pay interest from the date hereof on the unpaid
principal amount hereof, in like money, at said office, on the dates and at the
rates provided in ARTICLE V of the Agreement. All or any portion of the
principal amount of Loans may be prepaid or required to be prepaid as provided
in the Agreement.

         If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Credit Documents executed in
connection with the Agreement, the then remaining principal amount and accrued
but unpaid interest thereon evidenced by this Revolving Note shall become
immediately due and payable, without presentation, demand, protest or notice of
any kind, all of which are hereby waived by the Borrower.

         In the event this Revolving Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest due hereunder thereon at the rates set forth above.

                                      A-2-1
<PAGE>

         Interest hereunder shall be computed as provided in the Agreement.

         This Revolving Note is one of the Revolving Notes referred to in the
Agreement and is issued pursuant to and entitled to the benefits and security of
the Agreement to which reference is hereby made for a more complete statement of
the terms and conditions upon which the Revolving Loans evidenced hereby were or
are made and are to be repaid. [The Revolving Note is issued in replacement of a
Revolving Note issued to the Lender pursuant to the Second Amended Credit
Agreement, as defined in the Credit Agreement, and does not effect any
refinancing or extinguishment of the indebtedness and obligations of such note,
and is not a novation but is a replacement of such note.] This Revolving Note is
subject to certain restrictions on transfer or assignment as provided in the
Agreement.

         This Revolving Note shall be governed by and construed in accordance
with the laws of the State of Florida.

         All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law all defenses based on suretyship or
impairment of collateral and the benefits of ail provisions of law for stay or
delay of execution or sale of property or other satisfaction of judgment against
any of them on account of liability hereon until judgment be obtained and
execution issued against any other of them and returned unsatisfied or until it
can be shown that the maker or any other party hereto had no property available
for the satisfaction of the debt evidenced by this instrument, or until any
other proceedings can be had against any of them, also their right, if any, to
require the holder hereof to hold as security for this Revolving Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.

                            [SIGNATURE PAGE FOLLOWS.]

                                      A-2-2
<PAGE>

         IN WITNESS WHEREOF, the Borrower has caused this Revolving Note to be
made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.

                                       RADIATION THERAPY SERVICES, INC.

WITNESS:

_________________________________      By:______________________________________
                                       Name:____________________________________
_________________________________      Title:___________________________________

                                      A-2-3
<PAGE>

                    ACKNOWLEDGEMENT OF EXECUTION ON BEHALF OF
                        RADIATION THERAPY SERVICES, INC.

STATE OF NORTH CAROLINA

COUNTY OF MECKLENBURG

         Before me, the undersigned, a Notary Public in and for said County and
State on this ______day of March, 2004, personally appeared David M. Koeninger,
known to be the Chief Financial Officer of Radiation Therapy Services, Inc. (the
"Borrower"), who, being by me duly sworn, says he works at 2234 Colonial
Boulevard, Fort Myers, Florida 33907, and that by authority duly given by, and
as the act of, the Borrower, the foregoing Revolving Note dated as of
March_____, 2004 was signed by him as said__________________________________on
behalf of the Borrower,

         Witness my hand and official seal this_______day of March, 2004.

                                       _____________________________________
                                                   Notary Public

(SEAL)

My commission expires: __________________

                                     A-2-4
<PAGE>

                          AFFIDAVIT OF A. BRITT CANADY

         The undersigned, being first duly sworn, deposes and says that:

         1.       He is a Principal of Bane of America Securities, LLC, and
works at 100 North Carolina Street, Charlotte, North Carolina 28202.

         2.       The Revolving Note of Radiation Therapy Services, Inc. dated
March ____, 2004 was executed before him and delivered to him on behalf of the
Administrative Agent in Charlotte, North Carolina on March____, 2004,

         This the_______day of March, 2004.

                                 _____________________________________
                                 A. Britt Canady

                          Acknowledgement of Execution

STATE OF NORTH CAROLINA

COUNTY OF MECKLENBURG

         Before me, the undersigned, a Notary Public in and for said County and
State on this ______day of March, 2004 A.D., personally appeared A. Britt Canady
who before me affixed his signature to the above Affidavit.

         Witness my hand and official seal this______ day of March, 2004.

                                       _____________________________________
                                                   Notary Public

(SEAL)

My Commission Expires:_________________

                                      A-2-5
<PAGE>

                                   EXHIBIT A-3

                             Form of Swing Line Note

                                 Promissory Note
                               (Swing Line Loan)

$_________________                                            ________,_________

                                                              _____________,____

         FOR VALUE RECEIVED,____________________________________________, a
_____ corporation having its principal place of business located
in__________,__________(the "Borrower"), hereby promises to pay to the order of
BANK OF AMERICA, N.A. ("Bank of America"), in its individual capacity, at Bank
of America's offices located at 101 North Tryon Street, NC1-001-15-04,
Charlotte, North Carolina 28255 (or at such other place or places as Bank of
America may designate) at the times set forth in the Third Amended and Restated
Credit Agreement dated as of March 31, 2004 among the Borrower, the financial
institutions party thereto (collectively, the "Lenders"), Bank of America, N.A.,
as Administrative Agent for the Lenders (the "Administrative Agent") and
Wachovia Bank, National Association, as Documentation Agent (as amended,
supplemented or otherwise modified from time to time, the "Agreement" -- all
capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Agreement), in lawful money of the United States of
America, in immediately available funds, the principal amount of
_______________________________________________ DOLLARS ($____________________)
or if less than such principal amount, the aggregate unpaid principal amount of
all Swing Line Loans made by Bank of America to the Borrower pursuant to the
Agreement, on the Termination Date or such earlier date as may be required
pursuant to the terms of the Agreement, and to pay interest from the date hereof
on the unpaid principal amount hereof, in like money, at said office, on the
dates and at the rates provided in ARTICLE V of the Agreement. All or any
portion of the principal amount of Swing Line Loans may be prepaid as provided
in the Agreement.

         If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Credit Documents executed in
connection with the Agreement, the then remaining principal amount and accrued
but unpaid interest shall bear interest which shall be payable on demand at the
Default Rate until such principal and interest have been paid in full. Further,
in the event of such acceleration, this Note, and all other indebtedness of the
Borrower to the Lender shall become immediately due and payable, without
presentation, demand, protest or notice of any kind, all of which are hereby
waived by the Borrower,

         In the event this Note is not paid when due at any stated or
accelerated maturity, the Borrower agrees to pay, in addition to the principal
and interest, all costs of collection, including reasonable attorneys' fees, and
interest thereon at the rates set forth above.

                                     A-3-1
<PAGE>

         Interest hereunder shall be computed on the basis of a 360 day year for
the actual number of days in the interest period.

         This Note is the Swing Line Note referred to in the Agreement and is
issued pursuant to and entitled to the benefits and security of the Agreement to
which reference is hereby made for a more complete statement of the terms and
conditions upon which the Swing Line Loans evidenced hereby were or are made and
are to be repaid. [The Swing Line Note is issued in replacement of a Swing Line
Note issued to the Lender pursuant to the Second Amended Credit Agreement, as
defined in the Credit Agreement, and does not effect any refinancing or
extinguishment of the indebtedness and obligations of such note, and is not a
novation but is a replacement of such note.] This Note is subject to certain
restrictions on transfer or assignment as provided in the Agreement.

         This Note shall be governed by and construed in accordance with the
laws of the State of Florida.

         All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law all defenses based on suretyship or
impairment of collateral and the benefits of all provisions of law for stay or
delay of execution or sale of property or other satisfaction of judgment against
any of them on account of liability hereon until judgment be obtained and
execution issued against any other of them and returned unsatisfied or until it
can be shown that the maker or any other party hereto had no property available
for the satisfaction of the debt evidenced by this instrument, or until any
other proceedings can be had against any of them, also their right, if any, to
require the holder hereof to hold as security for this Note any collateral
deposited by any of said Persons as security. Protest, notice of protest, notice
of dishonor, diligence or any other formality are hereby waived by all parties
bound hereon.

                            [SIGNATURE PAGE FOLLOWS.]

                                      A-3-2
<PAGE>

         IN WITNESS WHEREOF, the Borrower has caused this Note to be made,
executed and delivered by its duly authorized representative as of the date and
year first above written, all pursuant to authority duly granted.

                                       RADIATION THERAPY SERVICES, INC.

 WITNESS:

_________________________________      By: _____________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                     A-3-3
<PAGE>

                    ACKNOWLEDGEMENT OF EXECUTION ON BEHALF OF
                        RADIATION THERAPY SERVICES, INC.

STATE OF NORTH CAROLINA

COUNTY OF MECKLENBURG

         Before me, the undersigned, a Notary Public in and for said County and
State on this _____day of March, 2004, personally appeared David M. Koeninger,
known to be the Chief Financial Officer of Radiation Therapy Services, Inc. (the
"Borrower"), who, being by me duly sworn, says he works at 2234 Colonial
Boulevard, Fort Myers, Florida 33907, and that by authority duly given by, and
as the act of, the Borrower, the foregoing Swing Line Note dated as of March
_____, 2004 was signed by him as said _______________________________ on behalf
of the Borrower.

         Witness my hand and official seal this______ day of March, 2004.

                                       _________________________________________
                                                      Notary Public

(SEAL)

My commission expires: ________________

                                     A-3-4
<PAGE>

                          AFFIDAVIT OF A. BRITT CANADY

         The undersigned, being first duly sworn, deposes and says that:

         1.       He is a Principal of Banc of America Securities, LLC, and
works at 100 North Carolina Street, Charlotte, North Carolina 28202.

         2.       The Swing Line Note of Radiation Therapy Services, Inc. dated
March_______________, 2004 was executed before him and delivered to him on
behalf of the Administrative Agent in Charlotte, North Carolina on March ___,
2004.

         This the_______day of March, 2004.

                                       __________________________________
                                       A. Britt Canady

                          Acknowledgement of Execution

STATE OF NORTH CAROLINA

COUNTY OF MECKLENBURG

         Before me, the undersigned, a Notary Public in and for said County and
State on this ______ day of March, 2004 A.D., personally appeared A. Britt
Canady who before me affixed his signature to the above Affidavit.

         Witness my hand and official seal this _____ day of March, 2004.

                                       ___________________________________
                                                   Notary Public

(SEAL)

My Commission Expires: _______________________

                                     A-3-5
<PAGE>

                                   EXHIBIT A-4

                            FORM OF TERM LOAN B NOTE

                                 Promissory Note
                                 (Term Loan B)

$ _______________                                           ________,___________

                                                            ________ ____,______

         FOR VALUE RECEIVED, RADIATION THERAPY SERVICES, INC., a Florida
corporation having its principal place of business located in Fort Myers,
Florida (the "Borrower"), hereby promises to pay to the order
of_________________________________ (the "Lender"), in its individual
capacity, at the office of BANK OF AMERICA, N.A., as administrative agent for
the Lenders (the "Administrative Agent"), located at 101 North Tryon Street,
NC1-001-15-04, Charlotte, North Carolina 28255 (or at such other place or places
as the Administrative Agent may designate in writing) at the times set forth in
the Third Amended and Restated Credit Agreement dated as of March 31, 2004 among
the Borrower, the financial institutions party thereto (collectively, the
"Lenders"), the Administrative Agent and Wachovia Bank, National Association, as
Documentation Agent (as amended, restated, modified or amended and restated from
time to time, the "Agreement" -- all capitalized terms not otherwise defined
herein shall have the respective meanings set forth in the Agreement), in lawful
money of the United States of America, in immediately available funds, the
principal amount of ___________________________DOLLARS ($_________________) as
required pursuant to the terms of the Agreement, and to pay interest from the
date hereof on the unpaid principal amount hereof, in like money, at said
office, on the dates and at the rates provided in ARTICLE V of the Agreement.
All or any portion of the principal amount of Loans may be prepaid or required
to be prepaid as provided in the Agreement.

         If payment of all sums due hereunder is accelerated under the terms of
the Agreement or under the terms of the other Credit Documents executed in
connection with the Agreement, the then remaining principal amount hereof and
accrued but unpaid interest thereon evidenced by this Term Loan B Note shall
become immediately due and payable, without presentation, demand, protest or
notice of any kind, all of which are hereby waived by the Borrower.

         In the event this Term Loan B Note is not paid when due at any stated
or accelerated maturity, the Borrower agrees to pay, in addition to the
principal and interest due hereunder, all costs of collection, including
reasonable attorneys' fees, and interest thereon at the rates set forth above.

         Interest hereunder shall be computed as provided in the Agreement.

         This Term Loan B Note is one of the Term Loan B Notes referred to in
the Agreement and is issued pursuant to and entitled to the benefits and
security of the Agreement to which

                                      A-1-1
<PAGE>

reference is hereby made for a more complete statement of the terms and
conditions upon which the Term Loan B evidenced hereby was made and is to be
repaid. This Term Loan B Note is subject to certain restrictions on transfer or
assignment as provided in the Agreement.

         This Term Loan B Note shall be governed by and construed in accordance
with the laws of the State of Florida.

         All Persons bound on this obligation, whether primarily or secondarily
liable as principals, sureties, guarantors, endorsers or otherwise, hereby waive
to the full extent permitted by law all defenses based on suretyship or
impairment of collateral and the benefits of all provisions of law for stay or
delay of execution or sale of property or other satisfaction of judgment against
any of them on account of liability hereon until judgment be obtained and
execution issued against any other of them and returned unsatisfied or until it
can be shown that the maker or any other party hereto had no property available
for the satisfaction of the debt evidenced by this instrument, or until any
other proceedings can be had against any of them, also their right, if any, to
require the holder hereof to hold as security for this Term Loan B Note any
collateral deposited by any of said Persons as security. Protest, notice of
protest, notice of dishonor, diligence or any other formality are hereby waived
by all parties bound hereon.

                            [SIGNATURE PAGE FOLLOWS.]

                                     A-1-2
<PAGE>

         IN WITNESS WHEREOF, the Borrower has caused this Term Loan B Note to be
made, executed and delivered by its duly authorized representative as of the
date and year first above written, all pursuant to authority duly granted.

                                       RADIATION THERAPY SERVICES, INC.

WITNESS:

_________________________________      By: _____________________________________
                                       Name: ___________________________________
_________________________________      Title: __________________________________

                                     B-1-1
<PAGE>

                    ACKNOWLEDGEMENT OF EXECUTION ON BEHALF OF
                        RADIATION THERAPY SERVICES, INC.

STATE OF NORTH CAROLINA

COUNTY OF MECKLENBURG

         Before me, the undersigned, a Notary Public in and for said County and
State on this _____day of March, 2004, personally appeared David M. Koeninger,
known to be the Chief Financial Officer of Radiation Therapy Services, Inc. (the
"Borrower"), who, being by me duly sworn, says he works at 2234 Colonial
Boulevard, Fort Myers, Florida 33907, and that by authority duly given by, and
as the act of, the Borrower, the foregoing Term Loan B Note dated as of
March _______, 2004 was signed by him as said ___on behalf of the Borrower.

         Witness my hand and official seal this______day of March, 2004.

                                       ______________________________________
                                                    Notary Public

(SEAL)

My commission expires: ________________

                                     B-1-2
<PAGE>

                          AFFIDAVIT OF A. BRITT CANADY

         The undersigned, being first duly sworn, deposes and says that:

         1.       He is a Principal of Banc of America Securities, LLC, and
works at 100 North Carolina Street, Charlotte, North Carolina 28202.

         2.       The Term Loan B Note of Radiation Therapy Services, Inc. dated
March______________, 2004 was executed before him and delivered to him on behalf
of the Administrative Agent in Charlotte, North Carolina on March __, 2004.

         This the_______day of March, 2004.

                                 ____________________________________________
                                 A. Britt Canady

                          Acknowledgement of Execution

STATE OF NORTH CAROLINA

COUNTY OF MECKLENBURG

         Before me, the undersigned, a Notary Public in and for said County and
State on this ___ day of March, 2004 A.D., personally appeared A. Britt Canady
who before me affixed his signature to the above Affidavit.

         Witness my hand and official seal this______day of March, 2004.

                                       _____________________________________
                                                     Notary Public

(SEAL)

               My Commission Expires:____________________________

                                     B-1-3

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