EXHIBIT 10.22
                          PRIME MEDICAL SERVICES, INC.

                              AMENDED AND RESTATED
                                 LOAN AGREEMENT

                                 $50,000,000.00

                                    TERM LOAN

                                       and

                                 $40,000,000.00

                              REVOLVING CREDIT LOAN

                       THE FIRST NATIONAL BANK OF BOSTON,
                  as Administrative Agent and Syndication Agent

                           NATIONSBANK OF TEXAS, N.A.,
                             as Documentation Agent

                                       and

                             THE BANKS NAMED HEREIN,
                                    as Banks

                           Dated as of April 26, 1996




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                                TABLE OF CONTENTS

                                      Page


ARTICLE I DEFINITIONS............................................1

 Section 1.1 Amendment and Restatement...........................1
 Section 1.2 Definitions.........................................1
 Section 1.3 Other Definitional Provisions......................14

ARTICLE II ADVANCES.............................................14

 Section 2.1 Commitments........................................14
 Section 2.2 Notes..............................................15
 Section 2.3 Repayment of Advances..............................15
 Section 2.4 Interest...........................................15
 Section 2.5 Borrowing Procedure................................16
 Section 2.6 Continuations; Conversions.........................16
 Section 2.7 Use of Proceeds....................................17
 Section 2.8 Fees...............................................17

ARTICLE III PAYMENTS............................................17

 Section 3.1 Method of Payment..................................17
 Section 3.2 Optional Prepayment................................18
 Section 3.3 Mandatory Prepayments..............................18
 Section 3.4 Pro Rata Treatment.................................19
 Section 3.5 Non-Receipt of Funds by the Administrative Agent...19
 Section 3.6 Withholding Taxes..................................19
 Section 3.7 Withholding Tax Exemption..........................20
 Section 3.8 Computation of Interest............................20
 Section 3.9 Order of Application...............................20

ARTICLE IV YIELD PROTECTION AND ILLEGALITY......................21

 Section 4.1 Additional Costs...................................21
 Section 4.2 Limitation on Eurodollar Advances..................22
 Section 4.3 Illegality.........................................22
 Section 4.4 Treatment of Eurodollar Advances...................22
 Section 4.5 Compensation.......................................23
 Section 4.6 Capital Adequacy...................................23

ARTICLE V SECURITY..............................................24
 Section 5.1 Collateral.........................................24
 Section 5.2 Setoff.............................................24
 Section 5.3 Guaranties.........................................24


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ARTICLE VI CONDITIONS PRECEDENT.................................24

 Section 6.1 Initial Advance....................................24
 Section 6.2 All Advances.......................................26


ARTICLE VII REPRESENTATIONS AND WARRANTIES......................26

 Section 7.1 Existence..........................................27
 Section 7.2 Financial Statements...............................27
 Section 7.3 Corporate Action: No Breach........................27
 Section 7.4 Operation of Business..............................27
 Section 7.5 Litigation and Judgments...........................28
 Section 7.6 Rights in Properties; Liens........................28
 Section 7.7 Enforceability.....................................28
 Section 7.8 Approvals..........................................28
 Section 7.9 Debt...............................................28
 Section 7.10 Taxes.............................................28
 Section 7.11 Use of Proceeds; Margin Securities................28
 Section 7.12 ERISA.............................................28
 Section 7.13 Disclosure........................................29
 Section 7.14 Subsidiaries; Partnerships........................29
 Section 7.15 Agreements........................................29
 Section 7.16 Compliance with Legal Requirements; 
              Governmental Authorizations.......................29
 Section 7.17 Investment Company Act............................30
 Section 7.18 Public Utility Holding Company Act................30
 Section 7.19 Environmental Matters.............................30
 Section 7.20 Acquisition.......................................30

ARTICLE VIII POSITIVE COVENANTS.................................31

 Section 8.1 Reporting Requirements.............................31
 Section 8.2 Maintenance of Existence; Conduct of Business......33
 Section 8.3 Maintenance of Properties..........................33
 Section 8.4 Taxes and Claims...................................33
 Section 8.5 Insurance..........................................33
 Section 8.6 Inspection Rights..................................34
 Section 8.7 Keeping Books and Records..........................34
 Section 8.8 Compliance with Laws...............................34
 Section 8.9 Compliance with Agreements.........................34
 Section 8.10 Further Assurances................................34
 Section 8.11 ERISA.............................................34
 Section 8.12 Information Relating to Proposed Acquisitions.....34
 Section 8.13 After-Acquired Subsidiaries.......................34
 Section 8.14 Syndication Cooperation...........................35

ARTICLE IX NEGATIVE COVENANTS...................................35

 Section 9.1 Debt...............................................35
 Section 9.2 Limitation on Liens................................35
 Section 9.3 Mergers, Etc.......................................36

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 Section 9.4 Restricted Payments................................36
 Section 9.5 Investments........................................36
 Section 9.6 Limitation on Issuance of Capital Stock............37
 Section 9.7 Transactions With Affiliates.......................37
 Section 9.8 Disposition of Assets..............................37
 Section 9.9 Sale and Leaseback.................................37
 Section 9.10 Prepayment of Debt................................37
 Section 9.11 Nature of Business................................37
 Section 9.12 Environmental Protection..........................38
 Section 9.13 Accounting........................................38
 Section 9.14 Amendment of Partnership and Management 
              Agreements........................................38

ARTICLE X FINANCIAL COVENANTS...................................38

 Section 10.1 Total Debt to EBITDA..............................38
 Section 10.2 Interest Coverage Ratio...........................38
 Section 10.3 Total Debt Service Coverage Ratio.................39
 Section 10.4 Consolidated Net Worth............................39
 Section 10.5 Minimum EBITDA....................................39

ARTICLE XI DEFAULT..............................................39

 Section 11.1 Events of Default.................................39
 Section 11.2 Remedies..........................................41
 Section 11.3 Performance by the Administrative Agent...........42

ARTICLE XII THE ADMINISTRATIVE AGENT............................42

 Section 12.1 Appointment, Powers and Immunities................42
 Section 12.2 Rights of Administrative Agent as a Bank..........43
 Section 12.3 Sharing of Payments, Etc..........................43
 Section 12.4 Indemnification...................................44
 Section 12.5 Independent Credit Decisions......................44
 Section 12.6 Several Commitments...............................45
 Section 12.7 Successor Administrative Agent....................45
 Section 12.8 Independent Contractor............................45

ARTICLE XIII MISCELLANEOUS......................................46

 Section 13.1 Expenses..........................................46
 Section 13.2 Indemnification...................................46
 Section 13.3 No Duty...........................................46
 Section 13.4 No Fiduciary Relationship.........................46
 Section 13.5 No Waiver; Cumulative Remedies....................47
 Section 13.6 Successors and Assigns............................47
 Section 13.7 Survival..........................................49
 Section 13.8 Entire Agreement..................................49
 Section 13.9 Amendments, Etc...................................49
 Section 13.10 Maximum Interest Rate............................50
 Section 13.11 Notices..........................................50
 Section 13.12 Governing Law....................................50

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 Section 13.13 Counterparts.....................................50
 Section 13.14 Severability.....................................50
 Section 13.15 Headings.........................................50
 Section 13.16 Construction.....................................50
 Section 13.17 Independence of Covenants........................50
 Section 13.18 Confidentiality..................................51
 Section 13.19 Renewal and Increase.............................51
 Section 13.20 Waiver of Jury Trial.............................51
 Section 13.21 Choice of Forum; Consent to Service of 
               Process and Jurisdiction.........................52


                                INDEX TO EXHIBITS

Exhibit   Description of Exhibit


A         Advance Request Form
B         Form of Assignment and Acceptance
C         Borrower Security Agreement
D         Form of Guaranty
E         Form of Guarantor Security Agreement
F         Form of Pledge Agreement
G         Form of Revolving Credit Note
H         Form of Term Note
I         Perfection Certificate
J         Form of Opinion of Counsel for Borrower and the Guarantors
K         Compliance Certificate


                               INDEX TO SCHEDULES

Schedule             Description of Schedule

1                    Commitments
2                    Guarantors
3                    Partnerships
7.5                  Existing Litigation
7.9                  Existing Debt
7.14.1               Capitalization of Subsidiaries
7.14.2               Partners
7.15                 Agreements
7.16                 Governmental Disclosures
7.19                 Environmental Matters
9.2                  Existing Liens



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                       AMENDED AND RESTATED LOAN AGREEMENT

     THIS AMENDED AND RESTATED LOAN  AGREEMENT  (the  "Agreement"),  dated as of
April 26, 1996, is among PRIME MEDICAL  SERVICES,  INC., a Delaware  corporation
("Borrower"),  each of the banks or other lending institutions which is or which
may from time to time become a  signatory  hereto or any  successor  or assignee
thereof  (collectively,  the  "Banks"  and  individually,  a "Bank"),  THE FIRST
NATIONAL  BANK  OF  BOSTON  ("FNBB"),   a  national  banking   association,   as
Administrative Agent for itself and the other Banks (in such capacity,  together
with its successors in such capacity, the "Administrative  Agent"),  NATIONSBANK
OF TEXAS, N.A. ("NationsBank"), a national banking association, as Documentation
Agent for  itself  and the  other  Banks (in such  capacity,  together  with its
successors  in  such  capacity,   the  "Documentation   Agent"),  and  FNBB,  as
Syndication  Agent  (in such  capacity,  together  with its  successors  in such
capacity, the "Syndication Agent").

                                 R E C I T A L S

     1.  Reference  is hereby made to that certain  Loan  Agreement  dated as of
November 28, 1994, by and between Borrower, the Banks defined therein, and FNBB,
as Agent  for the  Banks  defined  therein  as  amended  by that  certain  First
Amendment to Loan Agreement  dated as of August 17, 1995 (the  "Original  Credit
Agreement").

     2.  Borrower has  requested  that the Banks  increase the  Commitments  (as
defined in the  Original  Credit  Agreement),  provide to Borrower the Term Loan
Commitment (as defined herein), admit additional financial institutions as Banks
hereunder and modify certain other  provisions  contained in the Original Credit
Agreement.

     3. The  Administrative  Agent,  the  Documentation  Agent,  the Syndication
Agent,  the Banks and  Borrower  desire and have agreed to amend and restate the
Original Credit Agreement in its entirety as and pursuant to this Agreement.

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

                                    ARTICLE I

                                   DEFINITIONS

     Section 1.1    Amendment  and  Restatement.  
                    ----------------------------

     This  Agreement  is  in  renewal,  extension,  modification,  increase  and
restatement of the Original Credit Agreement.

     Section 1.2    Definitions.  
                    ------------

     As used in this  Agreement,  the  following  terms shall have the following
meanings:

     "Acquisition" means any transaction, or any series of related transactions,
consummated  on or after the date hereof,  by which  Borrower or any  Subsidiary
directly or indirectly  (a) acquires all or  substantially  all of the assets of
any Person,  whether  through  purchase of assets,  merger,  or  otherwise,  (b)
acquires (in one  transaction  or as the most recent  transaction in a series of
transactions)  at least a majority  (in number of votes) of the  securities  (or
similar ownership  interests) of any Person, or (c) acquires (in one transaction
or as the most  recent  transaction  in a  series  of  transactions)  at least a
majority of the general partnership interests of any Person.

     "Additional Costs" has the meaning specified in Section 4.1.

     "Adjusted  Eurodollar  Rate"  means,  for any  Eurodollar  Advance  for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary,  to
the nearest 0.01%) determined by the Administrative Agent to be equal to (a) the
Eurodollar Rate for such Eurodollar  Advance for such Interest Period divided by
(b) 1.00 minus the  Reserve  Requirement  for such  Eurodollar  Advance for such
Interest Period.


                                                                 
                                        1

<PAGE>




     "Administrative Agent" has the meaning specified in the preamble.

     "Advance" means (a) with respect to the Revolving Credit  Commitment,  each
advance of funds by the Banks,  or any of them, to Borrower  pursuant to Section
2.5(b),  and (b) with respect to the Term Loan  Commitment,  each advance by the
Banks to Borrower pursuant to Section 2.5(a).

     "Advance Request Form" means a certificate,  in  substantially  the form of
Exhibit A, properly completed and signed by Borrower requesting an Advance.

     "Affiliate"  means, as to any Person, any other Person (a) that directly or
indirectly, through one or more intermediaries, Controls or is Controlled by, or
is under common  Control  with,  such Person,  (b) that  directly or  indirectly
beneficially  owns or holds  five  percent  (5%) or more of any  class of voting
stock of such  Person,  or (c) five  percent (5%) or more of the voting stock of
which is  directly  or  indirectly  beneficially  owned or held by the Person in
question;  provided, however, in no event shall the Agents or any Bank be deemed
an Affiliate of Borrower or any of its Subsidiaries.

     "After-Acquired Subsidiary" has the meaning specified in Section 8.13.

     "Agents" means the  Administrative  Agent, the Documentation  Agent and the
Syndication Agent. "Agent" means any one of the Agents.

     "Alternate  Base Rate" means,  at any time, the greater of (a) the variable
rate of interest  established from time to time by the  Administrative  Agent as
its "base rate" and set by the Administrative  Agent as a general reference rate
of interest charged by the Administrative  Agent, and (b) the Federal Funds Rate
plus   one-half  of  one  percent   (.5%).   Borrower   acknowledges   that  the
Administrative Agent may, from time to time, extend credit to other borrowers at
rates of interest  varying  from,  and having no  relationship  to, such general
reference  rate.  Each change in the Alternate Base Rate shall become  effective
without prior notice to Borrower  automatically as of the opening of business on
the date of such change in the Alternate Base Rate.

     "Alternate  Base Rate Advances"  means Advances that bear interest at rates
based upon the Alternate Base Rate.

     "Applicable  Lending  Office" means for each Bank and each Type of Advance,
the lending office of such Bank (or of an Affiliate of such Bank) designated for
such  Type of  Advance  below  its  name on the  signature  pages  hereof  or an
Assignment and Acceptance, or such other office of such Bank (or of an Affiliate
of such  Bank) as such Bank may from time to time  specify to  Borrower  and the
Administrative  Agent as the office by which its Advances of such Type are to be
made and maintained.

     "Applicable  Margin" means the interest margin over the Alternate Base Rate
or the Adjusted  Eurodollar  Rate,  as the case may be, that is as follows:  (a)
from the date hereof  until  delivery of financial  statements  and a compliance
certificate for the period ending September 30, 1996, as required hereunder, (i)
one and one-quarter of one percent (1.25%) for Alternate Base Rate Advances, and
(ii) two and three-quarters of one percent (2.75%) for Eurodollar Advances;  and
(b)  thereafter,  based on the Total Debt to EBITDA Ratio as of and for the most
recent four (4) quarter  period  ending on or before the date of  determination,
the margin set forth opposite such ratio below:

                                                   Applicable
                                                     Margin          Applicable
                                                   Alternate           Margin
                                                   Base Rate         Eurodollar
          Total Debt to EBITDA Ratio                Advances          Advances
------------------------------------              ------------       ----------
Less than 2.0 to 1.0                                  0.5%              2.00%

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<PAGE>

Less than 2.50 to 1.0 but greater than               0.75%              2.25%
  or equal to 2.0 to 1.0
Less than 3.0 to 1.0 but greater than                1.00%              2.50%
  or equal to 2.50 to 1.0
Less than 3.50 to 1.0 but greater than               1.25%              2.75%
  or equal to 3.0 to 1.0
Greater than or equal to 3.50 to 1.0                 1.50%              3.00%


     The Total  Debt to EBITDA  Ratio  shall be  determined  from the  then-most
current of either (a) the quarterly or annual  financial  statements and related
compliance certificate delivered pursuant to Section 8.1, or (b) the most recent
Advance Request Form for a Permitted Acquisition, calculating any adjustments to
such ratio necessitated as a result of the Permitted  Acquisition for which such
Advance was made.  The  adjustment,  if any, to the  Applicable  Margin shall be
effective  commencing  on the fifth (5th)  Business  Day after  delivery of such
financial statements (and related compliance certificate) or the respective date
of Advance for a Permitted Acquisition, as the case may be. If Borrower fails at
any time to  furnish  to the  Administrative  Agent and the Banks the  financial
statements  and related  compliance  certificate  as  required  to be  delivered
pursuant to Section 8.1,  then the maximum  Applicable  Margin shall apply until
such  time as such  financial  statements  and  compliance  certificates  are so
delivered.

     "Applicable  Payment  Amount" means, as of any date, an amount equal to (a)
the aggregate  amount of Debt of the Companies,  as of such date,  minus (b) the
product of (i) EBITDA of the  Companies,  for the four (4) fiscal quarter period
immediately preceding the date of determination, and (ii) 2.75; provided that if
such Applicable  Payment Amount is less than $0.00, then the Applicable  Payment
Amount shall be $0.00.

     "Applicable  Rate"  means:  (a)  during  any  period  that an Advance is an
Alternate Base Rate Advance, the Alternate Base Rate plus the Applicable Margin;
and (b) during any period that an Advance is a Eurodollar Advance,  the Adjusted
Eurodollar Rate plus the Applicable Margin.

     "Applicable Unused Fee Percentage" means the per annum rate with respect to
the unused portion of the Revolving Credit Commitments as follows:  (a) from the
date hereof until delivery of financial statements and a compliance  certificate
for the period ending September 30, 1996, as required hereunder, one-half of one
percent (0.50%); and (b) thereafter,  based on the Total Debt to EBITDA Ratio as
of and for the most recent four (4) quarter  period ending on or before the date
of determination, the percentage set forth opposite such ratio below:


                                                   Applicable
                                                   Unused Fee
          Total Debt to EBITDA Ratio               Percentage
Less than 2.5 to 1.0                                 0.375%
Greater than or equal to 2.50 to 1.0                 0.50%


     The Applicable  Unused Fee Percentage shall be adjusted,  if necessary,  at
the same time as adjustments to the Applicable Margin.

     "Assignee" has the meaning specified in Section 13.6.

     "Assigning Bank" has the meaning specified in Section 13.6.

                                        3

<PAGE>

     "Assignment and Acceptance" means an assignment and acceptance entered into
by an Assigning Bank and its Assignee and accepted by the  Administrative  Agent
pursuant to Section 13.6, in substantially the form of Exhibit B.

     "Bank" and "Banks" have the meanings specified in the preamble.

     "Basle  Accord"  means  the  proposals  for  risk-based  capital  framework
described  by  the  Basle  Committee  on  Banking  Regulations  and  Supervisory
Practices  in  its  paper   entitled   "International   Convergence  of  Capital
Measurement and Capital Standards" dated July 1988, as amended, supplemented and
otherwise modified and in effect from time to time, or any replacement thereof.

     "Borrower  Security   Agreement"  means  the  Borrower  Security  Agreement
executed by Borrower in favor of the Administrative Agent for the benefit of the
Banks in  substantially  the  form of  Exhibit  C, as the  same may be  amended,
supplemented,  or modified from time to time, which Borrower Security  Agreement
is in renewal, amendment,  restatement and substitution of that certain Borrower
Security Agreement dated November 28, 1994, executed by Borrower in favor of the
Administrative  Agent,  for the benefit of the Banks under the  Original  Credit
Agreement,  as amended  pursuant to that First  Amendment  to Borrower  Security
Agreement dated as of August 17, 1995.

     "Business Day" means (a) any day on which the Administrative  Agent is open
for  regular  business,  and  (b)  with  respect  to all  borrowings,  payments,
Conversions,  Continuations,  Interest  Periods,  and notices in connection with
Eurodollar  Advances,  any day which is a Business  Day  described in clause (a)
above and which is also a day on which  dealings in Dollar  deposits are carried
out in the London interbank market.

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

     "Change  in  Control"  means the  individuals  who,  as of the date of this
Agreement,  constitute  the  members  of  Borrower's  Board  of  Directors  (the
"Incumbent  Board") do not  constitute  or cease for any reason to constitute at
least fifty percent (50%) of:

     (a) Borrower's Board of Directors; or

     (b) The  surviving  corporation's  Board of  Directors  in the event of any
merger or consolidation (if permitted by Section 9.3) involving Borrower; or

     (c) The  controlling  entity's board of directors,  the comparable  body if
there is no Board of  Directors,  or voting  control  if there is no  comparable
body,  in the event that the  surviving  corporation  under  clause (b) above is
directly or indirectly controlled by that entity.

     Any individual who becomes a member of the Board of Directors or comparable
body or who obtains a voting interest,  as applicable under clauses (a), (b), or
(c) above,  after the date of this agreement and whose appointment to the Board,
or  nomination  for  election,  was  approved  or  ratified  by a  vote  of  the
individuals  comprising  at least  fifty (50%) of the  Incumbent  Board shall be
deemed to be a member of the Incumbent Board.

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

     "Collateral" has the meaning specified in Section 5.1.



                                        4

<PAGE>

     "Commitment"  means,  as to each Bank as of any date, the Revolving  Credit
Commitment and the Term Loan  Commitment of such Bank.  "Commitments"  means the
Revolving Credit Commitments and the Term Loan Commitments of all the Banks.

     "Companies" means Borrower and its Subsidiaries.

     "Confidential  Information"  means any and all information  relating to the
Companies,  including,  without limitation,  information relating to each of the
Company's financial condition,  business plans,  management,  earnings,  assets,
liabilities,   contracts,   processes,   products,   research  and   development
activities, intellectual property, services, customers, suppliers, marketing and
sales.  In addition,  Confidential  Information  shall include any and all other
information  marked  or  identified  in  writing  by  any of  the  Companies  as
"Confidential"  or  "Confidential  Information"  and  provided  by  each  of the
Companies or its  representatives  to any of the Banks or the Agents or obtained
by the  Banks or the  Agents  after  an  inspection  pursuant  to  Section  8.6.
Notwithstanding the foregoing, "Confidential Information" shall not include:

     (i) any information  known to an Agent or a Bank prior to disclosure by any
of the Companies or its representatives,  as documented prior to such disclosure
in such Agent's or Bank's written records;

     (ii) any information which an Agent or a Bank demonstrates became available
to it on a  non-confidential  basis  from  a  source  (other  than  any  of  the
Companies) who is not bound by a  confidentiality  agreement  with, or any other
contractual,  legal or fiduciary  obligation of  confidentiality  to, any of the
Companies or any other party with respect to such information;

     (iii) any information  which an Agent or a Bank  demonstrates is or becomes
generally  available to the public other than as a result of a disclosure  by it
in breach of Section 13.18; and

     (iv) any information which an Agent or a Bank demonstrates was conceived of
or developed by it or any of its employees without access or reference, directly
or indirectly, to the Confidential Information.

     "Consolidated Net Income" means, for any Person for any period,  the amount
which,  in  conformity  with  GAAP,  would  be shown  on a  consolidated  income
statement of such Person as net income for such period,  after  deduction of any
minority interests.

     "Consolidated  Net Worth" means, at any particular time, all amounts which,
in  conformity  with  GAAP,  would be  included  as  stockholders'  equity  on a
consolidated balance sheet of the Companies.

     "Continue,"  "Continuation,"  and  "Continued"  refers to the  continuation
pursuant to Section 2.6 of a Eurodollar  Advance from one Interest Period to the
next Interest Period.

     "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 ownership of voting  securities  or other  ownership  interests,  by
contract or otherwise.  "Controlling" and "Controlled" have meanings correlative
thereto.

     "Conversion" and "Converted" refers to a conversion pursuant to Section 2.6
of one Type of Advance into another Type of Advance.

     "Debt" means as to any Person at any time (without  duplication and without
duplication  among  the  Companies):  (a) all  obligations  of such  Person  for
borrowed money;  (b) all obligations of such Person  evidenced by bonds,  notes,
debentures, or other similar instruments;  (c) all obligations of such Person to
pay the deferred  purchase price of property or services,  except trade accounts
payable of such Person  arising in the ordinary  course of business that are not
past due by more than ninety (90) days;  (d) all Capital  Lease  Obligations  of
such Person;  (e) all  indebtedness or other  obligations of others of the types
described in this definition,  if Guaranteed by such Person; (f) all obligations
secured by a Lien existing on property owned by such Person,  


                                        5

<PAGE>

whether or not the  obligations  secured  thereby have been assumed by such
Person or  arenon-recourse  to the credit of such Person;  (g) all reimbursement
obligations  of such Person  (whether  contingent  or  otherwise)  in respect of
letters of  credit,  bankers'  acceptances,  surety or other  bonds and  similar
instruments;  and (h) all  liabilities  of such  Person in respect  of  unfunded
vested benefits under any Plan; provided,  however, that the term Debt shall not
include  endorsements  of instruments  for deposit or collection in the ordinary
course of business.

     "Default"  means an  Event  of  Default  or the  occurrence  of an event or
condition  which  with the  giving of notice or the lapse of time or both  would
become an Event of Default.

     "Defaulting  Bank"  means  any  Bank  that  has  defaulted  on  any  of its
obligations under this Agreement.

     "Default Rate" means the lesser of (a) the Maximum Rate, and (b) the sum of
the  Alternate  Base Rate in effect from day to day plus the  Applicable  Margin
plus two percent (2%).

     "Documentation Agent" has the meaning specified in the preamble.

     "Dollars" and "$" mean lawful money of the United States of America.

     "EBITDA" means,  for any Person for any period,  Consolidated Net Income of
such  Person  for  such  period,  determined  after  deduction  of any  minority
interests, plus all amounts deducted therefrom during such period, in conformity
with GAAP, for interest, taxes, depreciation and amortization.

     "Eligible   Assignee"   means  any  commercial   bank,   savings  and  loan
association,  savings bank, finance company,  insurance  company,  pension fund,
mutual fund, or other financial institution (whether a corporation, partnership,
or other entity) approved by the Administrative Agent and, so long as no Default
has occurred and is continuing,  Borrower, such approvals not to be unreasonably
withheld.

     "Environmental  Laws"  means any and all  federal,  state,  and local laws,
regulations,  and requirements pertaining to health, safety, or the environment,
including,   without  limitation,  the  Comprehensive   Environmental  Response,
Compensation and Liability Act of 1980, 42 U.S.C. ss. 9601 et seq., the Resource
Conservation  and  Recovery  Act of  1976,  42  U.S.C.  ss.  6901 et  seq.,  the
Occupational  Safety and Health  Act, 29 U.S.C.  ss. 651 et seq.,  the Clean Air
Act,  42 U.S.C.  ss. 7401 et seq.,  the Clean  Water Act, 33 U.S.C.  ss. 1251 et
seq., and the Toxic Substances  Control Act, 15 U.S.C. ss. 2601 et seq., as such
laws, regulations,  and requirements may be amended or supplemented from time to
time.

     "Environmental  Liabilities"  means,  as to any  Person,  all  liabilities,
obligations,  responsibilities,  Remedial  Actions,  losses,  damages,  punitive
damages,  consequential damages, treble damages, costs, and expenses (including,
without limitation,  all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility  studies),
fines, penalties,  sanctions,  and interest incurred as a result of any claim or
demand,  by any Person,  whether  based in  contract,  tort,  implied or express
warranty,   strict   liability,   criminal  or  civil  statute,   including  any
Environmental Law, permit, order or agreement with any Governmental Authority or
other Person,  arising from  environmental,  health or safety  conditions or the
Release or  threatened  Release of a Hazardous  Material  into the  environment,
resulting  from the past,  present,  or future  operations of such Person or its
Affiliates.

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

     "ERISA  Affiliate"  means any  corporation  or trade or business which is a
member of the same  controlled  group of  corporations  (within  the  meaning of
Section 414(b) of the Code) as Borrower or is under common  control  (within the
meaning of Section 414(c) of the Code) with Borrower.


                                        6

<PAGE>

     "Eurodollar  Advances"  means  Advances  the  interest  rates on which  are
determined on the basis of the rates  referred to in the definition of "Adjusted
Eurodollar Rate" in this Section 1.1.

     "Eurodollar Rate" means, for any Eurodollar Advance for any Interest Period
therefor,  the rate per annum  (rounded  upwards,  if necessary,  to the nearest
0.01%) quoted by the  Administrative  Agent at  approximately  11:00 a.m. London
time (or as soon thereafter as  practicable)  two (2) Business Days prior to the
first (1st) day of such Interest  Period for the offering by the  Administrative
Agent to leading  banks in the London  interbank  market of Dollar  deposits  in
immediately available funds having a term comparable to such Interest Period and
in an amount  comparable to the principal amount of the Eurodollar  Advance made
by the  Administrative  Agent to which  such  Interest  Period  relates.  If the
Administrative  Agent is not participating in any Eurodollar Advances during any
Interest Period therefor (pursuant to Section 4.4 or for any other reason),  the
Adjusted  Eurodollar  Rate for such Advances for such  Interest  Period shall be
determined by reference to the amount of the Advances  which the  Administrative
Agent would have made had it been participating in such Advances.

     "Event of Default" has the meaning specified in Section 11.1.

     "Excess Cash Flow" means, for any quarterly period,  (a) EBITDA,  minus (b)
total cash income tax expense  actually  paid during such period,  minus (c) the
aggregate  amount of any optional  prepayments  of the  Obligations  during such
period,  minus (d)  scheduled  principal  payments in respect of all Debt during
such period,  minus (e) total  consolidated  interest  expense in respect of all
Debt  actually  paid or that is payable  during such  period,  minus (f) capital
expenditures  during such period (provided that such capital  expenditures shall
not  exceed  (x)  $2,000,000.00  minus  (y)  the  aggregate  amount  of  capital
expenditures during the three (3) fiscal quarters ending prior to such quarterly
fiscal period).

     "Federal  Funds  Rate"  means,  for any day,  the rate per  annum  (rounded
upwards,  if necessary,  to the nearest 0.01%) equal to the weighted  average of
the rates on overnight  Federal funds  transactions  with members of the Federal
Reserve  System  arranged by Federal  funds brokers on such day, as published by
the Federal  Reserve Bank of New York on the Business Day next  succeeding  such
day, provided that (a) if the day for which such rate is to be determined 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 such rate is not so published on such next
succeeding Business Day, the Federal Funds Rate for any day shall be the average
rate charged to the  Administrative  Agent on such day on such  transactions  as
determined by the Administrative Agent.

     "FNBB" has the meaning specified in the preamble.

     "GAAP"  means  generally  accepted  accounting  principles,  applied  on  a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American  Institute of Certified Public  Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective  successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent  basis" when the  accounting  principles
applied in a current  period are  comparable  in all material  respects to those
accounting principles applied in a preceding period, except for changes required
by GAAP.

     "Governmental  Authority"  means  any  nation or  government,  any state or
political subdivision thereof and any entity exercising executive,  legislative,
judicial,   regulatory,   or  administrative   functions  of  or  pertaining  to
government.

     "Governmental  Authorization"  shall mean any approval,  consent,  license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Authority or pursuant to
any Legal Requirement.

     "Guarantee" by any Person means any obligation, contingent or otherwise, of
such Person directly or indirectly  guaranteeing any Debt or other obligation of
any other Person and,  without  limiting the  generality of the  foregoing,  any
obligation,  direct or indirect,  contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Debt or other obligation (whether arising by virtue of partnership arrangements,
by agreement to

                                        7

<PAGE>




keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial  statement  conditions or otherwise),  or (b) entered into
for the  purpose of  assuring  in any other  manner the  obligee of such Debt or
other  obligation of the payment  thereof or to protect the obligee against loss
in respect  thereof (in whole or in part),  provided  that the term  "Guarantee"
shall not include  endorsements for collection or deposit in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding meaning.

     "Guaranties" means,  collectively,  the Guaranty Agreements executed by the
Guarantors in favor of the Agents and the Banks,  each in substantially the form
of Exhibit D, which Guaranty Agreements are in renewal, amendment,  substitution
and replacement of the Guaranty  Agreements executed by the Guarantors under the
Original Credit Agreement in favor of the Agent and the Banks under the Original
Credit Agreement. "Guaranty" means any one of the Guaranties.

     "Guarantors"  means,   collectively,   all  Wholly-Owned   Subsidiaries  of
Borrower,  now  owned  or  hereafter  acquired  or  formed,  including,  without
limitation,  the Subsidiaries listed on Schedule 2. "Guarantor" means any one of
the Guarantors.

     "Guarantor  Security  Agreements" means the Security Agreements executed by
the  Guarantors  in favor of the  Administrative  Agent,  for the benefit of the
Banks,  in  substantially  the form of  Exhibit  E, as the same may be  amended,
supplemented  or modified from time to time,  which  Security  Agreements are in
renewal,  amendment,  restatement and  substitution  of the Security  Agreements
executed by the Guarantors  under the Original Credit  Agreement in favor of the
Administrative  Agent,  for the benefit of the Banks under the  Original  Credit
Agreement.  "Guarantor  Security  Agreement"  means  any  one of  the  Guarantor
Security Agreements.

     "Hazardous  Material"  means  any  substance,  product,  waste,  pollutant,
material,  chemical,  contaminant,  constituent,  or other  material which is or
becomes listed,  regulated, or addressed under any Environmental Law, including,
without limitation, asbestos, petroleum, and polychlorinated biphenyls.

     "Hedging Agreement" has the meaning specified in Section 11.1.

     "Interest  Coverage Ratio" means,  as to the Companies for any period,  (a)
EBITDA for such  period  divided  by (b) the  aggregate  amount of  consolidated
interest expense for such period, all as determined in accordance with GAAP.

     "Interest  Period"  means,  with respect to any  Eurodollar  Advance,  each
period  commencing on the date such Advance is made or Converted from an Advance
of another Type or, in the case of each subsequent,  successive  Interest Period
applicable to a Eurodollar Advance,  the last day of the next preceding Interest
Period with respect to such Advance, and ending on the numerically corresponding
day in the first (1st),  second (2nd), third (3rd) or sixth (6th) calendar month
thereafter,  as Borrower  may select as  provided in Section 2.5 or 2.6,  except
that each such  Interest  Period which  commences on the last  Business Day of a
calendar  month (or on any day for which there is no  numerically  corresponding
day in the appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month. Notwithstanding the foregoing:
(a) each  Interest  Period  which  would  otherwise  end on a day which is not a
Business  Day  shall  end on the  next  succeeding  Business  Day  (or,  if such
succeeding Business Day falls in the next succeeding calendar month, on the next
preceding  Business Day); (b) any Interest Period which would  otherwise  extend
beyond the Termination Date shall end on the Termination  Date; (c) no more than
six (6)  Interest  Periods  shall  be in  effect  at the same  time;  and (d) no
Interest  Period  shall have a duration  of less than one (1) month and,  if any
Interest Period would otherwise be a shorter period,  such Advances shall not be
available hereunder.

     "Issuance  Proceeds"  means the net proceeds of (i) any sale or issuance of
Borrower's  capital  stock,  or (ii)  the  incurrence  of any  Debt of the  type
described in subsections  (a) and (b) of the definition of Debt, in each case to
the extent  permitted  hereunder;  provided that "Issuance  Proceeds " shall not
include proceeds from the exercise of any warrants issued to Alabama Lithotripsy
Joint Venture to the extent such warrant proceeds are contemporaneously  used to
pay outstanding Debt to Alabama Lithotripsy Joint Venture.


                                        8

<PAGE>




     "Legal  Requirement"  shall  mean any  federal,  state,  local,  municipal,
foreign,   international,   multinational,   or  other   administrative   order,
constitution,  law, ordinance, principle of common law, regulation,  statute, or
treaty as in effect on the date hereof.

     "Lien" means any lien,  mortgage,  security interest,  tax lien,  financing
statement, pledge, charge, hypothecation,  assignment,  preference, priority, or
other  encumbrance  of  any  kind  or  nature  whatsoever  (including,   without
limitation, any conditional sale or title retention agreement),  whether arising
by contract, operation of law, or otherwise.

     "Litho" means Lithotripters, Inc., a North Carolina corporation.

     "Loan  Documents"  means this Agreement,  the Notes,  the  Guaranties,  the
Borrower  Security  Agreement,  the Guarantor  Security  Agreements,  the Pledge
Agreements,  any  Hedging  Agreement  between the  Administrative  Agent and the
Documentation  Agent,  and all  other  instruments,  documents,  and  agreements
executed and delivered pursuant to or in connection with this Agreement, as such
instruments,  documents,  and  agreements  may be  amended,  modified,  renewed,
extended, or supplemented from time to time.

     "Material  Subsidiary"  means,  as of any date, (a) any  Subsidiary  which,
together with its  Subsidiaries,  accounts for three percent (3%) or more of the
Company's  consolidated  gross  revenues or assets,  or (b) any  combination  of
Subsidiaries which, together with their Subsidiaries,  account for seven percent
(7%) or more of the Company's  consolidated  gross  revenues or assets,  in each
case on a consolidated basis (but without elimination of any minority interests)
as of and for the most  recent  fiscal  quarter  for which such  information  is
available. "Material Subsidiaries" means all of the Material Subsidiaries.

     "Maximum Rate" means, at any time and with respect to any Bank, the maximum
rate of interest under  applicable law that such Bank may charge  Borrower.  The
Maximum Rate shall be calculated in a manner that takes into account any and all
fees,  payments,  and  other  charges  in  respect  of the Loan  Documents  that
constitute  interest  under  applicable  law.  Each change in any interest  rate
provided for herein based upon the Maximum Rate  resulting  from a change in the
Maximum  Rate shall take effect  without  notice to Borrower at the time of such
change in the Maximum Rate.

     "Multiemployer Plan" means a multiemployer plan as defined in Section 3(37)
of ERISA  to  which  contributions  have  been  made by  Borrower  or any  ERISA
Affiliate of Borrower and which is covered by Title IV of ERISA.

     "NationsBank" has the meaning specified in the preamble.

     "Notes" means the Revolving  Credit Notes and the Term Notes.  "Note" means
any one of the Notes.

     "Obligated Party" means any Person who is or becomes party to any agreement
that  guarantees or secures  payment and  performance of the  Obligations or any
part thereof.

     "Obligations"  means all  obligations,  indebtedness,  and  liabilities  of
Borrower to the Agents and the Banks, or any of them, arising pursuant to any of
the Loan Documents, now existing or hereafter arising, whether direct, indirect,
related, unrelated, fixed, contingent, liquidated, unliquidated, joint, several,
or joint and several,  and all interest accruing thereon and all attorneys' fees
and other expenses incurred in the enforcement or collection thereof.

     "Original Credit Agreement" has the meaning specified in the recitals.

     "Partnerships"  means the  partnerships in which Borrower or any Subsidiary
now owns or hereafter acquires general and/or limited partnership  interests and
the other  Persons in which  Borrower or any  Subsidiary  now owns or  hereafter
acquires ownership interests,  including,  without limitation,  the partnerships
and other  Persons  listed on  Schedule  3.  "Partnership"  means any one of the
Partnerships.


                                        9

<PAGE>




     "Payment  Date" means (a) with respect to Alternate  Base Rate Advances and
the commitment fees payable pursuant to Section 2.8(a), the last Business Day of
each April,  July,  October and January,  commencing June 30, 1996, and (b) with
respect to  Eurodollar  Advances,  the last day of the respect  Interest  Period
therefor, provided that if any Interest Period is greater than three (3) months,
then  accrued  interest  shall  also be due and  payable  shall  also be due and
payable  on the date that is three (3)  months  after the  commencement  of such
Interest Period.

     "PBGC"  means  the  Pension  Benefit  Guaranty  Corporation  or any  entity
succeeding to all or any of its functions under ERISA.

     "Permitted  Acquisition"  means an  Acquisition  by  Borrower or any of its
Subsidiaries  with respect to which each of the following  conditions shall have
been satisfied:

     (a) the Acquisition by Borrower or such Subsidiary is of a business, assets
or Person (as applicable,  the "Target") which is engaged in  substantially  the
same  business as the business  conducted by Borrower or such  Subsidiary on the
date hereof, or any other business reasonably related thereto;

     (b) as of the  closing  of  such  Acquisition,  the  Acquisition  has  been
approved and recommended by the board of directors or other applicable governing
body of the Target and the Person from which the Target is to be acquired;

     (c) prior to the  closing  of such  acquisition,  the Target and the Person
from which the Target is to be acquired must be Solvent;

     (d) as of the  closing of such  Acquisition,  after  giving  effect to such
Acquisition,  Borrower or the  Subsidiary  that is the  acquiring  party must be
Solvent and the Companies, on a consolidated basis, must be Solvent;

     (e) as of the  closing of such  Acquisition,  after  giving  effect to such
Acquisition,  no Default  shall exist or occur as a result of, and after  giving
effect to, such Acquisition;

     (f) the aggregate  purchase price with respect to such Acquisition does not
exceed five (5) times EBITDA of the Target, subject to adjustments acceptable to
the Administrative Agent where less than all of the business, assets or stock of
the Target is acquired,  acquired  pursuant to the  Acquisition for the four (4)
fiscal  quarters  ending on the most  recently  ended fiscal period prior to the
date of such Acquisition;

     (g) the aggregate cash  consideration  for such Acquisition does not exceed
$10,000,000.00 and the aggregate cash consideration for all Acquisitions  (other
than  the  Acquisition  of  additional  limited  partnership  interests  of  the
Partnerships  in which Litho is, as of the date  hereof,  the  general  partner)
during the  immediately  preceding  twelve  (12) month  period  (including  such
Acquisition) does not exceed $20,000,000.00;

     (h) after giving  effect to such  Acquisition,  the  aggregate  Debt of the
Companies  (without  deduction  for any minority  interests  and  including  any
Advances under the Revolving Credit  Commitments) does not exceed the product of
(1) EBITDA of the Companies  (including  EBITDA for the Target acquired pursuant
to the  Acquisition)  for the four (4) fiscal  quarters ending on the closing of
the Acquisition, and (2) 2.75;

     (i) the  Administrative  Agent  shall  have  received  pro forma  financial
statements of the Companies (as if the business,  assets or Person  acquired had
been  acquired  since the first (1st) day of the period for which such pro forma
financial  statements are  delivered) for the prior four (4) fiscal  quarters of
Borrower and the Companies;

     (j) if the  Target is to be an  After-Acquired  Subsidiary,  then  Borrower
shall have complied with the terms and conditions set forth in Section 8.13; and


                                       10

<PAGE>




     (k) the  Administrative  Agent has received a certificate,  executed by the
President or a Vice President of Borrower  confirming  that all  representations
and warranties  set forth in the Loan Documents  continue to be true and correct
in all material  respects  immediately  prior to and after giving  effect to the
Permitted  Acquisition and the transactions  contemplated  thereby,  and setting
forth the  calculations  supporting  compliance with the limitations  prescribed
herein.

     "Person" means any individual,  corporation,  business trust,  association,
company, partnership, joint venture, Governmental Authority, or other entity.

     "Plan" means any employee  benefit or other plan  established or maintained
by Borrower or any ERISA  Affiliate of Borrower and which is covered by Title IV
of ERISA.

     "Pledge  Agreements" means the Pledge  Agreements  executed by Borrower and
each  Subsidiary  of  Borrower  that owns  general  and/or  limited  partnership
interests in the  Partnerships  in favor of the  Administrative  Agent,  for the
benefit of the Banks, substantially in the form of Exhibit F, as the same may be
amended,  supplemented or modified from time to time.  "Pledge  Agreement" means
any one of the Pledge Agreements.

     "Pledgors" means each of the pledgors of partnership  interests pursuant to
a Pledge Agreement. "Pledgor" means any one of the Pledgors.

     "Principal Office" means the principal office of the Administrative  Agent,
presently located at 100 Federal Street, Boston, Massachusetts 02110.

     "Prohibited  Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Code.

     "Regulation D" means  Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.

     "Regulatory  Change" means,  with respect to any Bank, any change after the
date of this  Agreement  in United  States  federal,  state,  or foreign laws or
regulations  (including  Regulation D) or the adoption or making after such date
of any  interpretations,  directives,  or requests  applying to a class of banks
including  such Bank of or under any United States  federal,  state,  or foreign
laws or  regulations  (whether  or not  having the force of law) by any court or
governmental  or  monetary   authority   charged  with  the   interpretation  or
administration thereof.

     "Release" means, as to any Person, any release,  spill, emission,  leaking,
pumping, injection, deposit, disposal,  disbursement,  leaching, or migration of
Hazardous  Materials  into the indoor or outdoor  environment  or into or out of
property owned by such Person,  including,  without limitation,  the movement of
Hazardous Materials through or in the air, soil, surface water, ground water, or
property.

     "Remedial  Action"  means all  actions  required  to (a) clean up,  remove,
treat,  or  otherwise  address  Hazardous  Materials  in the  indoor or  outdoor
environment,  (b)  prevent  the  Release or threat of Release  or  minimize  the
further  Release of Hazardous  Materials so that they do not migrate or endanger
or  threaten  to  endanger  public  health or  welfare  or the indoor or outdoor
environment,   or  (c)  perform  pre-remedial  studies  and  investigations  and
post-remedial monitoring and care.

     "Required  Banks" means,  as of any date,  any  combination of Banks (other
than any Defaulting  Banks) who collectively hold sixty percent (60%) of the sum
of (a) the Revolving Credit Commitments (other than of any Defaulting Banks), or
if the Revolving  Credit  Commitments  shall have been  terminated,  then of the
aggregate  unpaid  principal amount of the Revolving Credit Notes (other than of
any Defaulting Banks), and (b) the aggregate unpaid principal amount of the Term
Notes (other than of any Defaulting Banks).

     "Reportable  Event"  means any of the events  set forth in Section  4043 of
ERISA.

                                       11

<PAGE>




     "Reserve  Requirement"  means, for any Eurodollar  Advance for any Interest
Period  therefor,  the average rate at which  reserves  (including any marginal,
supplemental  or emergency  reserves) are required to be maintained  during such
Interest  Period under  Regulation D by each Bank on its portion of such Advance
against "Eurocurrency Liabilities" as such term is used in Regulation D. Without
limiting the effect of the foregoing,  the Reserve Requirement shall reflect any
other  reserves  required to be maintained by a Bank by reason of any Regulatory
Change  against  (i) any  category of  liabilities  which  includes  deposits by
reference to which the Adjusted Eurodollar Rate is to be determined, or (ii) any
category  of  extensions  of credit or other  assets  which  include  Eurodollar
Advances.

     "Revolving  Credit  Commitment"  means, as to each Bank as of any date, the
obligation of such Bank on such date to make Advances  hereunder in an aggregate
principal  amount at any time  outstanding  up to but not  exceeding  the amount
shown on  Schedule  1 as its  Revolving  Credit  Commitment,  as the same may be
reduced  pursuant to Section 2.1(c) or terminated  pursuant to Section 2.1(c) or
Section 11.2 and as the same may be increased or decreased  from time to time by
further  assignment  pursuant to Section 13.6.  "Revolving  Credit  Commitments"
means the  Revolving  Credit  Commitments  of all of the  Banks in the  original
aggregate amount of $40,000,000.00.

     "Revolving  Credit Loan" means all Advances  with respect to the  Revolving
Credit Commitment, evidenced by the Revolving Credit Notes.

     "Revolving Credit Note" means a revolving credit note executed by Borrower,
substantially  in the form of Exhibit G, payable to each Bank in an amount equal
to  such  Bank's  Revolving  Credit  Commitment,  as the  same  may be  amended,
supplemented,  modified or restated from time to time, evidencing the obligation
of Borrower to repay the Revolving Credit Loan, and all renewals,  modifications
and  extensions  thereof.  "Revolving  Credit  Notes" means all of the Revolving
Credit Notes of the Banks.

     "RICO" means the Racketeer Influenced and Corrupt Organization Act of 1970,
as amended from time to time.

     "Solvent"  means,  with  respect  to  any  Person,  that  on  the  date  of
determination  (a) the fair market value of its assets is greater than the total
amount of liabilities,  including, without limitation, contingent liabilities of
such Person which would be required to be included on the balance  sheet of such
Person or disclosed in the  financial  statements  of such Person in  accordance
with GAAP,  (b) the present fair  salable  value of the assets of such Person is
not less than the amount that will be required to pay the probable  liability of
such Person on its debts as they become  absolute and  matured,  (c) such Person
does not intend to, and does  believe that it will,  incur debts or  liabilities
beyond such Person's  ability to pay as such debts and liabilities  mature,  and
(d) such Person is not engaged in business or transactions,  and is not about to
engage in business or  transactions,  for which its assets would  constitute  an
unreasonably small capital.

     "Subsidiary"   means,   with  respect  to  any  Person,   any  corporation,
partnership,  association,  or other business entity (a) of which  securities or
other  ownership  interests  representing  more than fifty  percent (50%) of the
equity or more than fifty  percent  (50%) of the  ordinary  voting power or more
than fifty percent (50%) of the general  partnership  interests are, at the time
any determination is made, owned, Controlled or held by such Person, or (b) that
is, at the time any determination is made,  otherwise  Controlled by one or more
Subsidiaries  of such Person or by such Person and one or more  Subsidiaries  of
such Person.

     "Syndication Agent" has the meaning specified in the preamble.

     "Termination Date" means 1:00 p.m. Boston,  Massachusetts time on April 30,
2001,  or such  earlier  date and time on which  the  Commitments  terminate  as
provided in this Agreement.

     "Term  Loan"  means the  $50,000,000.00  term  loan  facility  provided  to
Borrower by the Banks hereunder.

     "Term Loan  Commitment"  means, as to each Bank as of the date hereof,  the
obligation of such Bank on such date to make Advances  hereunder in an aggregate
principal  amount up to but not  exceeding the amount shown on Schedule 1 hereto
as its Term Loan Commitment, as the same may be increased or decreased from time
to time by further assignment pursuant

                                       12

<PAGE>




to Section 13.6. "Term Loan Commitments" means the Term Loan Commitments of
all of the Banks in the original aggregate amount of $50,000,000.00.

     "Term  Note"  means  a  term   promissory   note   executed  by   Borrower,
substantially  in the form of Exhibit H, payable to each Bank in an amount equal
to such Bank's Term Loan Commitment,  as the same may be amended,  supplemented,
modified or restated from time to time, evidencing the obligation of Borrower to
repay the Term Loan, and all renewals,  modifications  and  extensions  thereof.
"Term Notes" means all of the Term Notes of the Banks.

     "Total Debt Service  Coverage  Ratio"  means,  as to the  Companies for any
period,  (a) the sum of EBITDA for such period,  minus the  aggregate  amount of
capital  expenditures  made  during such  period,  divided by (b) the sum of all
principal  and interest  payments  payable  during such period in respect of all
Debt of the Companies  (without  deduction for any minority  interests),  all as
determined  on a rolling four (4) quarter and  consolidated  basis in accordance
with GAAP.

     "Total  Debt  to  EBITDA"  means,  as of any  date,  the  ratio  of (a) the
aggregate  amount of Debt of the Companies  (without  deduction for any minority
interests),  as of such date, to (b) EBITDA of the  Companies,  for the four (4)
fiscal quarter period ending on the date of determination.

     "Type"  means any type of Advance  (i.e.,  Alternate  Base Rate  Advance or
Eurodollar Advance).

     "UCC" means the Uniform Commercial Code as in effect in the Commonwealth of
Massachusetts or other applicable jurisdiction, as amended.

     "Wholly-Owned  Subsidiaries"  means, as of any date, all Subsidiaries  that
are  wholly-owned  by  Borrower  or a  wholly-  owned  Subsidiary  of  Borrower.
"Wholly-Owned Subsidiary" means any one of the Wholly-Owned Subsidiaries.

     Section 1.3    Other Definitional Provisions.  
                    ------------------------------

     All definitions  contained in this Agreement are equally  applicable to the
singular and plural forms of the terms defined.  The words  "hereof,"  "herein,"
and "hereunder" and words of similar import referring to this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement.
Unless  otherwise  specified,   all  Article,   Section,  Exhibit  and  Schedule
references  pertain to this  Agreement.  All accounting  terms not  specifically
defined  herein  shall be  construed  in  accordance  with GAAP.  All  financial
covenants  and related  definitions  relating  to the  Companies  shall,  unless
otherwise  indicated,  be determined after deduction of any minority  interests,
provided that all references to "Debt" shall include all Debt without  deduction
for any  minority  interests.  Terms used  herein  that are  defined in the UCC,
unless otherwise defined herein, shall have the meanings specified in the UCC.

                                   ARTICLE II

                                    ADVANCES

     Section 2.1 Commitments.
                 -----------
     (a) Revolving  Credit  Commitments.  Subject to the terms and conditions of
this Agreement,  each Bank hereby  severally agrees to make one or more Advances
to Borrower from time to time from the date hereof to the Termination Date in an
aggregate  principal  amount at any time outstanding up to but not exceeding the
amount of such Bank's Revolving Credit Commitment as then in effect.  Subject to
the foregoing limitations, and the other terms and provisions of this Agreement,
Borrower may borrow,  repay, and reborrow  hereunder the amount of the Revolving
Credit Commitments by means of Eurodollar  Advances (or, in the event Eurodollar
Advances are unavailable  hereunder,  Alternate Base Rate Advances when required
or permitted by Article IV).

     (b) Term Loan  Commitments.  Subject  to the terms and  conditions  of this
Agreement,  each  Bank  hereby  severally  agrees  to make a single  Advance  to
Borrower,  on or about the date of this Agreement,  in the amount of such Bank's
Term Loan Commitment. Borrower may not borrow, repay, and reborrow hereunder any
portion of the amount of the Term Loan.

                                       13

<PAGE>




     (c) Optional  Reduction and  Termination of Revolving  Credit  Commitments.
Borrower shall have the right to terminate in whole or reduce in part the unused
portion of the  Revolving  Credit  Commitments  upon at least three (3) Business
Days'  prior  written  notice  (which  notice  shall  be   irrevocable)  to  the
Administrative   Agent   specifying  the  effective  date  thereof,   whether  a
termination or reduction is being made, and the amount of any partial reduction,
provided that each partial  reduction shall be in the amount of $1,000,000.00 or
a greater integral multiple thereof and Borrower shall simultaneously prepay the
amount by which  the  unpaid  principal  amount of the  Revolving  Credit  Notes
exceeds the Revolving  Credit  Commitments  (after giving effect to such notice)
plus accrued and unpaid interest on the principal amount so prepaid.  No portion
of  the  Revolving  Credit  Commitments  may be  reinstated  after  it has  been
terminated or reduced.

     Section 2.2    Notes.
                    ------
     
     (a) Revolving  Credit Notes.  The obligation of Borrower to repay each Bank
for  Advances  made by  such  Bank  pursuant  to such  Bank's  Revolving  Credit
Commitment,  and all interest thereon,  shall be evidenced by a Revolving Credit
Note dated the date  hereof,  executed by  Borrower  and payable to the order of
such Bank in the  original  principal  amount of such  Bank's  Revolving  Credit
Commitment.

     (b) Term Notes.  The obligation of Borrower to repay each Bank for Advances
made by such Bank pursuant to such Bank's Term Loan Commitment, and all interest
thereon,  shall be evidenced  by a Term Note dated the date hereof,  executed by
Borrower and payable to the order of such Bank in the original  principal amount
of such Bank's Term Loan Commitment.

     Section 2.3    Repayment of Advances.
                    ----------------------

     (a) Revolving Credit Notes.  Borrower shall repay the outstanding principal
amount of the Revolving Credit Notes on the Termination Date.

     (b) Term Notes.  Borrower shall repay the outstanding  principal  amount of
the Term Notes as follows: (i) in one (1) installment,  on July 31, 1996, in the
amount of  $1,000,000.00;  (ii) in seven (7) equal  quarterly  installments,  on
October 31, 1996,  January 31, 1997, April 30, 1997, July 31, 1997,  October 31,
1997, January 31, 1998, and April 30, 1998, each in the amount of $2,000,000.00;
(iii) in four (4) equal quarterly  installments,  on July 31, 1998,  October 31,
1998,  January 31, 1999 and April 30, 1999, each in the amount of $2,500,000.00;
and (iv) in eight (8) equal quarterly  installments,  on July 31, 1999,  October
31, 1999,  January 31, 2000,  April 30, 2000,  July 31, 2000,  October 31, 2000,
January  31,  2001  and  on  the  Termination   Date,  each  in  the  amount  of
$3,125,000.00.

     Section 2.4    Interest.  
                    ---------

     The  unpaid  principal  amount of all  Advances  shall bear  interest  at a
varying  rate per annum  equal from day to day to the lesser of (a) the  Maximum
Rate, or (b) the  Applicable  Rate. If at any time the  Applicable  Rate for any
Advance shall exceed the Maximum Rate,  thereby causing the interest accruing on
such Advance to be limited to the Maximum Rate, then any subsequent reduction in
the  Applicable  Rate for such Advance  shall not reduce the rate of interest on
such  Advance  below the  Maximum  Rate until the  aggregate  amount of interest
accrued on such Advance equals the aggregate amount of interest which would have
accrued on such Advance if the Applicable  Rate had at all times been in effect.
Accrued  and unpaid  interest on the  Advances  shall be due and payable on each
Payment Date and on the Termination  Date.  Notwithstanding  the foregoing,  any
outstanding  principal  of any Advance and (to the fullest  extent  permitted by
law) any other amount payable by Borrower under this Agreement or any other Loan
Document  that is not paid in full  when due  (whether  at stated  maturity,  by
acceleration,  or  otherwise)  shall bear  interest at the Default  Rate for the
period from and  including  the due date thereof to but  excluding  the date the
same is paid in full. Interest payable at the Default Rate shall be payable from
time to time on demand.

     Section 2.5    Borrowing Procedure.
                    --------------------

     (a) Revolving  Credit Loan.  Borrower shall give the  Administrative  Agent
notice by means of an Advance  Request Form of each requested  Advance under the
Revolving Credit Commitments hereunder at least two (2) Business Days before the
requested  date of each  Eurodollar  Advance  (and at least one (1) Business Day
before the requested date of each Alternate Base

                                       14

<PAGE>




Rate Advance),  specifying:  (a) the requested date of such Advance (which shall
be a Business Day); (b) the amount of such Advance;  and (c) the duration of the
Interest Period for such Advance (if a Eurodollar  Advance).  The Administrative
Agent at its  option may  accept  telephonic  requests  for  Advances  under the
Revolving Credit Commitments, provided that such acceptance shall not constitute
a waiver of the  Administrative  Agent's right to delivery of an Advance Request
Form  in  connection  with  subsequent   Advances  under  the  Revolving  Credit
Commitments.  Any telephonic  request for an Advance under the Revolving  Credit
Commitments by Borrower shall be promptly  confirmed by submission of a properly
completed Advance Request Form to the  Administrative  Agent. Each Advance under
the  Revolving  Credit  Commitments  shall be in a minimum  principal  amount of
$1,000,000.00  or a greater  integral  multiple  thereof,  provided that if such
Advance equals the entire  remaining  unfunded  portion of the Revolving  Credit
Commitments,  it may be for  any  amount.  The  aggregate  principal  amount  of
Eurodollar  Advances  having the same Interest Period shall be at least equal to
$2,500,000.00 or a greater integral multiple of $500,000.00.

     (b) Term Loan. Borrower shall give the Administrative Agent notice by means
of an  Advance  Request  Form  of  the  initial  Advance  under  the  Term  Loan
Commitments  hereunder at least two (2) Business Days before the requested  date
thereof,  specifying:  (a) the requested  date of such Advance (which shall be a
Business  Day);  (b) the amount of such  Advance;  and (c) the  duration  of the
Interest Period for such Advance (if a Eurodollar Advance).

     (c)  Generally.  The  Administrative  Agent  shall  notify each Bank of the
contents  of each  Advance  Request  Form.  Not later than  11:00  a.m.  Boston,
Massachusetts time on the date specified for each Advance  hereunder,  each Bank
will make  available  to the  Administrative  Agent at the  Principal  Office in
immediately available funds, for the account of Borrower,  its pro rata share of
each Advance. After the Administrative Agent's receipt of such funds and subject
to the other terms and conditions of this Agreement,  the  Administrative  Agent
will  make each  Advance  available  to  Borrower  by  depositing  the same,  in
immediately  available funds, in a deposit account of Borrower maintained at the
Documentation  Agent.  All notices under this Section shall be  irrevocable  and
shall be given not later than 11:00 a.m. Boston,  Massachusetts  time on the day
which is not less than the  number of  Business  Days  specified  above for such
notice.

     Section 2.6    Continuations; Conversions.
                    ---------------------------

     (a)  Continuations.  Borrower  shall have the right to Continue  Eurodollar
Advances by giving the Administrative  Agent written notice specifying:  (i) the
Continuation date; (ii) the amount of the Advance to be Continued; and (iii) the
duration of the  Interest  Period  applicable  thereto,  which  notice  shall be
irrevocable  and must be given by  Borrower  not later than  11:00 a.m.  Boston,
Massachusetts time at least two (2) Business Days before each such Continuation.
The Administrative Agent shall promptly notify each Bank of the contents of each
such notice. If Borrower shall fail to give the Administrative  Agent the notice
as specified above for Continuation of a Eurodollar  Advance prior to the end of
the  Interest  Period  applicable  thereto,  such  Eurodollar  Advance  shall be
automatically Continued for a one (1) month Interest Period.

     (b) Conversions. Borrower shall have the right to Convert an Alternate Base
Rate  Advance at any time to a Eurodollar  Advance by giving the  Administrative
Agent written notice specifying: (i) the Conversion Date; (ii) the amount of the
Advance  to be  Converted;  and  (iii)  the  duration  of  the  Interest  Period
applicable  thereto,  which  notice  shall be  irrevocable  and must be given by
Borrower not later than 11:00 a.m. Boston,  Massachusetts  time at least two (2)
Business  Days  before  each such  Conversion.  The  Administrative  Agent shall
promptly notify each Bank of the contents of each such notice.

     (c) Default.  After the occurrence and during the continuance of a Default,
no  outstanding  Advances may be Converted  into,  or Continued as, a Eurodollar
Advance.

     Section 2.7    Use of Proceeds.
                    ----------------

     (a)  Revolving  Credit Loan.  The proceeds of Advances  under the Revolving
Credit  Commitments  shall be used by Borrower  (i) for  working  capital in the
ordinary course of business, (ii) to purchase, refurbish or replace equipment to
be utilized in lithotripsy operations, (iii) to finance the Acquisition of Litho
and to finance  Permitted  Acquisitions,  (iv) to the extent  permitted  by this
Agreement,  to repurchase outstanding capital stock of Borrower, and (v) to make
loans or capital contributions

                                       15

<PAGE>




to its  Subsidiaries  the proceeds of which are used by each such Subsidiary for
one or more of the purposes  permitted by Subsections (i), (ii), (iii), and (iv)
of this Section 2.7(a).

     (b) Term Loan.  The  proceeds of Advances  under the Term Loan  Commitments
shall be used by Borrower to finance the Acquisition of Litho.

     Section 2.8    Fees.
                    -----

     (a) Borrower  hereby  agrees to pay to the  Administrative  Agent,  for the
ratable  account of each Bank,  a  commitment  fee on the daily  average  unused
amount of such  Bank's  Revolving  Credit  Commitment  for the  period  from and
including the date of this Agreement to but excluding the  Termination  Date, at
the per annum rate equal to the  Applicable  Unused  Fee  Percentage  based on a
365-day or  366-day  year,  as the case may be,  and the  actual  number of days
elapsed.  Accrued  commitment  fees shall be payable in arrears on each  Payment
Date and on the Termination Date.

     (b) Borrower  hereby  agrees to pay to the Agents for their own  respective
accounts,  the fees  agreed to by  Borrower  and the Agents  pursuant  to a side
letter agreement with each Agent.

                                   ARTICLE III

                                    PAYMENTS

     Section 3.1    Method of Payment.  
                    ------------------

     All  payments  of  principal,  interest,  and other  amounts  to be paid by
Borrower under this Agreement and the other Loan Documents  shall be paid to the
Administrative  Agent at the  Principal  Office for the  account of each  Bank's
Applicable Lending Office in Dollars and in immediately available funds, without
setoff,   deduction,   or  counterclaim,   not  later  than  1:00  p.m.  Boston,
Massachusetts time on the date on which such payment shall become due (each such
payment  made after such time on such due date to be deemed to have been made on
the next  succeeding  Business Day).  Borrower shall, at the time of making each
such payment,  specify to the Administrative  Agent the sums payable by Borrower
under this Agreement and the other Loan Documents to which such payment is to be
applied (and in the event that Borrower  fails to so specify,  or if an Event of
Default has occurred and is continuing,  the Administrative Agent may apply such
payment to the  Obligations in such order and manner as it may elect in its sole
discretion, subject to Section 3.4). Each payment received by the Administrative
Agent under this  Agreement or any other Loan Document for the account of a Bank
shall be paid promptly to such Bank, in  immediately  available  funds,  for the
account of such Bank's  Applicable  Lending  Office.  Whenever any payment under
this  Agreement  or any other Loan  Document  shall be stated to be due on a day
that is not a Business  Day,  such  payment  may be made on the next  succeeding
Business  Day, and such  extension of time shall in such case be included in the
computation of the payment of interest and commitment fee, as the case may be.

     Section 3.2    Optional Prepayment. 
                    -------------------- 

     Borrower  may,  upon at least three (3) Business  Days' prior notice to the
Administrative Agent, prepay the Notes in whole at any time or from time to time
in part  without  premium or penalty  but with  accrued  interest to the date of
prepayment  on the amount so  prepaid,  provided  that (a)  Eurodollar  Advances
prepaid  on a day  other  than  the  last day of the  Interest  Period  for such
Advances shall include the additional compensation,  if any, required by Section
4.5, and (b) each  partial  prepayment  shall be in the amount of the  aggregate
remaining  outstanding  principal  amount of the  Eurodollar  Advances or in the
principal amount of $1,000,000.00 or a greater integral  multiple  thereof.  All
notices  under this Section shall be  irrevocable  and must be given by Borrower
not later  than 11:00 a.m.  Boston,  Massachusetts  time on the day which is not
less than the number of Business Days specified above for such notice.  Optional
prepayments shall be applied to the Notes as set forth in Section 3.9.

     Section 3.3    Mandatory Prepayments.
                    ----------------------

     (a) Revolving Credit Notes.


                                       16

<PAGE>




     (i) Asset  Sales.  Immediately  upon the receipt of the  proceeds  thereof,
Borrower  shall prepay the Revolving  Credit Notes in an amount equal to the net
proceeds of any sale,  liquidation  or  disposition of any assets of any Company
(other than the Partnerships), where such net proceeds exceed $100,000.00.

     (ii)  Sale or  Issuance  of  Capital  Stock or Debt.  Immediately  upon the
receipt of the proceeds  thereof,  Borrower  shall prepay the  Revolving  Credit
Notes in an amount equal to fifty percent (50%) of any Issuance Proceeds.

     (iii) American  Physicians  Service Group.  Immediately upon the receipt of
the  proceeds of any  disposition  of the stock of American  Physicians  Service
Group,  Inc. held by any Company,  Borrower  shall prepay the  Revolving  Credit
Notes in an amount equal to excess of (A) the net  proceeds of any  disposition,
over (B) an amount equal to two dollars ($2.00) per share sold or disposed.

     (iv) Application of Mandatory  Prepayments.  Any such mandatory prepayments
of the Revolving  Credit Notes shall be applied to the Revolving Credit Notes on
a pro rata basis based upon the outstanding  principal balances of such Notes as
of the date of  payment.  Any such  prepayments  shall not reduce the  Revolving
Credit Commitments.

         (b)      Term Notes.
                  -----------
  
     (i)  Asset  Sales by  Partnerships.  Immediately  upon the  receipt  of the
proceeds thereof, Borrower shall prepay the Term Notes in an amount equal to the
net proceeds of any sale,  liquidation or  disposition of any  Partnership or of
any assets of any Partnership;  provided that such net proceeds shall be limited
to  Borrower's  or its  Wholly-Owned  Subsidiary's  pro rata portion of such net
proceeds; and provided further that Borrower shall not be required to prepay the
Term Notes to the  extent  that the net  proceeds  of any sale,  liquidation  or
disposition  of any assets of any  Partnership  are used by such  Partnership to
replace such assets with assets of similar  character within ninety (90) days of
such sale, liquidation or disposition.

     (ii)  Sale or  Issuance  of  Capital  Stock or Debt.  Immediately  upon the
receipt of the  proceeds  thereof,  Borrower  shall  prepay the Term Notes in an
amount equal to the lesser of (A) fifty percent (50%) of any Issuance  Proceeds,
and (B) the Applicable Payment Amount.

     (iii) Excess Cash Flow.  Borrower shall prepay the Term Notes within thirty
(30) days of the end of each fiscal  quarter of  Borrower,  commencing  with the
fiscal  quarter  ending on June 30,  1996,  in amount equal to the lesser of (A)
seventy-five  percent (75%) of Excess Cash Flow for such fiscal quarter, and (B)
the Applicable Payment Amount.

     (iv) Application of Mandatory Prepayments. Any mandatory prepayments of the
Term Notes shall be applied to the Term Notes on a pro rata basis based upon the
outstanding principal balances of such Notes as of the date of payment.

     Section 3.4    Pro Rata Treatment.
                    -------------------

     Except to the extent otherwise  provided herein:  (a) each Advance shall be
by the Banks under Section 2.1(a),  each payment of commitment fee under Section
2.8(a)  shall be made for the  account of the  Banks,  and each  termination  or
reduction of the Revolving Credit  Commitments under Section 2.1(c) or otherwise
shall be applied to the  Revolving  Credit  Commitments  of the Banks,  pro rata
according to the respective unused Revolving Credit Commitments;  (b) the making
and Continuation of Advances shall be made pro rata among the Banks according to
the amounts of their respective Commitments; and (c) each payment and prepayment
of  principal  of or  interest  on  Advances  by  Borrower  shall be made to the
Administrative  Agent for the account of the Banks in  accordance  with  Section
3.9.

     Section   3.5   Non-Receipt of Funds by the Administrative Agent.
                     ---------------------------------------------------  

     Unless  the  Administrative  Agent  shall have been  notified  by a Bank or
Borrower (the  "Payor")  prior to the date on which such Bank is to make payment
to the  Administrative  Agent of the  proceeds  of an  Advance  to be made by it
hereunder or Borrower is to make a payment to the  Administrative  Agent for the
account  of one or more of the  Banks,  as the case may be (such  payment  being
herein  called the  "Required  Payment"),  which notice shall be effective  upon
receipt,  that the Payor  does not  intend to make the  Required  Payment to the
Administrative

                                       17

<PAGE>




Agent,  the  Administrative  Agent may assume that the Required Payment has been
made and may, in reliance upon such  assumption  (but shall not be required to),
make the amount thereof available to the intended recipient on such date and, if
the Payor has not in fact made the Required Payment to the Administrative Agent,
the recipient of such payment  shall,  on demand,  return to the  Administrative
Agent the amount made available to it together with interest  thereon in respect
of the period  commencing  on the date such amount was so made  available by the
Administrative  Agent  until the date the  Administrative  Agent  recovers  such
amount at a rate per annum equal to the Federal Funds Rate for such period.

     Section 3.6    Withholding Taxes. 
                    ------------------

     All  payments by Borrower of  principal of and interest on the Advances and
of all fees and other  amounts  payable  under  any Loan  Document  are  payable
without  deduction for or on account of any present or future  taxes,  duties or
other  charges  levied or  imposed  by the  United  States of  America or by the
government  of any  jurisdiction  outside the United States of America or by any
political  subdivision or taxing authority of or in any of the foregoing through
withholding or deduction  with respect to any such payments.  If any such taxes,
duties or other charges are so levied or imposed,  Borrower will pay  additional
interest  or will make  additional  payments  in such  amounts so that every net
payment of principal  of and  interest on the Advances and of all other  amounts
payable by any of them under any Loan Document,  after  withholding or deduction
for or on account of any such present or future taxes,  duties or other charges,
will not be less than the amount  provided for herein or therein,  provided that
Borrower shall have no obligation to pay such additional  amounts to any Bank to
the extent that such taxes,  duties,  or other  charges are levied or imposed by
reason of the failure of such Bank to comply with the provisions of Section 3.7.
Borrower shall furnish promptly to the Administrative  Agent for distribution to
each affected Bank, as the case may be,  official  receipts  evidencing any such
withholding or reduction.

     Section 3.7    Withholding Tax Exemption.  
                    --------------------------

     Each Bank that is not  incorporated  under the laws of the United States of
America or a state  thereof  agrees  that it will  deliver to  Borrower  and the
Administrative  Agent two (2) duly  completed  copies of United States  Internal
Revenue  Service Form 1001 or 4224,  certifying in either case that such Bank is
entitled to receive  payments from  Borrower  under any Loan  Document,  without
deduction or withholding  of any United States  federal income taxes.  Each Bank
which so delivers a Form 1001 or 4224 further  undertakes to deliver to Borrower
and the  Administrative  Agent  two (2)  additional  copies  of such  form (or a
successor  form) on or before the date such form expires or becomes  obsolete or
after the occurrence of any event  requiring a change in the most recent form so
delivered by it, and such amendments  thereto or extensions or renewals  thereof
as may be reasonably requested by Borrower or the Administrative  Agent, in each
case  certifying  that such Bank is entitled to receive  payments  from Borrower
under any Loan Document  without  deduction or  withholding of any United States
federal income taxes,  unless an event (including  without limitation any change
in treaty,  law or regulation)  has occurred prior to the date on which any such
delivery would  otherwise be required which renders all such forms  inapplicable
or which would prevent such Bank from duly  completing  and  delivering any such
form with  respect to it and such Bank advises  Borrower and the  Administrative
Agent that it is not capable of receiving such payments without any deduction or
withholding of United States federal income tax.

     Section 3.8    Computation of Interest.  
                    ------------------------

     Interest  on the  Eurodollar  Advances  shall be computed on the basis of a
year of 360 days. Interest on Alternate Base Rate Advances and all other amounts
payable by Borrower hereunder shall be computed on the basis of a year of 365 or
366 days, as the case may be.

     Section 3.9    Order of Application.
                    ---------------------

     (a) No  Default.  Prior  to the  occurrence  of an Event  of  Default,  any
voluntary payment may (except as otherwise  provided herein) be applied,  at the
option of Borrower, to either the Revolving Notes or the Term Notes. Any payment
(whether  voluntary or mandatory) of the Revolving Notes shall be applied to the
Revolving  Notes on a pro  rata  basis  based  upon  the  outstanding  principal
balances of the  Revolving  Notes as of the date of payment.  Any payment of the
Term Notes (whether  voluntary or mandatory)  shall be applied to the Term Notes
on a pro rata basis based upon the  outstanding  principal  balances of the Term
Notes as of the date of payment, and (x) voluntary  prepayments shall be applied
to reduce the payments  required by Section 2.3(b) on a pro rata basis,  and (y)
mandatory  prepayments  shall be  applied  to reduce the  payments  required  by
Section 2.3(b) in the inverse order of maturity.


                                       18

<PAGE>




     (b) After Default.  After the  occurrence and during the  continuance of an
Event of Default, any payment shall be applied shall be applied in the following
order: (i) to all fees and expenses for which Agents or Banks have not been paid
or reimbursed in accordance with the Loan Documents (and if such payment is less
than all unpaid or  unreimbursed  fees and  expenses,  then the payment shall be
paid  against  unpaid  and  unreimbursed  fees  and  expenses  in the  order  of
incurrence or due date); (ii) to accrued interest on the Revolving Notes and the
Term Notes on a pro rata basis, based upon the outstanding principal balances of
such  Notes  as of the  date of  payment;  and  (iii)  to the  principal  of the
Revolving  Notes  and the  Term  Notes  on a pro  rata  basis,  based  upon  the
outstanding  principal balances of such Notes as of the date of payment, and any
such  prepayments  of the Term Notes  shall be  applied  to reduce the  payments
required  by  Section  2.3(b)  in such  order  as  shall  be  determined  by the
Administrative Agent in its sole discretion.

     (c)  Application to Advances.  Subject to the foregoing,  and so long as no
Event of Default has  occurred and is  continuing,  payments of principal of any
Note shall be applied  to such  outstanding  Alternate  Base Rate  Advances  and
Eurodollar Advances under such Note as Borrower shall select; provided, however,
that Borrower shall select Alternate Base Rate Advances and Eurodollar  Advances
to be repaid in a manner  designated to minimize the funding loss required to be
paid pursuant to Section 4.5, if any, resulting from such payment;  and provided
further that if Borrower  shall fail to select the Alternate  Base Rate Advances
and Eurodollar Advances to which such payments are to be applied, or if an Event
of Default has occurred and is continuing at the time of such payment,  then the
Administrative  Agent shall be entitled to apply the payment to such Advances in
the manner in which it shall deem appropriate in its sole discretion.

                                   ARTICLE IV

                         YIELD PROTECTION AND ILLEGALITY

     Section 4.1    Additional Costs.
                    -----------------

     (a) Borrower  hereby  agrees to pay directly to each Bank from time to time
such amounts as such Bank may determine to be necessary to compensate it for any
costs incurred by such Bank which such Bank  determines are  attributable to its
making or  maintaining  any Eurodollar  Advances  hereunder or its obligation to
make any of such Advances  hereunder,  or any reduction in any amount receivable
by such Bank hereunder in respect of any such Advances or such obligation  (such
increases in costs and  reductions  in amounts  receivable  being herein  called
"Additional Costs"), resulting from any Regulatory Change which:

     (i) changes the basis of taxation of any amounts payable to such Bank under
this  Agreement or its Notes in respect of any of such Advances  (other than (1)
taxes imposed on the overall net income of such Bank or its  Applicable  Lending
Office for any of such  Advances,  (2)  franchise or similar taxes of such Bank,
and (3) amounts withheld pursuant to the last sentence of Section 3.7);


     (ii) imposes or modifies any reserve,  special  deposit,  minimum  capital,
capital ratio,  or similar  requirement  relating to any extensions of credit or
other assets of, or any deposits with or other  liabilities or  commitments  of,
such Bank; or

     (iii) imposes any other  Additional  Cost  affecting  this Agreement or the
Notes or any of such extensions, of credit or liabilities or commitments.

     Each Bank will  notify  Borrower of any event  occurring  after the date of
this  Agreement  which will entitle such Bank to  compensation  pursuant to this
Section 4.1(a) as promptly as practicable after it obtains knowledge thereof and
determines  to  request  such  compensation,  and  will  designate  a  different
Applicable  Lending  Office  for the  Advances  affected  by such  event if such
designation will avoid the need for, or reduce the amount of, such  compensation
and will not,  in the sole  opinion  of such Bank,  violate  any law,  rule,  or
regulation  or be in any way  disadvantageous  to such Bank,  provided that such
Bank shall have no  obligation  to so designate  an  Applicable  Lending  Office
located outside the United States of America. Each Bank will furnish

                                       19

<PAGE>




Borrower  with a  certificate  setting  forth the  basis and the  amount of each
request of such Bank for  compensation  under this Section  4.1(a).  If any Bank
requests compensation from Borrower under this Section 4.1(a),  Borrower may, by
notice  to such  Bank  (with a copy to the  Administrative  Agent)  suspend  the
obligation of such Bank to make or Continue making Eurodollar Advances until the
Regulatory  Change giving rise to such request  ceases to be in effect (in which
case such Bank's  Eurodollar  Advances shall be Converted to Alternate Base Rate
Advances in accordance with the provisions of Section 4.4).

     (b) Without limiting the effect of the foregoing provisions of this Section
4.1, in the event that, by reason of any Regulatory  Change, any Bank either (i)
incurs  Additional  Costs based on or  measured by the excess  above a specified
level of the amount of a category of deposits or other  liabilities of such Bank
which  includes  deposits by reference to which the interest  rate on Eurodollar
Advances is determined as provided in this Agreement or a category of extensions
of credit or other  assets of such Bank which  includes  Eurodollar  Advances or
(ii)  becomes  subject  to  restrictions  on the  amount of such a  category  of
liabilities or assets which it may hold,  then, if such Bank so elects by notice
to Borrower (with a copy to the  Administrative  Agent),  the obligation of such
Bank to make or Continue making Eurodollar Advances hereunder shall be suspended
until such  Regulatory  Change ceases to be in effect (in which case such Bank's
Eurodollar  Advances  shall be  Converted  to  Alternate  Base Rate  Advances in
accordance with the provisions of Section 4.4).

     (c) Determinations and allocations by any Bank for purposes of this Section
4.1 of the  effect of any  Regulatory  Change on its  costs of  maintaining  its
obligations to make Advances or of making or maintaining  Advances or on amounts
receivable by it in respect of Advances,  and of the additional amounts required
to compensate such Bank in respect of any Additional Costs, shall be conclusive,
absent manifest error and provided that such  determinations and allocations are
made on a reasonable basis.

     Section 4.2    Limitation  on  Eurodollar  Advances.  
                    -------------------------------------

     Anything  herein to the  contrary  notwithstanding,  if with respect to any
Eurodollar Advance for any Interest Period therefor:

     (a) The  Administrative  Agent  determines  (which  determination  shall be
conclusive  absent  manifest  error) that  quotations of interest  rates for the
relevant  deposits referred to in the definition of "Eurodollar Rate" in Section
1.1  are  not  being  provided  in the  relative  amounts  or for  the  relative
maturities for purposes of determining the rate of interest for such Advances as
provided in this Agreement; or

     (b) The Required Banks determine (which  determination  shall be conclusive
absent  manifest  error) and notify  the  Administrative  Agent that the rate of
interest  referred to in the definition of  "Eurodollar  Rate" in Section 1.1 on
the basis of which the rate of  interest  for such  Advances  for such  Interest
Period is to be  determined do not  accurately  reflect the cost to the Banks of
making or maintaining such Advances for such Interest Period;

     then the  Administrative  Agent shall give Borrower  prompt notice  thereof
specifying  the  relevant  amounts  or  periods,  and so long as such  condition
remains in effect,  the Banks shall be under no  obligation  to make or Continue
additional  Eurodollar  Advances and Borrower  shall,  on the last day(s) of the
then-current Interest Period(s) for the outstanding Eurodollar Advances,  prepay
such  Eurodollar  Advances or Convert  them to Alternate  Base Rate  Advances in
accordance with Section 4.4.

     Section  4.3   Illegality.  
                    -----------

     Notwithstanding any other provision of this Agreement, in the event that it
becomes unlawful for any Bank or its Applicable  Lending Office to (a) honor its
obligation to make Eurodollar  Advances  hereunder,  or (b) maintain  Eurodollar
Advances  hereunder,  then such Bank shall promptly notify Borrower (with a copy
to the  Administrative  Agent)  thereof  and such Bank's  obligation  to make or
maintain Eurodollar Advances shall be suspended until such time as such Bank may
again  make  and  maintain  Eurodollar  Advances  (in  which  case  such  Bank's
Eurodollar  Advances  shall be  Converted  to  Alternate  Base Rate  Advances in
accordance with the provisions of Section 4.4).

     Section 4.4    Treatment of Eurodollar Advances. 
                    ---------------------------------

     If the  Eurodollar  Advances  of any Bank are to be  Converted  pursuant to
Section 4.1, 4.2 or 4.3, such Bank's Eurodollar  Advances shall be automatically
Converted  into  Alternate  Base Rate  Advances  on the last  day(s) of the then
current  Interest  Period(s) for the  Eurodollar  Advances (or, in the case of a
Conversion  required by Section  4.1(b) or 4.3(b),  on such earlier date as such
Bank may specify to Borrower with a copy to the

                                       20

<PAGE>




Administrative  Agent) and,  unless and until such Bank gives notice as provided
below that the  circumstances  specified  in Section  4.1, 4.2 or 4.3 which gave
rise to such Conversion no longer exist:

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

     (b) All Advances which would otherwise be made or Continued by such Bank as
Eurodollar  Advances  shall be made as or  Converted  into  Alternate  Base Rate
Advances.

     If such Bank gives  notice to Borrower  (with a copy to the  Administrative
Agent) that the circumstances specified in Section 4.1, 4.2 or Section 4.3 which
gave rise to the Conversion of such Bank's Eurodollar  Advances pursuant to this
Section 4.4 no longer  exist  (which  such Bank agrees to do promptly  upon such
circumstances  ceasing to exist) at a time when Advances are  outstanding,  such
Bank's  Alternate Base Rate Advances shall be  automatically  Converted,  on the
first day(s) of the next  succeeding  Interest  Period(s)  for such  outstanding
Eurodollar  Advances  to the  extent  necessary  so that,  after  giving  effect
thereto, all Eurodollar Advances held by the Banks holding the same are held pro
rata (as to principal  amounts and Interest  Periods) in  accordance  with their
respective Commitments.

     Section 4.5    Compensation.  
                    -------------

     Borrower  shall pay to the  Administrative  Agent,  for the account of each
Bank,  upon the request of such Bank  through  the  Administrative  Agent,  such
amount or  amounts as shall be  sufficient  (in the  reasonable  opinion of such
Bank) to compensate it for any loss, cost, or expense incurred by it as a result
of:

     (a) Any payment,  prepayment or Conversion of a Eurodollar  Advance for any
reason  (including,  without  limitation,  the  acceleration  of the outstanding
Advances  pursuant  to  Section  11.2) on a date  other  than the last day of an
Interest Period for such Advance; or

     (b) Any failure by Borrower for any reason (including,  without limitation,
the failure of any conditions precedent specified in Article VI to be satisfied)
to borrow or  prepay a  Eurodollar  Advance  on the date for such  borrowing  or
prepayment,  specified in the relevant  notice of borrowing or prepayment  under
this Agreement.

     Such compensation shall not exceed the excess, if any, of (i) the amount of
interest which otherwise  would have accrued on the principal  amount so paid or
not  borrowed  for the period from the date of such payment or failure to borrow
to the last day of the  Interest  Period for such  Advance (or, in the case of a
failure  to  borrow,  the  Interest  Period for such  Advance  which  would have
commenced on the date specified for such  borrowing) at the  applicable  rate of
interest for such Advance  provided for herein over (ii) the interest  component
of the amount such Bank would have bid in the London interbank market for Dollar
deposits of leading banks and amounts  comparable to such  principal  amount and
with maturities comparable to such period.

     Section 4.6    Capital Adequacy. 
                    -----------------

     If after the date hereof,  any Bank shall have determined that the adoption
or implementation  of any applicable law, rule, or regulation  regarding capital
adequacy   (including,   without  limitation,   any  law,  rule,  or  regulation
implementing  the Basle  Accord),  or any change  therein,  or any change in the
interpretation  or   administration   thereof  by  any  central  bank  or  other
Governmental   Authority  charged  with  the  interpretation  or  administration
thereof, or compliance by such Bank (or its parent) with any guideline, request,
or directive regarding capital adequacy (whether or not having the force of law)
of  any  central  bank  or  other  Governmental  Authority  (including,  without
limitation,  any guideline or other requirement  implementing the Basle Accord),
has or would have the effect of  reducing  the rate of return on such Bank's (or
its  parent's)  capital as a  consequence  of its  obligations  hereunder or the
transactions  contemplated  hereby to a level below that which such Bank (or its
parent) could have  achieved but for such  adoption,  implementation,  change or
compliance  (taking  into  consideration  such Bank's  policies  with respect to
capital  adequacy) by an amount  deemed by such Bank to be  material,  then from
time to time,  within ten (10)  Business  Days after demand by such Bank (with a
copy to the Administrative  Agent), which demand shall be delivered by such Bank
to Borrower as promptly as practicable after such Bank obtains knowledge of such
reduction in its rate of return, Borrower shall pay to such Bank such additional
amount  or  amounts  as will  compensate  such  Bank  (or its  parent)  for such
reduction.  A certificate of such Bank claiming  compensation under this Section
and setting forth

                                       21

<PAGE>




the additional amount or amounts to be paid to it hereunder shall be conclusive,
absent manifest error and provided that the  determination  thereof is made on a
reasonable  basis. In determining such amount or amounts,  such Bank may use any
reasonable averaging and attribution methods.

                                    ARTICLE V

                                    SECURITY

     Section  5.1   Collateral.    
                    -----------

     To secure the full and complete payment and performance of the Obligations,
Borrower  shall  execute and deliver or cause to be executed and  delivered  the
documents described below covering the property and collateral described therein
(which,  together  with any  other  property  and  collateral  which  may now or
hereafter secure the Obligations or any part thereof, is sometimes herein called
the "Collateral"):

     (a) Borrower shall execute and deliver to the Administrative Agent, for the
benefit of the Banks, the Borrower Security Agreement.

     (b) The Guarantors shall execute and deliver to the  Administrative  Agent,
for the benefit of the Banks, the Guarantor Security Agreements.

     (c) Pledgors shall execute and deliver to the Administrative Agent, for the
benefit of the Banks, the Pledge Agreements.

     (d) Borrower shall execute and cause to be executed such further  documents
and instruments, including without limitation, Uniform Commercial Code financing
statements,  as the Administrative  Agent and the Documentation  Agent, in their
sole  discretion,  deem  necessary  or  desirable  to  evidence  and perfect the
Administrative Agent's liens and security interests in the Collateral.

     Section  5.2   Setoff.  
                    -------

     If an Event of Default shall have occurred and is continuing,  each Bank is
hereby authorized at any time and from time to time,  without notice to Borrower
(any such notice  being hereby  expressly  waived by  Borrower),  to set off and
apply any and all deposits (general or special,  time or demand,  provisional or
final) at any time held and other indebtedness at any time owing by such Bank to
or for  the  credit  or the  account  of  Borrower  against  any  and all of the
obligations  of Borrower now or hereafter  existing under this  Agreement,  such
Bank's Notes,  or any other Loan  Document,  irrespective  of whether or not the
Administrative  Agent or such  Bank  shall  have  made  any  demand  under  this
Agreement  or such Bank's Notes or such other Loan  Document  and although  such
obligations may be unmatured. Each Bank agrees promptly to notify Borrower (with
a copy to the  Administrative  Agent)  after any such  setoff  and  application,
provided  that the failure to give such notice  shall not affect the validity of
such setoff and application.  The rights and remedies of each Bank hereunder are
in addition to other rights and remedies (including,  without limitation,  other
rights of setoff) which such Bank may have.

     Section  5.3   Guaranties. 
                    -----------
       
     Each Guarantor shall  unconditionally and irrevocably guarantee the payment
and performance of the Obligations by execution and delivery of the Guaranties.

                                   ARTICLE VI

                              CONDITIONS PRECEDENT

     Section 6.1    Initial  Advance.  
                    -----------------

     The  obligation of each Bank to make its initial  Advance is subject to the
condition  precedent  that the  Documentation  Agent  shall have  received on or
before  the  day of  such  Advance  all of the  following,  each  dated  (unless
otherwise indicated) the date hereof, in form and substance  satisfactory to the
Documentation Agent:


                                       22

<PAGE>




     (a)  Resolutions.  Resolutions  of the Boards of  Directors of Borrower and
each Guarantor  certified by the Secretary or an Assistant  Secretary of each of
them which authorize the execution, delivery, and performance by such Company of
this Agreement and/or the other Loan Documents to which such Company is or is to
be a party;

     (b) Incumbency  Certificate.  A certificate of incumbency  certified by the
Secretary or an Assistant  Secretary of Borrower and each  Guarantor  certifying
the  names  of the  officers  of each  such  Company,  authorized  to sign  this
Agreement and each of the other Loan  Documents to which each such Company is or
is to be a party (including the certificates  contemplated herein) together with
specimen signatures of such officers;

     (c) Articles of  Incorporation.  The articles of  incorporation of Borrower
and each Guarantor certified, in the case of Borrower, by the Secretary of State
of  Delaware,  and,  in the  case  of each  Guarantor,  by the  Secretary  or an
Assistant Secretary of such Company;

     (d) Bylaws.  The bylaws of Borrower  and each  Guarantor  certified  by the
Secretary or an Assistant Secretary of each such Company;

     (e) Governmental  Certificates.  Certificates of the appropriate government
officials of the state of incorporation of Borrower and each Guarantor as to the
existence and good standing of each of them;

     (f) Notes. The Notes executed by Borrower;

     (g) Borrower Security  Agreement.  The Borrower Security Agreement executed
by Borrower;

     (h) Guaranties. The Guaranties executed by the Guarantors;

     (i)  Guarantor  Security  Agreement.   The  Guarantor  Security  Agreements
executed by the Guarantors;

     (j) Pledge Agreements. The Pledge Agreements executed by the Pledgors;

     (k) Financing  Statements.  Uniform  Commercial  Code financing  statements
executed by Borrower and each Guarantor and covering the Collateral;

     (l) Stock  Certificates.  Stock  certificates  evidencing all stock pledged
pursuant  to  the  Borrower  Security  Agreement  and  each  Guarantor  Security
Agreement, as applicable, together with stock powers duly executed in blank;

     (m) Certificates of Title.  Original  certificates of title,  together with
executed  applications  for title,  for all vehicles used in connection with the
transportation  of  lithotripters  pledged  pursuant  to the  Borrower  Security
Agreement and the Guarantor Security Agreements;

     (n)  Insurance  Policies.  Copies of all  insurance  policies  required  by
Section  8.5,   together   with  loss  payee   endorsements   in  favor  of  the
Administrative  Agent,  for  the  benefit  of the  Banks,  with  respect  to all
insurance policies covering Collateral;

     (o)  UCC and Tax  and  Judgment  Lien  Searches.  The  results  of  Uniform
Commercial Code searches showing all financing statements and other documents or
instruments,  and tax and judgment  lien  searches  showing all tax and judgment
liens, on file against each Company in such  jurisdictions as the Administrative
Agent shall  require,  such searches to be as of a date no more than twenty (20)
days prior to the date of the initial Advance;

     (p) Perfection Certificate. A Perfection Certificate,  in substantially the
form of Exhibit I hereto,  properly  completed and signed by the Chief Executive
or Chief Financial Officer of Borrower and the Guarantors;


                                       23

<PAGE>




     (q) Opinion of Counsel.  Favorable  opinions as to the matters set forth in
Exhibit J hereto of (i) Small,  Craig & Werkenthin,  special Texas legal counsel
to Borrower and the Guarantors,  (ii) Womble Carlyle  Sandridge & Rice,  special
North  Carolina  counsel  to  Litho,   (iii)  Bingham  Dana  &  Gould,   special
Massachusetts  legal  counsel to the Agents and the Banks,  and (iv) Moore & Van
Allen, L.L.C., special North Carolina counsel to the Agents and the Banks;

     (r)  Attorneys'  Fees and  Expenses.  Evidence  that the costs and expenses
(including attorneys' fees) referred to in Section 13.1, to the extent incurred,
shall have been paid in full by Borrower;

     (s) Fees. Borrower shall have paid to the Agents for their own account, the
fees owed by Borrower to the Agents  pursuant to the letter  agreements  of even
date herewith between Borrower and the Agents;

     (t)  Federal  Reserve  Board Form U-1.  For each Bank a properly  completed
Federal  Reserve Board Form U-1 duly executed by each Company  pledging stock of
another Company; and

     (u) Acquisition of Litho. Borrower shall have acquired good title, free and
clear of all Liens, to all of the issued and outstanding capital stock of Litho.

     Section 6.2    All Advances.  
                    -------------

     The  obligation  of each Bank to make any  Advance  (including  the initial
Advance) is subject to the following additional conditions precedent:

     (a) Advance Request Form. The Administrative Agent shall have received,  in
accordance  with Section 2.5, an Advance  Request Form executed by an authorized
officer of Borrower;

     (b) No Default. No Default shall have occurred and be continuing,  or would
result from such Advance;

     (c)  Representations  and  Warranties.   All  of  the  representations  and
warranties  contained  in  Article  VII  hereof  and in each of the  other  Loan
Documents  shall be true and correct on and as of the date of such  Advance with
the same force and effect as if such  representations  and  warranties  had been
made on and as of such date, except to the extent that such  representations and
warranties  speak to a specific date or the facts on which such  representations
and warranties are based have been changed by  transactions  contemplated by the
Loan Documents; and

     (d) Additional Documentation.  The Administrative Agent shall have received
such additional  approvals,  opinions, or documents as are required by the terms
and provisions of this Agreement or any other Loan Document.

                                   ARTICLE VII

                         REPRESENTATIONS AND WARRANTIES

     To induce the Agents and the Banks to enter into this  Agreement,  Borrower
hereby represents and warrants to the Agents and the Banks that:

     Section 7.1    Existence.
                    ----------

     (a)  Corporate   Existence.   Each  of  the   Companies   (other  than  the
Partnerships):  (a) is a corporation duly organized,  validly  existing,  and in
good standing under the laws of the jurisdiction of its  incorporation;  (b) has
all requisite  corporate  power and authority to own its assets and carry on its
business as now being or as proposed to be conducted; and (c) is qualified to do
business in all  jurisdictions  in which the nature of its  business  makes such
qualification  necessary  and where  failure to so qualify would have a material
adverse effect on the business, condition (financial or otherwise),  operations,
or  properties  of the  Companies  taken as a whole,  Borrower,  or any Material
Subsidiary.  Each  Company has the  corporate  power and  authority  to execute,
deliver,  and perform its  obligations  under this  Agreement and the other Loan
Documents to which it is or may become a party.

                                       24

<PAGE>




     (b)  Partnership  Existence.  Each of the  Partnerships:  (a) is a  general
partnership,  limited  partnership or limited liability company, as appropriate,
duly  organized,  validly  existing,  and in good standing under the laws of the
jurisdiction  of its  formation;  (b) has all  requisite  partnership  power and
authority or company power and authority, as appropriate,  to own its assets and
carry on its  business as now being or as proposed to be  conducted;  and (c) is
qualified  to do  business  in all  jurisdictions  in which  the  nature  of its
business  makes such  qualification  necessary  and where  failure to so qualify
would have a material  adverse effect on the business,  condition  (financial or
otherwise),  operations,  or  properties  of the  Companies  taken  as a  whole,
Borrower, or any Material Subsidiary.

     Section  7.2   Financial   Statements.   
                    -----------------------

     Borrower has delivered to the Administrative Agent (a) audited consolidated
financial  statements  of the  Companies  as of and for the  fiscal  year  ended
December 31, 1995, and unaudited  consolidated  financial statements of Borrower
for  the two  (2)  month  period  ended  February  29,  1996,  and  (b)  audited
consolidated  financial  statements of Litho and the  Partnerships as of and for
the fiscal years ended  December  31,  1995,  December 31, 1994 and December 31,
1993. Such financial  statements have been prepared in accordance with GAAP, and
fairly  present,  on a  consolidated  basis,  the  financial  condition  of  the
Companies and Litho and the Partnerships,  as appropriate,  as of the respective
dates indicated therein and the results of operations for the respective periods
indicated  therein.  There has been no material  adverse change in the business,
condition (financial or otherwise),  operations,  or properties of the Companies
taken as a whole,  Borrower, or any Material Subsidiary since the effective date
of the most recent financial statements referred to in this Section.

     Section 7.3    Corporate  Action:  No Breach.  
                    ------------------------------

     The execution,  delivery, and performance by each Company of this Agreement
and the other Loan  Documents to which such Company is or may become a party and
compliance  with the terms and  provisions  hereof  and  thereof  have been duly
authorized  by  all  requisite  corporate  action  (or,  if  such  Company  is a
partnership, then partnership action) on the part of such Company and do not and
will not (a) violate or conflict  with, or result in a breach of, or require any
consent under (i) the articles of  incorporation  or bylaws of such Company (or,
if such  Company  is a  partnership,  then  the  partnership  agreement  of such
Company),  (ii) any material applicable law, rule, or regulation or any material
order, writ, injunction,  or decree of any Governmental Authority or arbitrator,
or (iii) any material  agreement or  instrument to which such Company is a party
or by which such Company or any of its property is bound or subject  (other than
agreements  and  instruments  relating  to Debt  which will be paid off with the
proceeds of the initial Advance), or (b) constitute a material default under any
such agreement or instrument (other than agreements and instruments  relating to
Debt which will be paid off with the proceeds of the initial Advance), or result
in the creation or imposition of any Lien (except as provided in Article V) upon
any of the revenues or assets of any of the Companies.

     Section 7.4    Operation of Business.  
                    ----------------------

     Each of the Companies possesses all licenses, permits, franchises, patents,
copyrights,  trademarks, and tradenames, or rights thereto, necessary to conduct
their  respective  businesses  substantially  as now  conducted and as presently
proposed to be  conducted.  None of the  Companies  is in violation of any valid
rights of others with respect to any of the foregoing  (except where the failure
to do so would not have a material  adverse  effect on the  business,  condition
(financial or otherwise),  operations or properties of the Companies  taken as a
whole, Borrower, or any Material Subsidiary).

     Section 7.5    Litigation  and  Judgments.  
                    ---------------------------

     As of the date hereof, except as disclosed on Schedule 7.5 hereto, there is
no action,  suit,  investigation,  or proceeding  before or by any  Governmental
Authority or arbitrator  pending,  or to the  knowledge of Borrower,  threatened
against or affecting any of the Companies,  that would, if adversely determined,
have  a  material  adverse  effect  on the  business,  condition  (financial  or
otherwise),  operations  or  properties  of  the  Companies  taken  as a  whole,
Borrower,  or any  Material  Subsidiary  or the  ability of  Borrower to pay and
perform the Obligations. There are no outstanding judgments against any Company.

     Section 7.6    Rights in Properties; Liens. 
                    ----------------------------

     Each of the Companies has good and indefeasible title to or valid leasehold
interests in their respective material properties and assets, real and personal,
including  the  properties,  assets,  and leasehold  interests  reflected in the
financial  statements  described  in Section  7.2,  and none of the  properties,
assets, or leasehold  interests of any Company is subject to any Lien, except as
permitted by Section 9.2.


                                       25

<PAGE>




     Section 7.7    Enforceability.  
                    ---------------

     This Agreement constitutes,  and the other Loan Documents to which Borrower
is a party,  when  delivered,  shall  constitute the legal,  valid,  and binding
obligations of Borrower,  enforceable  against Borrower in accordance with their
respective terms, except as limited by bankruptcy,  insolvency, or other laws of
general  application  relating to the enforcement of creditors' rights. The Loan
Documents to which each Guarantor is a party,  when delivered,  shall constitute
the legal, valid, and binding obligations of such Guarantor, enforceable against
such Guarantor in accordance with their respective  terms,  except as limited by
bankruptcy,  insolvency,  or other laws of general  application  relating to the
enforcement of creditors' rights.

     Section 7.8    Approvals.  
                    ----------

     No  authorization,  approval,  or consent of, and no filing or registration
with, any Governmental  Authority or third party is or will be necessary for the
execution,  delivery,  or  performance  by  Borrower  or any  Guarantor  of this
Agreement and the other Loan  Documents to which Borrower or any Guarantor is or
may become a party or for the validity or enforceability thereof.

     Section 7.9    Debt. 
                    -----

     As of the date hereof,  the Companies have no Debt,  except as disclosed on
Schedule 7.9. 

     Section 7.10   Taxes.  
                    ------

     The Companies have filed or extended all tax returns  (federal,  state, and
local)  required  to be filed,  including  all  income,  franchise,  employment,
property,  and  sales  tax  returns,  and  have  paid  all of  their  respective
liabilities for taxes, assessments,  governmental charges, and other levies that
are due and payable.  Except as previously disclosed to the Administrative Agent
in writing, no Company knows of any pending  investigation of any of them by any
taxing authority or of any pending but unassessed tax liability of any of them.

     Section  7.11  Use of  Proceeds;  Margin  Securities.  
                    --------------------------------------

     No Company is engaged principally,  or as one of its important  activities,
in the business of extending  credit for the purpose of  purchasing  or carrying
margin stock  (within the meaning of  Regulations  G, T, U, or X of the Board of
Governors  of the Federal  Reserve  System),  and no part of the proceeds of any
Advance will be used to purchase or carry any margin  stock or to extend  credit
to others for the purpose of  purchasing or carrying  margin  stock,  except for
purchases of Borrower's capital stock permitted by Section 9.4 hereof.

     Section  7.12  ERISA.  
                    ------

     The  Companies  are  in  compliance  in  all  material  respects  with  all
applicable  provisions  of ERISA.  Neither a  Reportable  Event nor a Prohibited
Transaction  has occurred and is continuing  with respect to any Plan. No notice
of intent to terminate a Plan has been filed,  nor has any Plan been terminated.
No circumstances  exist which constitute grounds entitling the PBGC to institute
proceedings to terminate,  or appoint a trustee to  administer,  a Plan, nor has
the PBGC  instituted any such  proceedings.  None of the Companies nor any ERISA
Affiliate has completely or partially withdrawn from a Multi-employer  Plan. The
Companies and each ERISA Affiliate have met their minimum  funding  requirements
under ERISA with  respect to all of their  Plans,  and the present  value of all
vested  benefits  under each Plan does not exceed the fair  market  value of all
Plan  assets  allocable  to such  benefits,  as  determined  on the most  recent
valuation,  date of the Plan and in accordance with ERISA. None of the Companies
nor any ERISA Affiliate has incurred any liability to the PBGC under ERISA.

     Section  7.13  Disclosure.  
                    -----------

     All factual  information  (taken as a whole)  furnished  by or on behalf of
Borrower in writing to any Agent or any Bank (including, without limitation, all
factual  information  contained  in the Loan  Documents)  for  purposes of or in
connection  with this  Agreement,  the other Loan  Documents or any  transaction
contemplated herein or therein is, and all other such factual information (taken
as a whole) hereafter  furnished by or on behalf of Borrower in writing will be,
true and accurate in all material  respects on the date as of which such factual
information  is dated or  certified  and is not (and  such  factual  information
(taken as a whole)  hereafter  furnished  will not be) incomplete by omitting to
state any facts  necessary to make such factual  information  (taken as a whole)
not  misleading  in  any  material   respect  at  such  time  in  light  of  the
circumstances under which such factual information was provided.

     Section 7.14   Subsidiaries; Partnerships. 
                    ---------------------------

     Each of the Guarantors is a direct or indirect  wholly-owned  Subsidiary of
Borrower,  and as of the date hereof,  together with the Partnerships  listed on
Schedule 3, constitute all of the Subsidiaries of Borrower.  Schedule 7.14.1, as
the same may be amended from time to time to reflect  transactions  permitted by
this  Agreement,  sets forth the  outstanding  shares of capital stock (or other
ownership   interests)  and  the  name  of  each  shareholder  of  each  of  the
Subsidiaries of Borrower.  All of the outstanding  capital stock of Borrower and
each of its Subsidiaries has been validly issued,

                                       26

<PAGE>




is fully paid, and is nonassessable. Schedule 7.14.2, as the same may be amended
from time to time to reflect  transactions  permitted  by this  Agreement,  sets
forth the outstanding partnership interests of the Partnerships owned by each of
the Companies.

     Section 7.15   Agreements.  
                    -----------

     Except as set forth on Schedule  7.15,  none of the Companies is a party to
any indenture,  loan, or credit agreement, or to any lease or other agreement or
instrument,  or subject to any  charter or  corporate  restriction  which  could
reasonably  be  expected  to have a  material  adverse  effect on the  business,
condition  (financial or  otherwise),  operations or properties of the Companies
taken as a  whole,  Borrower,  or any  Material  Subsidiary  or the  ability  of
Borrower or any  Guarantor  to pay and perform  its  obligations  under the Loan
Documents  to which it is a party.  None of the  Companies  is in default in any
material  respect in the performance,  observance,  or fulfillment of any of the
obligations,  covenants,  or conditions contained in any agreement or instrument
to which it is a party,  which  default,  in the  aggregate  with all such other
defaults,  would  have a  material  adverse  affect on the  business,  condition
(financial or otherwise),  operations or properties of the Companies  taken as a
whole, Borrower, or any Material Subsidiary.

     Section 7.16   Compliance with Legal Requirements; Governmental
                    Authorizations.
                    -------------------------------------------------

     (a)  Except  as set  forth  in  Schedule  7.16.1:  (i) each  Company  is in
compliance in all material  respects with each Legal  Requirement that is or was
applicable to it or to the conduct or operation of its business or the ownership
or use of any of its  assets;  and (ii) no Company  has  received  any notice or
other communication from any Governmental Authority or other Person of any event
or  circumstance  which could  constitute  a violation  of, or failure to comply
with, any Legal Requirement.

     (b) Except as set forth in Schedule  7.16:  (i) each Company is in material
compliance  with  all  of  the  terms  and  requirements  of  each  Governmental
Authorization  held by such Company;  (ii) no Company has received any notice or
other  communication  from any  Governmental  Authority  or other Person of, any
event or  circumstance  which could  constitute  a  violation  of, or failure to
comply with, any term or requirement of any  Governmental  Authorization,  or of
any actual or potential revocation, withdrawal,  cancellation or termination of,
or  material  modification  to,  any  Governmental   Authorization;   (iii)  all
applications  required  to have  been  filed  for the  renewal  of any  required
Governmental  Authorizations  have been duly  filed on a timely  basis  with the
appropriate  Governmental  Authorities,  and all other filings  required to have
been made with respect to such Governmental  Authorizations  have been duly made
on a  timely  basis  with the  appropriate  Governmental  Authorities;  (iv) all
Governmental  Authorizations of the Companies are transferable to the Companies;
(v) upon  consummation of the transactions  contemplated  hereby,  the Companies
will lawfully hold all such Governmental  Authorizations;  and (vi) none of such
Governmental Authorizations will terminate upon consummation of the transactions
contemplated hereby. Except as set forth on Schedule 7.16, each of the Companies
possesses the necessary Governmental Authorizations (i) necessary to permit each
Company to lawfully conduct and operate its respective business in the manner it
currently  conducts and operates such business and to permit such Company to own
and use its  assets  in the  manner  in which it  currently  owns and uses  such
assets, and (ii) necessary to permit each Company,  upon the consummation of the
transactions  contemplated  hereby, to lawfully conduct and operate its business
and to permit each Company to own and use its assets,  where the failure to have
such  Governmental  Authorization  would have a material  adverse  effect on the
business,  condition  (financial or otherwise),  operations or properties of the
Companies taken as a whole, Borrower, or any Material Subsidiary.

     Section 7.17   Investment Company Act. 
                    -----------------------

     No Company is an "investment  company" within the meaning of the Investment
Company Act of 1940, as amended.

     Section 7.18   Public Utility  Holding  Company Act. 
                    --------------------------------------

     No Company is a "holding  company" or a "subsidiary  company" of a "holding
company" or an "affiliate" of a "holding  company" or a "public  utility" within
the meaning of the Public Utility Holding Company Act of 1935, as amended.

     Section 7.19   Environmental  Matters.  
                    -----------------------

     Except as disclosed on Schedule  7.19, as the same may be amended from time
to time, hereto:

     (a) Each of the Companies and all of their respective  properties,  assets,
and operations are in compliance in all material respects with all Environmental
Laws. No Company is aware of, nor have any of them received notice of, any past,

                                       27

<PAGE>




present, or future conditions, events, activities, practices, or incidents which
may  interfere  with or prevent the material  compliance  or continued  material
compliance of any Company with all material Environmental Laws; and

     (b)  The  Companies  have  obtained  all  material  permits,  licenses  and
authorizations  that are required under applicable  Environmental  Laws, and all
such  permits are in good  standing  and each  Company is in  compliance  is all
material respects with all of the terms and conditions of such permits.

     Section 7.20   Acquisition.  
                    -------------

     The Stock Purchase  Agreement  dated April 26, 1996,  executed by Borrower,
Litho,  and the Sellers defined therein  previously  delivered to the Agents and
the  Banks  is a true and  correct  copy of such  agreement,  and  Borrower  has
delivered to the Agents and the Banks true and correct copies of all amendments,
supplements and modifications  thereto.  Borrower has provided to the Agents and
the Banks all material information possessed by Borrower or of which Borrower is
aware regarding the acquisition by Borrower of the Acquisition of Litho.

                                  ARTICLE VIII

                               POSITIVE COVENANTS

     Borrower  hereby  covenants and agrees that, as long as the  Obligations or
any part  thereof  are  outstanding  or any Bank has any  Commitment  hereunder,
Borrower will perform and observe each of the following positive covenants:

     Section  8.1   Reporting   Requirements.   
                    -------------------------

     Borrower will furnish to the Administrative Agent and each Bank:

     (a) Annual  Financial  Statements.  As soon as available,  and in any event
within  ninety-five  (95) days after the end of each  fiscal  year of  Borrower,
beginning  with the fiscal year ending  December  31, 1996, a copy of the annual
audit report of the Companies for such fiscal year containing, on a consolidated
and  consolidating  basis,  balance  sheets and  statements of income,  retained
earnings,  and cash flow as at the end of such  fiscal  year and for the  twelve
(12)-month period then ended, in each case setting forth in comparative form the
figures for the preceding fiscal year,  audited by independent  certified public
accountants  of  recognized  standing,  and  accompanied  by an  opinion of such
independent  certified  public  accountants  stating  that such  report has been
prepared in accordance with GAAP;

     (b) Monthly Financial  Statements.  As soon as available,  and in any event
within  forty  (40) days  after  the end of each  month of each  fiscal  year of
Borrower, a copy of an unaudited financial report of the Companies as of the end
of such month and for the portion of the fiscal year then ended, containing,  on
a consolidated and consolidating  basis, balance sheets and statements of income
(together  with a  breakdown  of  revenues by  customer  and  procedure,  and of
expenses by procedure),  retained earnings,  and cash flow, in each case setting
forth in  comparative  form the  figures  for the  corresponding  period  of the
preceding fiscal year,  certified by the chief financial  officer of Borrower to
have been prepared in accordance with GAAP and to fairly and accurately  present
(subject to year-end audit  adjustments) the financial  condition and results of
operations of the Companies,  on a consolidated and consolidating  basis, at the
date and for the periods indicated therein;

     (c) Compliance  Certificate.  Concurrently with the delivery of each of the
financial  statements  referred to in Section  8.1(a) and within forty (40) days
after the end of each of the first three (3) fiscal quarters of each fiscal year
of Borrower,  a certificate of the chief executive or chief financial officer of
Borrower,  in  substantially  the form of  Exhibit K, (i)  stating  that to such
officer's knowledge, no Default has occurred and is continuing,  or if a Default
has occurred  and is  continuing,  a statement as to the nature  thereof and the
action that is proposed to be taken with  respect  thereto,  and (ii) showing in
reasonable detail the calculations demonstrating compliance with Article X;

     (d) Accounts Receivable Aging Report. As soon as available and in any event
within  forty  (40) days  after the end of each  month,  an aged  listing of the
accounts  receivable of each of Borrower and its  Subsidiaries  as of the end of
such month in a form reasonably satisfactory to the Administrative Agent;


                                       28

<PAGE>




     (e)  Business  Plan and Budget.  As soon as  available  and in any event by
December  15 of each year,  a copy of the annual  budget  and  business  plan of
Borrower and its  Subsidiaries  for the  upcoming  fiscal  year,  together  with
details of the assumptions, if any, underlying such budget and business plan;

     (f)  Management  Letters.  Promptly  upon  receipt  thereof,  a copy of any
management  letter or written  report  submitted  to any Company by  independent
certified public accountants with respect to the business,  condition (financial
or otherwise), operations, or properties of any Company;

     (g) Notice of Litigation.  Promptly after the commencement thereof,  notice
of all actions,  suits,  and proceedings  before any  Governmental  Authority or
arbitrator  affecting  Borrower or any of its Subsidiaries  which, if determined
adversely  to Borrower  or any such  Subsidiary,  could have a material  adverse
effect  on  the  business,  condition  (financial  or  otherwise),  options,  or
properties of Borrower, any Subsidiary or the Companies (taken as a whole);

     (h) Notice of Default. As soon as possible and in any event within five (5)
days after Borrower  knows of the  occurrence of each Default,  a written notice
setting forth the details of such Default and the action that Borrower has taken
and proposes to take with respect thereto;

     (i) ERISA Reports.  Promptly after the filing or receipt thereof, copies of
all reports,  including annual reports, and notices which any Company files with
or receives from the PBGC or the U.S.  Department  of Labor under ERISA;  and as
soon as possible and in any event  within five (5) days after any Company  knows
or has reason to know that any Reportable  Event or Prohibited  Transaction  has
occurred  with  respect  to any  Plan or  that  the  PBGC,  or any  Company  has
instituted or will  institute  proceedings  under Title IV of ERISA to terminate
any Plan, a certificate of the chief financial officer of Borrower setting forth
the  details  as to such  Reportable  Event or  Prohibited  Transaction  or Plan
termination and the action that Borrower proposes to take with respect thereto;

     (j) Reports to Other  Creditors.  Promptly  after the  furnishing  thereof,
copies  of  any  statement  or  report  furnished  by  Borrower  or  any  of its
Subsidiaries to any other creditor to which any Company owes $250,000.00 or more
pursuant to the terms of any indenture, loan, or credit or similar agreement and
not otherwise required to be furnished to the Administrative Agent and the Banks
pursuant to any other clause of this Section;

     (k)  Proxy  Statements,  Etc.  As soon as  available,  one (1) copy of each
financial statement,  report,  notice or proxy statement sent by Borrower to its
stockholders  generally  and one (1) copy of each  regular,  periodic or special
report,  registration  statement,  or  prospectus  filed  by  Borrower  with any
securities  exchange or the Securities and Exchange  Commission or any successor
agency including, without limitation, all Forms 10-K, 10-Q and 8-K and all other
periodic reports required to be filed under the Securities  Exchange Act of 1934
and the rules and regulations promulgated thereunder;

     (l) Partnership  Lists.  As soon as available,  and in any event (a) within
thirty (30) days after the end of each fiscal quarter of Borrower, a list of the
names of each partner of each of the Partnerships and as soon as available,  and
(b) within thirty (30) days after the date hereof and  thereafter  within thirty
(30) days after the end of each fiscal year of Borrower,  or upon the occurrence
and  during  the  continuance  of an Event of  Default,  a list of the names and
addresses of each partner of each of the Partnerships;

     (m)  Governmental  Authorizations.  Upon the request of the  Administrative
Agent, but not more often than one (1) time during each fiscal year of Borrower,
a complete and accurate list of each Governmental  Authorization held by each of
Companies or that  otherwise  relate to the business of, or to any of the assets
owned or used by, each of the Companies;

     (n) Litho and Partnership Statements.

     (i) As soon as  available,  and in any event within  thirty (30) days after
the date hereof,  unaudited  consolidated  financial statements of Litho and the
Partnerships for the three (3) month period ended March 31, 1996

                                       29

<PAGE>




and the four (4)  month  period  ended  April  30,  1996,  which  financial
statements  shall  not  reflect  a  material  adverse  change  in the  financial
condition  of Litho and the  Partnerships  since the  statements  referred to in
Section 7.2;

     (ii) As soon as  available,  and in any event within thirty (30) days after
the end of each fiscal  quarter of Borrower,  beginning  with the fiscal quarter
ended  September  30,  1996,  income  and cash flow  statements  for each of the
Partnerships on a consolidated and consolidating basis;

     (o) Partnership Actions.  Promptly after the incurrence thereof,  notice of
any Partnership's (i) incurrence of Debt, (ii) change in accounting treatment or
reporting  practices  (which change shall not affect any reporting  requirements
set  forth  herein  or the Loan  Documents),  except  as  permitted  by GAAP and
disclosed to the Administrative  Agent, (iii) change in tax reporting treatment,
except as  permitted by law,  (iv)  amendment  of any  partnership  agreement or
management  agreement between such Partnership and any Company and copies of any
such  amendment  certified  by an officer of Borrower as being true and correct,
and (v) change in its insurance; and

     (p)  General  Information.  Promptly,  such  other  information  concerning
Borrower or any of its Subsidiaries as the Administrative  Agent or any Bank may
from time to time reasonably request.

     Section 8.2    Maintenance of Existence; Conduct of Business.  
                    ----------------------------------------------

     Borrower will preserve and maintain its corporate  existence and all of its
leases, privileges,  licenses, permits, franchises,  qualifications,  and rights
that are  necessary  or  desirable  in the  ordinary  conduct  of its  business.
Borrower  will cause each of its  Subsidiaries  to  preserve  and  maintain  its
corporate,  partnership  or  other  similar  existence  and  all of its  leases,
privileges,  licenses, permits,  franchises,  qualifications and rights that are
necessary or desirable in the ordinary conduct of its business,  except, in each
case,  where  failure to do so would not have a material  adverse  effect on the
business,  condition  (financial or otherwise),  operations or properties of the
Companies taken as a whole, Borrower, or any Material Subsidiary.  Borrower will
conduct,  and will cause each of its Subsidiaries to conduct, its business in an
orderly and efficient manner in accordance with good business practices.

     Section 8.3    Maintenance of Properties.  
                    --------------------------

     Borrower  will  maintain,  keep,  and  preserve,  and  cause  each  of  its
Subsidiaries to maintain,  keep, and preserve,  all of its properties  (tangible
and  intangible)  necessary  or useful in the proper  conduct of its business in
good working order and condition,  except, in each case, as permitted by Section
9.8 or 9.9 or where  the  failure  to do so would  not have a  material  adverse
effect on the  business,  condition  (financial  or  otherwise),  operations  or
properties  of the  Companies  taken  as a  whole,  Borrower,  or  any  Material
Subsidiary.

     Section 8.4    Taxes and Claims.  
                    -----------------

     Borrower will pay or discharge,  and will cause each of its Subsidiaries to
pay or discharge,  at or before maturity or before  becoming  delinquent (a) all
material taxes, levies,  assessments,  and governmental charges imposed on it or
its income or  profits or any of its  material  property,  and (b) all  material
lawful claims for labor, material, and supplies,  which, if unpaid, might become
a Lien upon any of its  property;  provided,  however,  that no Company shall be
required to pay or discharge any tax, levy,  assessment,  or governmental charge
which is being  contested in good faith by  appropriate  proceedings  diligently
pursued, and for which adequate reserves have been established.

     Section 8.5    Insurance.  
                    ----------

     Borrower will maintain, and will cause each of its Subsidiaries to maintain
(except in the case of the  Partnerships,  in which case Borrower shall maintain
for the Partnerships),  insurance with financially sound and reputable insurance
companies  in such  amounts  and  covering  such risks as is usually  carried by
corporations  engaged in similar businesses and owning similar properties in the
same  general  areas  in which  the  Companies  operate,  consistent  with  past
practices  of  the  Companies  and  to  the  extent  available  on  commercially
reasonable  terms,  provided that in any event  Borrower will maintain and cause
each of its Subsidiaries (except in the case of the Partnerships,  in which case
Borrower shall maintain for the Partnerships) to maintain workmen's compensation
insurance,  property  insurance,   comprehensive  general  liability  insurance,
professional liability insurance, and business interruption insurance reasonably
satisfactory to the Banks. Each insurance policy covering  Collateral shall name
the  Administrative  Agent as loss payee,  for the benefit of the Banks,  as its
interests  may appear and shall provide that such policy will not be canceled or
reduced  without  thirty (30) days' prior written  notice to the  Administrative
Agent.  Borrower  will  annually  provide  the  Administrative  Agent  with  all
certificates  of insurance  evidencing all policies of insurance of Borrower and
its Subsidiaries.

                                       30

<PAGE>




     Section 8.6    Inspection Rights. 
                    ------------------

     At any  reasonable  time and from time to time after  reasonable  notice to
Borrower,  Borrower  will  permit,  and will cause each of its  Subsidiaries  to
permit,  representatives of the  Administrative  Agent and each Bank to examine,
copy,  and make  extracts  from its books and records,  to visit and inspect its
properties,  and to discuss its business,  operations,  and financial  condition
with its  officers,  and  independent  certified  public  accountants.  Prior to
removing any such copies or extracts from a Company's  premises,  such Company's
representatives  shall be  provided  a  reasonable  opportunity  to review  such
information  and  mark  or  identify  it  as   "confidential"  or  "confidential
information" as reasonably deemed appropriate by such Company.

     Section 8.7    Keeping Books and Records.  
                    --------------------------

     Borrower  will  maintain,  and  will  cause  each  of its  Subsidiaries  to
maintain,  proper books of record and account in which full,  true,  and correct
entries in conformity  with GAAP shall be made of all dealings and  transactions
in relation to its business and activities.

     Section 8.8    Compliance with Laws. 
                    ---------------------

     Borrower will comply, and will cause each of its Subsidiaries to comply, in
all material  respects with all material  applicable laws,  rules,  regulations,
orders, and decrees of any Governmental Authority or arbitrator.

     Section 8.9    Compliance  with  Agreements.  
                    -----------------------------                    

     Borrower will comply, and will cause each of its Subsidiaries to comply, in
all material respects with all agreements, contracts, and instruments binding on
it or affecting its  properties  or business,  except where the failure to do so
would not have a material adverse effect on the business,  condition  (financial
or  otherwise),  operations or  properties  of the  Companies  taken as a whole,
Borrower, or any Material Subsidiary.

     Section 8.10   Further Assurances.  
                    -------------------

     Borrower will (a), and will cause each of its Subsidiaries  (other than the
Partnerships)  to, execute and deliver such further  agreements and  instruments
and  take  such  further   action  as  may  be   reasonably   requested  by  the
Administrative  Agent to carry out the provisions and purposes of this Agreement
and the other Loan  Documents  and, (b) and will cause each of its  Subsidiaries
(including the Partnerships) to, create,  preserve, and perfect the Liens of the
Administrative Agent, for the benefit of the Banks, in the Collateral.

     Section 8.11   ERISA.  
                    ------

     Borrower will comply,  and will cause each of its  Subsidiaries  to comply,
with all minimum funding requirements,  and all other material requirements,  of
ERISA, if applicable, so as not to give rise to any liability thereunder.

     Section 8.12   Information Relating to Proposed  Acquisitions.  
                    -----------------------------------------------

     Borrower will use its best efforts to keep the Administrative Agent and the
Banks informed of the relevant information and status of and will share with the
Administrative Agent and the Banks and provide copies to the extent possible, of
all material due diligence information relating to any proposed Acquisition with
respect to which  Borrower or any  Subsidiary  enters into a letter of intent or
acquisition agreement, during the term of this Agreement.

     Section 8.13   After-Acquired Subsidiaries.  
                    ----------------------------

     Concurrently   upon  the  formation  or  Acquisition  by  Borrower  or  any
Subsidiary of any  Wholly-Owned  Subsidiary after the date hereof (pursuant to a
Permitted Acquisition or otherwise) (an "After-Acquired  Subsidiary"),  Borrower
shall cause the After-Acquired  Subsidiary to deliver articles of incorporation,
bylaws, and resolutions (or other corresponding  constituent documents) and such
opinions as the  Administrative  Agent shall  require and to execute a Guaranty,
Guarantor Security Agreement, and Pledge Agreement (if applicable),  as shall be
required by the Administrative  Agent to create first priority Liens in favor of
the Administrative  Agent, for the benefit of the Banks, in such  After-Acquired
Subsidiary's assets, to secure the Obligations.

     Section 8.14   Syndication Cooperation. 
                    ------------------------

     Borrower  acknowledges  that the Agents  intend  promptly  to  commence  to
syndicate  the  Commitments  of the Banks in accordance  with the  provisions of
Section 13.6.  Borrower agrees to actively assist Agents and their Affiliates in
achieving a  syndication  that is  satisfactory  to Agents and  Borrower  and in
preparing  information  requested by Agents in  connection  with  arranging  and
syndication of the Commitments of the Banks and to take such other action deemed
necessary  by Agents or their  Affiliates,  including  the  holding  of a formal
presentation  to  prospective  Banks to achieve a successful  syndication of the
Commitments by Agents. The syndication efforts will be accomplished by a variety
of means,

                                       31

<PAGE>




including the  preparation  of a confidential  information  memorandum and other
marketing  materials,  direct  contact  during the  syndication  between  senior
management  (including,  but not limited to, the chief  executive  officer,  the
chief  financial  officer and treasurer of Borrower) and advisors and Affiliates
of Borrower and the proposed syndicate Banks.

                                   ARTICLE IX

                               NEGATIVE COVENANTS

     Borrower  hereby  covenants and agrees that, as long as the  Obligations or
any part  thereof  are  outstanding  or any Bank has any  Commitment  hereunder,
Borrower will perform and observe the following negative covenants:

     Section 9.1    Debt.  
                    -----

     Borrower will not incur, create, assume, or permit to exist, nor permit any
of its Subsidiaries (other than the Partnerships) to incur,  create,  assume, or
permit to exist, any Debt, except:

     (a) Debt owed to the Agents and the Banks pursuant to the Loan Documents;

     (b) Existing Debt described on Schedule 7.9 hereto;

     (c) Debt owed to Borrower or to any Wholly-Owned Subsidiary;

     (d) Debt in an aggregate  principal amount not to exceed $250,000.00 at any
time  outstanding  the  proceeds of which are used by the  Companies to purchase
equipment, other than lithotripters;

     (e) Any Company's  obligations as general  partner of a Partnership for the
Debt of such Partnership; and

     (f) Any Company's Guarantee of Debt of any Partnership,  if such Company is
a general partner of such Partnership.

     Section 9.2    Limitation on Liens.  
                    --------------------

     Borrower will not incur, create, assume, or permit to exist, nor permit any
of its Subsidiaries (other than the Partnerships) to incur,  create,  assume, or
permit to exist, any Lien upon any of their respective  properties,  assets,  or
revenues, whether now owned or hereafter acquired, except:

     (a) Liens disclosed on Schedule 9.2;

     (b) Purchase money Liens securing Debt permitted by Section 9.1(d) and (e);

     (c) Liens in favor of the  Administrative  Agent,  for the  benefit  of the
Banks;

     (d) Encumbrances  consisting of minor easements,  zoning  restrictions,  or
other  restrictions on the use of real property that do not  (individually or in
the aggregate)  materially affect the value of the assets encumbered  thereby or
materially impair the ability of Borrower or any of its Subsidiaries to use such
assets in their  respective  businesses,  and none of which is  violated  in any
material respect by existing or proposed structures or land use;

     (e) Liens for taxes,  assessments,  or other governmental charges which are
not delinquent or which are being contested in good faith and for which adequate
reserves have been established;

     (f)  Liens of  mechanics,  materialmen,  warehousemen,  carriers,  or other
similar  statutory  Liens  securing  obligations  that  are  not yet due and are
incurred in the ordinary course of business; and

     (g) Liens  resulting  from  good  faith  deposits  to  secure  payments  of
workmen's  compensation  or other  social  security  programs  or to secure  the
performance of tenders,  statutory  obligations,  surety and appeal bonds, bids,
contracts  (other  than for  payment of Debt),  or leases  made in the  ordinary
course of business.

                                       32

<PAGE>




     Section 9.3    Mergers,  Etc.  
                    --------------

     Except upon the prior written consent of the Required Banks,  Borrower will
not become a party to a merger or  consolidation,  except with  another  Company
where Borrower is the surviving  entity.  Borrower will not, and will not permit
any of its Subsidiaries  (other than the Partnerships) to, wind-up,  dissolve or
liquidate  itself,  unless the assets and stock or other ownership  interests of
the Company being wound up,  dissolved or liquidated are  transferred to another
Company.  Except as permitted by Section  9.5,  Borrower  will not, and will not
permit  any of its  Subsidiaries  (other  than the  Partnerships)  to,  make any
Acquisition other than a Permitted Acquisition.  Borrower will not, and will not
permit  any  of  its  Subsidiaries  (other  than  the  Partnerships)  to,  form,
incorporate,  acquire or make any investment in any  Subsidiary,  except (a) the
Subsidiaries  listed on Schedule  7.14.1,  (b)  Subsidiaries  acquired or formed
through a Permitted  Acquisition,  and (c) Wholly-Owned  Subsidiaries  formed in
accordance with Section 8.13.

     Section 9.4    Restricted  Payments.  
                    ---------------------

     Borrower will not declare or pay any dividends or make any other payment or
distribution  (whether  in cash,  property,  or  obligations)  on account of its
capital stock,  or redeem,  purchase,  retire,  or otherwise  acquire any of its
capital  stock,  or permit any of its  Subsidiaries  to  purchase  or  otherwise
acquire any capital  stock of Borrower,  or set apart any money for a sinking or
other analogous fund for any dividend or other distribution on its capital stock
or for any redemption,  purchase, retirement, or other acquisition of any of its
capital  stock;  provided,  however,  that,  from the date  hereof  through  and
including  the  Termination  Date,  Borrower  may  redeem or retire  and/or  the
Companies  may  purchase  shares of  Borrower's  capital  stock for an aggregate
consideration of no more than $750,000.00.

     Section 9.5    Investments.  
                    ------------

     Borrower will not make, nor permit any of its Subsidiaries  (other than the
Partnerships)  to make,  any  advance,  loan,  extension  of credit,  or capital
contribution  to or  investment  in, or  purchase  or own,  or permit any of its
Subsidiaries (other than the Partnerships) to purchase or own, any stock, bonds,
notes, debentures, or other securities of, any Person, except:

     (a) The  Companies,  or any of them,  may purchase  (i) readily  marketable
direct  obligations  of the United States of America or any agency  thereof with
maturities of one year or less from the date of acquisition,  (ii) fully insured
certificates  of deposit  with  maturities  of one year or less from the date of
acquisition  issued by any  commercial  bank  operating in the United  States of
America  having  capital  and  surplus  in excess of  $1,000,000,000,  and (iii)
commercial  paper of a domestic  issuer if at the time of purchase such paper is
rated in one (1) of the two (2) highest rating categories of Standard and Poor's
Rating  Group,  a division of McGraw  Hill,  Inc.,  a New York  corporation,  or
Moody's Investors Service, Inc.;

     (b) The Companies,  or any of them,  may make loans to officers,  directors
and employees of any of them provided such loans are made in the ordinary course
of  business,  and  are  in an  aggregate  principal  amount  of not  more  than
$200,000.00 at any time outstanding;

     (c)  Borrower may  continue to hold  capital  stock of American  Physicians
Service Group, Inc. held by Borrower on the date hereof; and

     (d) The Companies may create new  Subsidiaries,  hold stock in Subsidiaries
and themselves,  and engage in the transactions permitted by Section 9.3 hereof,
provided that Borrower complies with Section 8.13.

     Section 9.6    Limitation on Issuance of Capital Stock.  
                    ----------------------------------------

     Borrower  will not permit  any of its  Subsidiaries  to at any time  issue,
sell,  assign,  or  otherwise  dispose of (a) any of its capital  stock or other
ownership interests,  (b) any securities exchangeable for or convertible into or
carrying  any  rights to acquire  any of its  capital  stock or other  ownership
interests,  or (c) any  option,  warrant,  or other  right to acquire any of its
capital  stock  or  other  ownership  interests;  provided,  however,  that  any
Subsidiary  of Borrower  may issue,  sell,  assign or  otherwise  dispose of its
capital stock or other ownership interests,  or securities  exchangeable for its
capital  stock  or  other  ownership   interests,   to  Borrower  or  any  other
Wholly-Owned Subsidiary.

     Section 9.7    Transactions With Affiliates. 
                    -----------------------------

     Borrower will not enter into,  and will not permit any of its  Subsidiaries
to enter into, any transaction,  including,  without  limitation,  the purchase,
sale,  or  exchange  of  property  or the  rendering  of any  service,  with any
Affiliate  of Borrower or any  Subsidiary  of  Borrower,  except in the ordinary
course of Borrower's or such

                                       33

<PAGE>




Subsidiary's  business and upon fair and  reasonable  terms no less favorable to
Borrower or such Subsidiary than would be obtained in a comparable  arm's-length
transaction with a Person not an Affiliate of Borrower or such Subsidiary.

     Section 9.8    Disposition of Assets.  
                    ----------------------

     Borrower will not sell, lease,  assign,  transfer,  or otherwise dispose of
any  of  its  assets,  nor  permit  any  of its  Subsidiaries  (other  than  the
Partnerships) to do so with any of their respective  assets,  except (subject to
the mandatory  prepayments required by Section 3.3) (a) inter-Company  transfers
between  Borrower  and  a  Wholly-Owned   Subsidiary  or  between   Wholly-Owned
Subsidiaries,  (b)  dispositions  of assets,  other than  lithotripters,  in the
ordinary course of business for  consideration  of up to an aggregate  amount of
$250,000.00  during the term of this Agreement,  (and the  Administrative  Agent
agrees  to  execute  and  deliver  releases  of Liens in  connection  with  such
dispositions), (c) dispositions by any Company of assets used in connection with
cardiac  rehabilitation  or  diagnostic  imaging,  and (d)  dispositions  of any
tangible  assets that are worn or obsolete,  provided that such tangible  assets
are replaced by assets of similar  character where the replacement of such asset
is necessary or appropriate for the continued conduct of such Company's business
as presently conducted.

     Section 9.9    Sale and Leaseback.  
                    -------------------

     Borrower  will not enter into,  nor permit any of its  Subsidiaries  (other
than the  Partnerships)  to enter into, any  arrangement  with any Person (other
than  another  Company)  pursuant to which it leases from such Person  equipment
used in lithotripsy  operations  that has been or is to be sold or  transferred,
directly  or  indirectly,  by it to such  Person;  provided,  however,  that the
Companies may enter into any  arrangement  with any Person  pursuant to which it
leases  from such  Person  real or  personal  property  not used in  lithotripsy
operations  that  has  been  or  is to  be  sold  or  transferred,  directly  or
indirectly,  by it to such Person,  in an  aggregate  amount of up to but not to
exceed $250,000.00 during the term of this Agreement.

     Section 9.10   Prepayment of Debt.  
                    -------------------

     Borrower will not prepay, nor permit any of its Subsidiaries to prepay, any
Debt, except the Obligations,  if such prepayment would result in Borrower being
in violation of Article X hereof.

     Section 9.11   Nature of Business. 
                    -------------------

     Borrower will not, and will not permit any of its Subsidiaries  (other than
the  Partnerships) to, engage in any business other than the businesses in which
they are engaged on the date hereof;  provided,  however, that Borrower will not
and will not permit any of its Subsidiaries  (other than the  Partnerships)  not
already in the business of providing non-medical  management services to cardiac
rehabilitation  or  diagnostic  imaging  operations,  to engage  in either  such
business.

     Section  9.12  Environmental Protection.  
                    -------------------------

     Borrower will not, and will not permit any of its  Subsidiaries to, conduct
any activity or use any of their  respective  properties or assets in any manner
that could reasonably be expected to violate any Environmental Law or create any
Environmental Liabilities for which Borrower or any of its Subsidiaries would be
responsible.

     Section 9.13   Accounting.  
                    -----------

     Borrower will not, and will not permit any of its Subsidiaries  (other than
the  Partnerships)  to,  change  its  fiscal  year or  make  any  change  (a) in
accounting  treatment  or reporting  practices,  except as permitted by GAAP and
disclosed to the Administrative Agent, or (b) in tax reporting treatment, except
as permitted by law.

     Section 9.14   Amendment of Partnership and Management Agreements.  
                    ---------------------------------------------------

     Borrower  will not, and will not permit any of its  Subsidiaries  to, amend
any  partnership  agreements  of  any  of the  Partnerships  or  any  management
agreements  between any Company and any of the  Partnerships,  if such amendment
could  reasonably be expected to have a material adverse effect on the business,
condition (financial or otherwise),  operations,  or properties of the Companies
taken as a whole, Borrower, or any Material Subsidiary.

                                    ARTICLE X

                               FINANCIAL COVENANTS

     Borrower  hereby  covenants and agrees that, as long as the  Obligations or
any part  thereof  are  outstanding  or any Bank has any  Commitment  hereunder,
Borrower will perform and observe the following financial covenants:


                                       34

<PAGE>




     Section 10.1   Total Debt to EBITDA.  
                    ---------------------

     Borrower will not permit the Total Debt to EBITDA  Ratio,  determined as of
the last day of each fiscal quarter of the Companies and for the four (4) fiscal
quarter  period then ending,  to exceed the ratio set forth opposite such period
below:


              Period                                             Ratio
              -------                                            -----
Date hereof through September 30, 1996                        4.00 to 1.0
October 1, 1996 through December 31, 1996                     3.25 to 1.0
January 1, 1997 through December 31, 1997                     3.00 to 1.0
January 1, 1998 through December 31, 1998                     2.50 to 1.0
January 1, 1999 and thereafter                                2.00 to 1.0

     For purposes of this Section 10.1, cash flows during the relevant period of
any entity acquired by the Companies during such period shall be included in the
calculation of EBITDA.

     Section 10.2   Interest Coverage Ratio. 
                    ------------------------

     Borrower  will not permit the Interest  Coverage  Ratio (a) as of September
30,  1996 for the six (6) month  period  then ended to be less than 2.75 to 1.0,
(b) as of December  31, 1996 for the nine (9) month period then ended to be less
than  3.25 to 1.0,  (c) as of the last day of March  31,  1997,  June 30,  1997,
September  30, 1997 and December 31, 1997,  in each case for the four (4) fiscal
quarters  then  ended,  to be less than  3.75 to 1.0,  (d) as of the last day of
March 31, 1998, June 30, 1998, September 30, 1998 and December 31, 1998, in each
case for the four (4) fiscal  quarters then ended,  to be less than 4.50 to 1.0,
and (e) as of the  last  day of each  fiscal  quarter  of  Borrower  thereafter,
commencing March 31, 1999, to be less than 5.25 to 1.0.

     Section 10.3   Total Debt Service Coverage Ratio.  
                    ----------------------------------

     Borrower  will not permit the Total Debt Service  Coverage  Ratio (a) as of
September  30, 1996 for the six (6) month period then ended to be less than 1.10
to 1.0,  (b) as of December 31, 1996 for the nine (9) month period then ended to
be less than 1.20 to 1.0,  and (c) as of the last day of each fiscal  quarter of
Borrower thereafter, commencing March 31, 1997, to be less than 1.30 to 1.0.

     Section 10.4   Consolidated Net Worth.  
                    -----------------------

     Borrower shall not permit, as of any date during the following periods, its
Consolidated Net Worth to be less than the amount set forth opposite such period
below, such amount to be (a) increased on the last day of each successive fiscal
quarter of Borrower, beginning June 30, 1996 to and including March 30, 1998, by
an amount  equal to one  hundred  percent  (100%) of the  increase  in net worth
arising from any Acquisition or equity  issuance,  and (b) increased on the last
day of each successive fiscal quarter of Borrower beginning June 30, 1998, by an
amount equal to seventy-five  percent (75%) of Consolidated  Net Income for such
fiscal quarter:


               Period                                             Amount
               ------                                             ------
Date hereof through September 29, 1996                        $55,000,000.00
September 30, 1996 through March 30, 1997                     $65,000,000.00
March 31, 1997 through September 29, 1997                     $70,000,000.00
September 30, 1997 through March 30, 1998                     $75,000,000.00
March 31, 1998 and thereafter                                 $75,000,000.00


                                       35

<PAGE>




     Section 10.5   Minimum  EBITDA.  
                    ----------------

     Borrower  will not permit (a) EBITDA for any one (1) fiscal  quarter of the
Companies  to be  less  than  $5,000,000.00,  or (b)  EBITDA  for  any  two  (2)
consecutive fiscal quarters of the Companies to be less than $12,000,000.00.

                                   ARTICLE XI

                                     DEFAULT

     Section 11.1   Events of Default.  
                    ------------------

     Each of the following shall be deemed an "Event of Default":

     (a) Borrower  shall fail to pay when due any amount of principal  under any
Note.

     (b)  Borrower  shall  fail to pay by the  Administrative  Agent or any Bank
(through the Administrative  Agent), any interest on the Advances,  any fees due
hereunder or under any other Loan Document, or any other part of the Obligations
which does not  constitute  principal  under the Notes,  and such failure  shall
continue for three (3) Business Days after such payment became due.

     (c) Any  representation  or warranty made or deemed made by Borrower or any
Obligated Party (or any of their respective officers) in any Loan Document or in
any certificate, report, notice, or financial statement furnished at any time in
connection with this Agreement shall be false,  misleading,  or erroneous in any
material  respect  when made or deemed to have been made and the effect  thereof
shall not have been cured within ten (10) Business Days after notice  thereof to
Borrower by the  Administrative  Agent or any Bank  (through the  Administrative
Agent).

     (d) Borrower shall fail to perform,  observe,  or comply with any covenant,
agreement,  or term  contained in Article X; or Borrower or any Obligated  Party
shall fail to perform,  observe, or comply with any covenant,  agreement or term
contained  in Section 8.1 (a),  (b),  (c) or (d), or Article IX and such failure
shall  continue for a period of three (3) Business Days after notice  thereof to
Borrower by the  Administrative  Agent or any Bank  (through the  Administrative
Agent);  or Borrower or any  Obligated  Party shall fail to perform,  observe br
comply with any other covenant,  agreement,  or term contained in this Agreement
or any other Loan Document  (other than  covenants to pay the  Obligations)  and
such failure shall  continue for a period of ten (10) Business Days after notice
thereof  to  Borrower  by the  Administrative  Agent  or any Bank  (through  the
Administrative Agent).

     (e) Any Company shall commence a voluntary  proceeding seeking liquidation,
reorganization,  or other  relief with  respect to itself or its debts under any
bankruptcy,  insolvency,  or other  similar  law now or  hereafter  in effect or
seeking the appointment of a trustee, receiver, liquidator,  custodian, or other
similar official of it or a substantial part of its property or shall consent to
any such  relief  or to the  appointment  of or  taking  possession  by any such
official in an  involuntary  case or other  proceeding  commenced  against it or
shall make a general  assignment for the benefit of creditors or shall generally
fail to pay its debts as they become due or shall take any  corporate  action to
authorize any of the foregoing.

     (f) An  involuntary  proceeding  shall be  commenced  against  any  Company
seeking liquidation,  reorganization,  or other relief with respect to it or its
debts under any bankruptcy, insolvency, or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,  custodian
or other similar official for it or a substantial part of its property, and such
involuntary  proceeding  shall remain  undismissed  and unstayed for a period of
forty-five (45) days.

     (g) Any Company shall fail to discharge  within a period of forty-five (45)
days after the commencement  thereof any attachment,  sequestration,  or similar
proceeding or proceedings, including without limitation any order of forfeiture,
seizure or divestiture  (whether under RICO or otherwise) involving an aggregate
amount in excess of Two Hundred Fifty Thousand and 00/100 Dollars  ($250,000.00)
against any of its assets or properties.

     (h) A final judgment or judgments for the payment of money in excess of Two
Hundred Fifty Thousand and 00/100 Dollars  ($250,000.00)  in the aggregate shall
be rendered  by a court or courts  against any Company and the same shall not be
discharged  (or provision  shall not be made for such  discharge),  or a stay of
execution  thereof shall not be procured,  within  forty



                                       36

<PAGE>

-five (45) days from the date of entry  thereof and such Company shall not,
within said period of  forty-five  (45) days, or such longer period during which
execution of the same shall have been  stayed,  appeal  therefrom  and cause the
execution thereof to be stayed during such appeal.

     (i) Any Company  shall fail to pay when due any principal of or interest on
Debt in an aggregate  principal  amount of Two Hundred Fifty Thousand and 00/100
Dollars  ($250,000.00) or more (other than the Obligations),  or the maturity of
any such Debt  shall  have been  accelerated,  or any such Debt  shall have been
required to be prepaid prior to the stated maturity thereof,  or any event shall
have  occurred  that permits (or, with the giving of notice or the lapse of time
or both,  would  permit) any holder or holders of such Debt or any Person acting
on behalf of such  holder or  holders  to  accelerate  the  maturity  thereof or
require any such prepayment.

     (j) This  Agreement  or any other Loan  Document  shall cease to be in full
force  and  effect  or  shall be  declared  null  and  void or the  validity  or
enforceability  thereof  shall be  contested  or  challenged  by  Borrower,  any
Subsidiary  of  Borrower,  any  Obligated  Party  or  any  of  their  respective
shareholders,  or  Borrower  or any  Obligated  Party shall deny that it has any
further liability or obligation under any of the Loan Documents,  or any Lien or
security interest created by the Loan Documents shall for any reason cease to be
a valid,  first priority perfected security interest in and Lien upon any of the
Collateral purported to be covered thereby.

     (k) Any of the  following  events  shall  occur or exist  with  respect  to
Borrower or any ERISA Affiliate:  (i) any Prohibited  Transaction  involving any
Plan; (ii) any Reportable Event with respect to any Plan; (iii) the filing under
Section  4041 of  ERISA of a  notice  of  intent  to  terminate  any Plan or the
termination of any Plan;  (iv) any event or circumstance  that might  constitute
grounds entitling the PBGC to institute  proceedings under Section 4042 of ERISA
for the termination  of, or for the appointment of a trustee to administer,  any
Plan, or the institution by the PBGC of any such proceedings; or (v) complete or
partial  withdrawal  under  Section 4201 or 4204 of ERISA from a  Multi-employer
Plan or the  reorganization,  insolvency,  or termination of any  Multi-employer
Plan; and in each case above,  such event or condition,  together with all other
events or conditions,  if any, have subjected or could in the reasonable opinion
of the Required Banks subject Borrower, or any of its Subsidiaries,  to any tax,
penalty,  or other  liability to a Plan, a  Multi-employer  Plan,  the PBGC,  or
otherwise (or any  combination  thereof) which in the aggregate  exceed or could
reasonably be expected to exceed Two Hundred Fifty  Thousand and 00/100  Dollars
($250,000.00).

     (l) Any Change in Control shall occur.

     (m) Borrower  shall fail to deliver to the  Administrative  Agent,  for the
benefit of the Banks,  interest rate hedging or other  protection  agreements (a
"Hedging  Agreement") with a Bank or other person  reasonably  acceptable to the
Agents in a  notional  amount of at least  Twenty  Million  and  00/100  Dollars
($20,000,000.00)  for a duration of at least three (3) years,  assuring that the
net  interest  cost on such  amount is  fixed,  capped  or  hedged,  in form and
substance  acceptable to the Administrative Agent within ninety (90) days of the
date hereof.

     Section 11.2   Remedies.  
                    ---------

     If any Event of Default shall occur and be continuing,  the  Administrative
Agent may (and if directed by the Required  Banks,  shall) do any one or more of
the following:

     (a)  Acceleration.  Declare all  outstanding  principal  of and accrued and
unpaid  interest on the Notes and all other  obligations  of Borrower  under the
Loan Documents  immediately due and payable, and the same shall thereupon become
immediately due and payable,  without  notice,  demand,  presentment,  notice of
dishonor,  notice of acceleration,  notice of intent to accelerate,  protest, or
other  formalities  of any kind,  all of which are  hereby  expressly  waived by
Borrower;

     (b) Termination of Commitments. Terminate the Commitments without notice to
Borrower;

     (c) Judgment. Reduce any claim to judgment;


                                       37

<PAGE>




     (d)  Foreclosure.  Foreclose or  otherwise  enforce any Lien granted to the
Administrative  Agent for the benefit of itself and the Banks to secure  payment
and  performance  of the  Obligations  in accordance  with the terms of the Loan
Documents; and

     (e) Rights.  Exercise any and all rights and remedies  afforded by the laws
of the Commonwealth of Massachusetts  or any other  jurisdiction,  by any of the
Loan Documents, by equity, or otherwise; 

provided,  however,  that  upon the  occurrence  of an Event  of  Default  under
Subsection (e) or (f) of Section 11.1, the Commitments of all of the Banks shall
automatically terminate, and the outstanding principal of and accrued and unpaid
interest  on the Notes  and all other  obligations  of  Borrower  under the Loan
Documents  shall  thereupon  become  immediately due and payable without notice,
demand,  presentment,  notice of  dishonor,  notice of  acceleration,  notice of
intent to accelerate,  protest,  or other  formalities of any kind, all of which
are hereby expressly waived by Borrower.

     Section 11.3   Performance by the Administrative Agent.  
                    ----------------------------------------

     If Borrower  shall fail to perform any covenant or agreement in  accordance
with the terms of the Loan  Documents,  the  Administrative  Agent  may,  at the
direction of the Required Banks,  perform or attempt to perform such covenant or
agreement on behalf of Borrower.  In such event,  Borrower shall, at the request
of  the  Administrative   Agent,   promptly  pay  any  amount  expended  by  the
Administrative  Agent or the  Banks  in  connection  with  such  performance  or
attempted  performance  to the  Administrative  Agent at the  Principal  Office,
together with  interest  thereon at the Default Rate from and including the date
of such  expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding  the  foregoing,   it  is  expressly  agreed  that  neither  the
Administrative Agent nor any Bank shall have any liability or responsibility for
the performance of any obligation of Borrower under this Agreement or any of the
other Loan Documents.

                                   ARTICLE XII

                            THE ADMINISTRATIVE AGENT

     Section 12.1   Appointment, Powers and Immunities.  
                    -----------------------------------

     In  order  to  expedite  the  various  transactions  contemplated  by  this
agreement,  the Banks hereby  irrevocably  appoint and authorize  FNBB to act as
their Administrative Agent hereunder and under each of the other Loan Documents.
FNBB  consents  to such  appointment  and  agrees to  perform  the duties of the
Administrative  Agent as specified  herein.  The Banks  authorize and direct the
Administrative Agent to take such action in their name and on their behalf under
the terms and  provisions of the Loan  Documents and to exercise such rights and
powers  thereunder  as  are  specifically   delegated  to  or  required  of  the
Administrative Agent for the Banks,  together with such rights and powers as are
reasonably  incidental  thereto.  The  Administrative  Agent is hereby expressly
authorized to act as the Administrative  Agent on behalf of itself and the other
Banks:

     (a) To  receive on behalf of each of the Banks any  payment  of  principal,
interest,  fees or other amounts paid  pursuant to this  Agreement and the Notes
and to distribute to each Bank its pro rata share of all payments so received as
provided in this Agreement;

     (b) To  receive  all  documents  and items to be  furnished  under the Loan
Documents;

     (c) To act as nominee  for and on behalf of the Banks in and under the Loan
Documents;

     (d) To arrange for the means  whereby the funds of the Banks are to be made
available to Borrower;

     (e) To distribute to the Banks information,  requests,  notices,  payments,
prepayments,  documents  and  other  items  received  from  Borrower,  the other
Obligated Parties, and other Persons;

     (f) To execute and deliver to Borrower,  the other Obligated  Parties,  and
other Persons, all requests, demands, approvals,  notices, and consents received
from the Banks;

                                       38

<PAGE>




     (g) To the extent permitted by the Loan Documents, to exercise on behalf of
each Bank all rights and remedies of the Banks upon the  occurrence of any Event
of Default;

     (h) To accept,  execute,  and deliver the Security  Agreement and any other
security documents as the secured party; and

     (i) To take such other actions as may be requested by the Required Banks.

     Neither  the  Administrative  Agent  nor any of its  Affiliates,  officers,
directors,  employees,  attorneys, or agents shall be liable to any Bank for any
action  taken or omitted to be taken by any of them  hereunder  or  otherwise in
connection with this Agreement or any of the other Loan Documents (INCLUDING ANY
ACTION TAKEN OR OMITTED TO BE TAKEN BY SUCH PARTIES NEGLIGENTLY),  but excluding
such actions or omissions  arising from such  parties' own gross  negligence  or
willful  misconduct.  Without limiting the generality of the preceding sentence,
the  Administrative  Agent:  (i) may treat  the payee of any Note as the  holder
thereof until the Administrative Agent receives written notice of the assignment
or  transfer  thereof  signed  by such  payee  and in form  satisfactory  to the
Administrative Agent; (ii) shall have no duties or responsibilities except those
expressly set forth in this  Agreement and the other Loan  Documents,  and shall
not by reason of this  Agreement  or any other  Loan  Document  be a trustee  or
fiduciary for any Bank;  (iii) shall not be required to initiate any  litigation
or collection  proceedings  hereunder or under any other Loan Document except to
the extent requested by the Required Banks; (iv) shall not be responsible to the
Banks for any recitals,  statements,  representations or warranties contained in
this Agreement or any other Loan Document,  or any certificate or other document
referred to or provided for in, or received by any of them under, this Agreement
or  any  other  Loan  Document,  or  for  the  value,  validity,  effectiveness,
enforceability,  or  sufficiency of this Agreement or any other Loan Document or
any other  document  referred  to or  provided  for herein or therein or for any
failure by any Person to perform any of its obligations hereunder or thereunder;
(v) may consult with legal counsel (including counsel for Borrower), independent
public accountants, and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in  accordance  with
the advice of such  counsel,  accountants,  or experts;  and (vi) shall incur no
liability  under or in respect of any Loan  Document  by acting upon any notice,
consent,  certificate,  or other  instrument  or  writing  believed  by it to be
genuine and signed or sent by the proper party or parties. As to any matters not
expressly provided for by this Agreement,  the Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting,  here under in
accordance with instructions signed by the Required Banks, and such instructions
of the Required  Banks and any action  taken or failure to act pursuant  thereto
shall be binding on all of the Banks; provided, however, that the Administrative
Agent shall not be required to take any action which exposes the  Administrative
Agent to personal  liability or which is contrary to this Agreement or any other
Loan Document or applicable law.

     Section 12.2   Rights of Administrative Agent as a Bank. 
                    -----------------------------------------

     With respect to its Commitment, the Advances made by it and the Note issued
to it, FNBB in its capacity as a Bank  hereunder  shall have the same rights and
powers  hereunder  as any other Bank and may exercise the same as though it were
not acting as the  Administrative  Agent,  and the term "Bank" or "Banks" shall,
unless the context otherwise indicates,  include the Administrative Agent in its
individual  capacity.  The Administrative  Agent and its Affiliates may (without
having to account therefor to any Bank) accept deposits from, lend money to, act
as trustee  under  indentures  of,  provide  merchant  banking  services to, and
generally  engage in any kind of  business  with  Borrower,  any  Subsidiary  of
Borrower,  any other Obligated  Party,  and any other Person who may do business
with or own securities of Borrower or any other  Obligated  Party,  all as if it
were not  acting as the  Administrative  Agent and  without  any duty to account
therefor to the Banks.

     Section 12.3   Sharing of Payments, Etc. 
                    -------------------------

     If any Bank shall obtain any payment of any principal of or interest on any
Advance made by it under this Agreement or payment of any other obligation under
the Loan  Documents then owed by Borrower or any other  Obligated  Party to such
Bank,  whether  voluntary,  involuntary,  through  the  exercise of any right of
setoff, banker's lien, counterclaim or similar right, or otherwise, in excess of
its pro rata  share,  such Bank shall  promptly  purchase  from the other  Banks
participations in the Advances held by them hereunder in such amounts,  and make
such other  adjustments  from time to time as shall be  necessary  to cause such
purchasing Bank to share the excess payment ratably with each of the other Banks
in accordance with its pro rata portion  thereof.  To such end, all of the Banks
shall  make  appropriate   adjustments   among  themselves  (by  the  resale  of
participations  sold or otherwise) if all or any portion of such excess  payment
is thereafter rescinded or must

                                       39

<PAGE>




otherwise be restored. Borrower agrees, to the fullest extent it may effectively
do so under  applicable law, that any Bank so purchasing a participation  in the
Advances  made by the other Banks may  exercise  all rights of setoff,  banker's
lien,  counterclaim,  or similar  rights with respect to such  participation  as
fully as if such Bank were a direct holder of Advances to Borrower in the amount
of such  participation.  Nothing  contained  herein  shall  require  any Bank to
exercise any such right or shall  affect the right of any Bank to exercise,  and
retain the  benefits  of  exercising,  any such right with  respect to any other
indebtedness or obligation of Borrower.

     Section 12.4   Indemnification.  
                    ----------------

     THE BANKS HEREBY AGREE TO INDEMNIFY THE ADMINISTRATIVE  AGENT FROM AND HOLD
THE  ADMINISTRATIVE  AGENT HARMLESS  AGAINST (TO THE EXTENT NOT REIMBURSED UNDER
SECTIONS 13.1 AND 13.2, BUT WITHOUT  LIMITING THE  OBLIGATIONS OF BORROWER UNDER
SECTIONS  13.1  AND  13.2),   RATABLY  IN  ACCORDANCE   WITH  THEIR   RESPECTIVE
COMMITMENTS, ANY AND ALL LIABILITIES,  OBLIGATIONS,  LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS,  DEFICIENCIES,  SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
FEES), AND  DISBURSEMENTS OF ANY KIND OR NATURE  WHATSOEVER WHICH MAY BE IMPOSED
ON,  INCURRED  BY,  OR  ASSERTED  AGAINST  THE  ADMINISTRATIVE  AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF ANY OF THE LOAN  DOCUMENTS  OR ANY ACTION TAKEN OR
OMITTED TO BE TAKEN BY THE  ADMINISTRATIVE  AGENT  UNDER OR IN RESPECT OF ANY OF
THE LOAN  DOCUMENTS  INCLUDING ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED
BY  THE  ADMINISTRATIVE  AGENT'S  SOLE  OR  CONTRIBUTORY  NEGLIGENCE;  PROVIDED,
FURTHER,  THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF THE  FOREGOING  TO THE
EXTENT  CAUSED  BY  THE  ADMINISTRATIVE  AGENT'S  GROSS  NEGLIGENCE  OR  WILLFUL
MISCONDUCT.  WITHOUT LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF
THE BANKS THAT THE ADMINISTRATIVE AGENT SHALL BE INDEMNIFIED  HEREUNDER FROM AND
HELD HARMLESS AGAINST ALL OF SUCH  LIABILITIES,  OBLIGATIONS,  LOSSES,  DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS,  DEFICIENCIES,  SUITS, COSTS, EXPENSES (INCLUDING
ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY
ARISING OUT OF OR  RESULTING  FROM THE SOLE OR  CONTRIBUTORY  NEGLIGENCE  OF THE
ADMINISTRATIVE AGENT. WITHOUT LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH
BANK AGREES TO REIMBURSE THE  ADMINISTRATIVE  AGENT PROMPTLY UPON DEMAND FOR ITS
PRO RATA  SHARE  (CALCULATED  ON THE  BASIS OF THE  COMMITMENTS)  OF ANY AND ALL
OUT-OF-POCKET   EXPENSES   (INCLUDING   ATTORNEYS'   FEES)   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,  THE LOAN DOCUMENTS,  TO THE EXTENT THAT THE
ADMINISTRATIVE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY BORROWER.

     Section 12.5   Independent Credit Decisions.  
                    -----------------------------

     Each Bank agrees  that it has  independently  and  without  reliance on any
Agent or any other Bank, and based on such  documents and  information as it has
deemed  appropriate,  made its own credit  analysis of Borrower  and decision to
enter into this Agreement and that it will,  independently  and without reliance
upon any Agent or any other Bank, and based upon such documents and  information
as it shall deem appropriate at the time,  continue to make its own analysis and
decisions  in taking or not taking  action  under this  Agreement  or any of the
other Loan  Documents.  The  Administrative  Agent shall not be required to keep
itself informed as to the performance or observance by Borrower or any Obligated
Party of this  Agreement or any other Loan Document or to inspect the properties
or books of Borrower or any  Obligated  Party.  Except for notices,  reports and
other documents and information  expressly required to be furnished to the Banks
by the  Administrative  Agent hereunder or under the other Loan  Documents,  the
Administrative  Agent shall not have any duty or  responsibility  to provide any
Bank with any credit or other  financial  information  concerning  the  affairs,
financial  condition or business of Borrower or any  Obligated  Party (or any of
their Affiliates) which may come into the possession of the Administrative Agent
or any of its Affiliates.

     Section 12.6   Several Commitments.  
                    --------------------

     The Commitments and other obligations of the Banks under this Agreement are
several.  The  default by any Bank in making an Advance in  accordance  with its
Commitment shall not relieve the other Banks

                                       40

<PAGE>




of their  obligations  under this Agreement.  In the event of any default by any
Bank in making any Advance,  each  nondefaulting Bank shall be obligated to make
its  Advance  but  shall  not be  obligated  to  advance  the  amount  which the
defaulting Bank was required to advance hereunder. In no event shall any Bank be
required  to advance an amount or amounts  which shall in the  aggregate  exceed
such Bank's Commitment.  No Bank shall be responsible for any act or omission of
any other Bank.

     Section 12.7   Successor Administrative Agent. 
                    -------------------------------

     Subject to the  appointment  and  acceptance of a successor  Administrative
Agent as  provided  below,  the  Administrative  Agent may resign at any time by
giving notice thereof to the Banks and Borrower and the Administrative Agent may
be removed at any time with or without  cause by the  Required  Banks.  Upon any
such resignation or removal, the Required Banks will have the right to appoint a
successor  Administrative  Agent from among the remaining Banks. If no successor
Administrative  Agent shall have been so  appointed  by the  Required  Banks and
shall have accepted such appointment  within thirty (30) days after the retiring
Administrative  Agent's giving of notice of  resignation or the Required  Banks'
removal of the retiring  Administrative Agent, then the retiring  Administrative
Agent may,  on behalf of the Banks,  appoint a successor  Administrative  Agent,
which shall be a commercial  bank organized  under the laws of the United States
of America or any State  thereof and having  combined  capital and surplus of at
least  One  Billion  Dollars  ($1,000,000,000).   Upon  the  acceptance  of  its
appointment as successor  Administrative  Agent,  such successor  Administrative
Agent shall  thereupon  succeed to and become  vested  with all rights,  powers,
privileges,  immunities,  and duties of the resigning or removed  Administrative
Agent,  and the  resigning or removed  Administrative  Agent shall be discharged
from its  duties  and  obligations  under  this  Agreement  and the  other  Loan
Documents.   After  any  Administrative   Agent's   resignation  or  removal  as
Administrative  Agent,  the  provisions  of this  Article XII shall  continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was the Administrative Agent.

     Section 12.8   Independent Contractor.
                    -----------------------

     (a) The relationship between each Agent and each of the Banks is that of an
independent contractor.  The use of the term "Agent" is for convenience only and
is used  to  describe,  as a form of  convention,  the  independent  contractual
relationship between each Agent and each of the Banks. Nothing contained in this
Agreement  or the other Loan  Documents  shall be construed to create an agency,
trust or other fiduciary relationship between any Agent and any of the Banks.

     (b) As an independent contractor empowered by the Banks to exercise certain
rights and perform certain duties and  responsibilities  hereunder and under the
other   Loan   Documents,   the   Administrative   Agent   is   nevertheless   a
"representative"  of the  Banks,  as that term is  defined  in  Article 1 of the
Uniform  Commercial  Code,  for purposes of actions for the benefit of the Banks
and the  Administrative  Agent  with  respect  to all  collateral  security  and
guaranties  contemplated  by  the  Loan  Documents.  Such  actions  include  the
designation of the Administration  Agent as "secured party,"  "mortgagee" or the
like on all financing  statements and other documents and  instruments,  whether
recorded or  otherwise,  relating  to the  attachment,  perfection,  priority or
enforcement of any security interests, mortgages or deeds of trust in collateral
security   intended  to  secure  the  payment  or  performance  of  any  of  the
Obligations, all for the benefit of the Banks and the Administrative Agent.

                                  ARTICLE XIII

                                  MISCELLANEOUS

     Section 13.1   Expenses.  
                    ---------

     Borrower  hereby  agrees to pay on  demand:  (a) all  reasonable  costs and
expenses  of  the  Agents  in  connection  with  the  preparation,  negotiation,
syndication,  execution,  and  delivery  of this  Agreement  and the other  Loan
Documents including,  without limitation, the legal fees and reasonable expenses
of legal counsel for the Agents;  (b) all  reasonable  costs and expenses of the
Agents  in  connection  with any and all  amendments,  modifications,  renewals,
extensions  and  supplements  of any of the Loan  Documents;  (c) all reasonable
costs and  expenses of the Agents and the Banks in  connection  with any Default
and the  enforcement of this  Agreement or any other Loan  Document,  including,
without  limitation,  the fees and expenses of legal  counsel for the Agents and
the  Banks;  (d) all  transfer,  stamp,  documentary,  or other  similar  taxes,
assessments,  or charges levied by any Governmental Authority in respect of this
Agreement  or any  of  the  other  Loan  Documents;  (e)  all  costs,  expenses,
assessments,   and  other  charges  incurred  in  connection  with  any  filing,
registration,  recording,  or  perfection  of  any  security  interest  or  Lien
contemplated by this Agreement or any other Loan Document; and (f) all other

                                       41

<PAGE>




reasonable  costs and expenses  incurred by the Agents in  connection  with this
Agreement or any other Loan Document,  including, without limitation, all costs,
expenses,  and other charges incurred in connection with obtaining any mortgagee
title insurance policy,  survey, audit,  appraisal in respect of the Collateral,
and other out-of-pocket costs and expenses.

     SECTION 13.2   INDEMNIFICATION.  
                    ----------------

     BORROWER  SHALL  INDEMNIFY  THE  AGENTS  AND EACH  BANK AND EACH  AFFILIATE
THEREOF AND THEIR RESPECTIVE  OFFICERS,  DIRECTORS,  EMPLOYEES,  ATTORNEYS,  AND
AGENTS  FROM,  AND  HOLD  EACH OF THEM  HARMLESS  AGAINST,  ANY AND ALL  LOSSES,
LIABILITIES,  CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,  DISBURSEMENTS,  COSTS, AND
EXPENSES (INCLUDING  REASONABLE ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME
SUBJECT  WHICH  DIRECTLY  OR  INDIRECTLY   ARISE  FROM  OR  RELATE  TO  (A)  THE
NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION, OR ENFORCEMENT OF
ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS  CONTEMPLATED BY THE LOAN
DOCUMENTS, (C) ANY BREACH BY BORROWER OF ANY REPRESENTATION, WARRANTY, COVENANT,
OR OTHER  AGREEMENT  CONTAINED IN ANY OF THE LOAN  DOCUMENTS,  (D) THE PRESENCE,
RELEASE,  THREATENED  RELEASE,  DISPOSAL,  REMOVAL,  OR CLEANUP OF ANY HAZARDOUS
MATERIAL LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS
OF BORROWER OR ANY SUBSIDIARY OF BORROWER, OR (E) ANY INVESTIGATION, LITIGATION,
OR   OTHER   PROCEEDING,   INCLUDING,   WITHOUT   LIMITATION,   ANY   THREATENED
INVESTIGATION, LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING.
WITHOUT  LIMITING  THE  FOREGOING,  THIS  INDEMNITY  SHALL  APPLY  TO ANY  LOSS,
LIABILITY,  OBLIGATION,  DAMAGE, PENALTY, JUDGMENT, CLAIM, DEFICIENCY OR EXPENSE
ARISING OUT OF THE SOLE OR CONCURRENT  NEGLIGENCE OF ANY AGENT OR ANY BANK,  BUT
SHALL EXCLUDE ANY LOSS, LIABILITY, OBLIGATION, DAMAGE, PENALTY, JUDGMENT, CLAIM,
DEFICIENCY  OR  EXPENSE  ARISING  BY REASON OF THE  GROSS  NEGLIGENCE  OR WILFUL
MISCONDUCT OF ANY AGENT OR BANK.

     Section 13.3   No Duty. 
                    --------

     All attorneys, accountants,  appraisers, and other professional Persons and
consultants  retained  by the Agents  and the Banks  shall have the right to act
exclusively  in the  interest of the Agents and the Banks and shall have no duty
of disclosure, duty of loyalty, duty of care, or other duty or obligation of any
type or nature whatsoever to Borrower, any shareholder or Subsidiary of Borrower
or any other Person.

     Section 13.4   No Fiduciary Relationship.  
                    --------------------------

     The  relationship  between  Borrower and each Bank is solely that of debtor
and  creditor,  and none of the Agents nor any of the Banks has any fiduciary or
other special relationship with Borrower, and no term or condition of any of the
Loan  Documents  shall  be  construed  so as to deem  the  relationship  between
Borrower and any Bank to be other than that of debtor and creditor.

     Section 13.5   No Waiver; Cumulative Remedies. 
                    -------------------------------

     No failure on the part of the Agents or any Bank to  exercise  and no delay
in exercising,  and no course of dealing with respect to, any right,  power,  or
privilege under this Agreement shall operate as a waiver thereof,  nor shall any
single or  partial  exercise  of any  right,  power,  or  privilege  under  this
Agreement  preclude any other or further exercise thereof or the exercise of any
other right,  power, or privilege.  The rights and remedies provided for in this
Agreement and the other Loan  Documents are  cumulative and not exclusive of any
rights and remedies provided by law.

     Section 13.6   Successors and Assigns.
                    -----------------------

     (a) This  Agreement  shall be binding  upon and inure to the benefit of the
parties hereto and their  respective  successors  and assigns.  Borrower may not
assign or transfer any of its rights or obligations  hereunder without the prior
written consent of the  Administrative  Agent and all of the Banks. Any Bank may
sell participations to one or more banks or other institutions in or to all or a
portion of its rights and  obligations  under this  Agreement and the other Loan
Documents  (including,  without limitation,  all or a portion of its Commitments
and  the  Advances  owing  to it);  provided,  however,  that  (i)  such  Bank's
obligations  under  this  Agreement  and the other  Loan  Documents  (including,
without  limitation,  its Commitments)  shall remain  unchanged,  (ii) such Bank
shall  remain  solely  responsible  to  Borrower  for  the  performance  of such
obligations,  (iii)  such  Bank  shall  remain  the  holder of its Notes for all
purposes of this  Agreement,  (iv)  Borrower  shall  continue to deal solely and
directly  with such Bank in connection  with such Bank's rights and  obligations
under this Agreement and the other Loan Documents, and

                                       42

<PAGE>




(v) such Bank shall not sell a participation that conveys to the participant the
right to vote or give or withhold  consents  under this  Agreement  or any other
Loan Document,  other than the right to vote upon or consent to (A) any increase
of such Bank's  Commitments,  (B) any reduction of the  principal  amount of, or
interest to be paid on, the  Advances  of such Bank,  (C) any  reduction  of any
commitment fee or other amount payable to such Bank under any Loan Document,  or
(D) any  postponement  of any date for the  payment  of any  amount  payable  in
respect of the Advances of such Bank.

     (b)  Borrower  and each of the  Banks  agree  that any Bank (an  "Assigning
Bank")  may at any time  assign  to one or more  Eligible  Assignees  all,  or a
portion of all, of its rights and obligations under this Agreement and the other
Loan  Documents  (including,  without  limitation,  its Commitment and Advances)
(each an  "Assignee");  provided,  however,  that (i)  except  in the case of an
assignment of all of a Bank's rights and  obligations  under this  Agreement and
the other Loan  Documents,  the amount of the  Commitments of the assigning Bank
being  assigned  pursuant to each  assignment  (determined as of the date of the
Assignment and Acceptance with respect to such assignment)  shall in no event be
less than  $5,000,000.00,  and (ii) the  parties to each such  assignment  shall
execute and deliver to the Administrative Agent for its acceptance and recording
in the Register (as defined below), an Assignment and Acceptance,  together with
the Note subject to such  assignment,  and a processing and  recordation  fee of
$3,000.00. Upon such execution,  delivery,  acceptance,  and recording, from and
after the effective date  specified in each  Assignment  and  Acceptance,  which
effective  date shall be at least  five (5)  Business  Days after the  execution
thereof,  or, if so specified in such  Assignment  and  Acceptance,  the date of
acceptance  thereof by the  Administrative  Agent,  (x) the assignee  thereunder
shall  be a party  hereto  as a  "Bank"  and,  to the  extent  that  rights  and
obligations  hereunder have been assigned to it pursuant to such  Assignment and
Acceptance,  have the rights and  obligations  of a Bank hereunder and under the
Loan  Documents and (y) the Bank that is an assignor  thereunder  shall,  to the
extent that rights and  obligations  hereunder have been assigned by it pursuant
to such  Assignment and  Acceptance,  relinquish its rights and be released from
its  obligations  under this Agreement and the other Loan Documents (and, in the
case of an Assignment and Acceptance  covering all or the remaining portion of a
Bank's rights and obligations under the Loan Documents, such Bank shall cease to
be a party thereto).

     (c) By executing and delivering an Assignment and Acceptance, the Assigning
Bank and its Assignee confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment and Acceptance,
such  Assigning  Bank  makes  no  representation  or  warranty  and  assumes  no
responsibility  with respect to any statements,  warranties,  or representations
made in or in connection  with the Loan  Documents or the  execution,  legality,
validity, and enforceability,  genuineness,  sufficiency,  or. value of the Loan
Documents or any other instrument or document furnished  pursuant thereto;  (ii)
such  Assigning  Bank  makes  no  representation  or  warranty  and  assumes  no
responsibility  with  respect to the  financial  condition  of  Borrower  or any
Obligated  Party or the  performance  or observance by Borrower or any Obligated
Party of its obligations  under the Loan Documents;  (iii) the Assignee confirms
that it has received copies of the Loan  Documents,  together with copies of the
financial  statements  referred to in Section 7.2 and such other  documents  and
information  as it has deemed  appropriate  to make its own credit  analysis and
decision to enter into such Assignment and  Acceptance;  (iv) the Assignee will,
independently  and  without  reliance  upon  the  Administrative  Agent  or such
assignor  and  based  on  such  documents  and  information  as  it  shall  deem
appropriate at the time,  continue to make its own credit decisions in taking or
not taking  action under this  Agreement and the other Loan  Documents;  (v) the
Assignee  confirms that it is an Eligible  Assignee;  (vi) the Assignee appoints
and authorizes the  Administrative  Agent to take such action as  Administrative
Agent on its behalf and  exercise  such powers  under the Loan  Documents as are
delegated to the Administrative  Agent by the terms thereof,  together with such
powers as are reasonably  incidental thereto; and (vii) the Assignee agrees that
it will perform in accordance with their terms all of the  obligations  which by
the terms of the Loan Documents are required to be performed by it as a Bank.

     (d) The Administrative  Agent shall maintain at its Principal Office a copy
of each Assignment and Acceptance delivered to and accepted by it and a register
for the  recordation  of the names and addresses of the Banks and the Commitment
of, and principal  amount of the Advances  owing to, each Bank from time to time
(the  "Register").  The entries in the Register  shall be conclusive and binding
for all purposes, absent manifest error, and Borrower, the Administrative Agent,
and the Banks may treat each Person  whose name is recorded in the Register as a
Bank hereunder for all purposes under the Loan Documents.  The Register shall be
available for inspection by Borrower or any Bank at any reasonable time and from
time to time upon reasonable prior notice.


                                       43

<PAGE>




     (e) Upon  its  receipt  of an  Assignment  and  Acceptance  executed  by an
assigning  Bank and Assignee  representing  that it is an Eligible  Assignee (or
other  assignee  permitted  hereunder),  together  with any Note subject to such
assignment,  the  Administrative  Agent shall, if such Assignment and Acceptance
has been  completed  and is in  substantially  the form of Exhibit A, (i) accept
such Assignment and Acceptance, (ii) record the information contained therein in
the Register,  and (iii) give prompt written notice thereof to Borrower.  Within
five (5)  Business  Days after its  receipt  of such  notice,  Borrower,  at its
expense,  shall execute and deliver to the Administrative  Agent in exchange for
the surrendered Note a new Note to the order of such Eligible Assignee (or other
assignee  permitted  hereunder)  in an  amount  equal  to  the  portion  of  the
Commitments assumed by it pursuant to such Assignment and Acceptance and, if the
Assigning  Bank has  retained  a portion of the  Commitments,  a new Note to the
order of the Assigning Bank in an amount equal to the portion of the Commitments
retained by it hereunder (each such  promissory  note shall  constitute a "Note"
for  purposes of the Loan  Documents).  Such new Notes shall be in an  aggregate
principal  amount of the surrendered  Note, shall be dated the effective date of
such Assignment and Acceptance, and shall otherwise be in substantially the form
of Exhibit B and Exhibit C.

     (f) Any Bank may, in connection  with any  assignment or  participation  or
proposed assignment or participation  pursuant to this Section,  disclose to the
Assignee or participant or proposed  Assignee or  participant,  any  information
relating to Borrower or any Subsidiary of Borrower furnished to such, Bank by or
on behalf of Borrower or any of its Subsidiaries.

     (g) Notwithstanding  any other term of this Agreement to the contrary,  any
Bank may (without  requesting the consent of either the Administrative  Agent or
Borrower)  pledge its Notes to a Federal  Reserve Bank in support of  borrowings
made by such Bank from such Federal Reserve Bank.

     (h) Notwithstanding  any other term of this Agreement to the contrary,  any
Bank may assign all, or a portion of all,  of its rights and  obligations  under
this Agreement and the other Loan Documents (including,  without limitation, its
Commitment  and  Advances)  to an  Affiliate  of such  Bank or any  other  Bank,
provided that:

     (i)  such   assignor   Bank  has  obtained  the  written   consent  of  the
Administrative  Agent  (which  consent  shall  not be  unreasonably  delayed  or
withheld) if the effect of such  assignment  or  delegation  shall  entitle such
Affiliate or other Bank to claim  compensation from Borrower pursuant to Article
IV; and

     (ii) in every other case,  such assignor Bank has furnished  notice to, but
not obtained the consent of, the Administrative Agent.

     Section 13.7   Survival.  
                    ---------

     All representations and warranties made in this Agreement or any other Loan
Document or in any document,  statement,  or certificate furnished in connection
with this  Agreement  shall survive the execution and delivery of this Agreement
and the other Loan Documents until the Obligations  have been paid and performed
in full, and no  investigation  by the  Administrative  Agent or any Bank or any
closing  shall affect the  representations  and  warranties  or the right of the
Administrative  Agent or any Bank to rely upon them.  Without  prejudice  to the
survival of any other  obligation  of Borrower  hereunder,  the  obligations  of
Borrower under Article IV and Sections 13.1 and 13.2 shall survive  repayment of
the  Notes  and  termination  of  the   Commitments.   The  obligations  of  the
Administrative  Agent and the Banks under Section 13.18 shall survive  repayment
of the Notes and termination of the Commitments.

     Section 13.8   ENTIRE  AGREEMENT.  
                    ------------------

     THIS AGREEMENT,  THE NOTES, AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN
EMBODY THE FINAL,  ENTIRE  AGREEMENT  AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR  COMMITMENTS,  AGREEMENTS,  REPRESENTATIONS,  AND  UNDERSTANDINGS,
WHETHER  WRITTEN OR ORAL,  RELATING TO THE SUBJECT  MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES  HERETO.  THERE ARE NO ORAL  AGREEMENTS
AMONG THE PARTIES HERETO.

     Section 13.9   Amendments, Etc. 
                    ----------------

     No amendment or waiver of any provision of this  Agreement,  the Notes,  or
any other Loan  Document to which  Borrower  is a party,  nor any consent to any
departure by Borrower therefrom, shall in any event

                                       44

<PAGE>




be  effective  unless the same shall be agreed or  consented  to by the Required
Banks and Borrower,  and each such waiver or consent shall be effective  only in
the specific  instance and for the specific  purpose for which given;  provided,
that no amendment, waiver, or consent shall, unless in writing and signed by all
of the Banks and Borrower, do any of the following:  (a) increase Commitments of
the Banks or subject  the Banks to any  additional  obligations;  (b) reduce the
principal of, or interest on, the Notes or any fees or other amounts  payable to
the Banks (but not the  Administrative  Agent) hereunder;  (c) postpone any date
fixed for any payment of principal  of, or interest on, the Notes or any fees or
other amounts payable to the  Administrative  Agent or the Banks hereunder;  (d)
change the percentage of the  Commitments or of the aggregate  unpaid  principal
amount of the Notes or the number of Banks which shall be required for the Banks
or any of them to take any action under this Agreement; (e) change any provision
contained  in this  Section  13.9;  or (f) release any  material  portion of the
Collateral,   except   in   accordance   with  the   relevant   Loan   Document.
Notwithstanding   anything  to  the  contrary  contained  in  this  Section,  no
amendment,  waiver, or consent shall be made with respect to Article XII without
the prior written consent of the Administrative Agent.

     Section 13.10  Maximum Interest Rate. 
                    ----------------------

     No provision of this  Agreement or of any other Loan Document shall require
the  payment or the  collection  of  interest  in excess of the  maximum  amount
permitted by applicable law. If any excess of interest in such respect is hereby
provided for, or shall be adjudicated to be so provided, in any Loan Document or
otherwise in  connection  with this loan  transaction,  the  provisions  of this
Section  shall  govern  and  prevail  and  neither  Borrower  nor the  sureties,
guarantors,  successors,  or assigns of Borrower  shall be  obligated to pay the
excess  amount  of such  interest  or any  other  excess  sum  paid for the use,
forbearance,  or detention of sums loaned pursuant hereto. In the event any Bank
ever receives,  collects, or applies as interest any such sum, such amount which
would be in excess of the maximum  amount  permitted by applicable  law shall be
applied  as a  payment  and  reduction  of the  principal  of  the  indebtedness
evidenced  by the Notes;  and,  if the  principal  of the Notes has been paid in
full, any remaining  excess shall forthwith be paid to Borrower.  In determining
whether or not the interest paid or payable  exceeds the Maximum Rate,  Borrower
and each Bank shall, to the extent permitted by applicable law, (a) characterize
any  non-principal  payment  as an  expense,  fee,  or  premium  rather  than as
interest,  (b) exclude  voluntary  prepayments and the effects thereof,  and (c)
amortize,  prorate,  allocate,  and spread in equal or  unequal  parts the total
amount of interest  throughout the entire  contemplated term of the indebtedness
evidenced by the Notes so that  interest for the entire term does not exceed the
Maximum Rate.

     Section 13.11  Notices. 
                    --------

     All notices and other communications provided for in this Agreement and the
other Loan  Documents  to which  Borrower  is a party  shall be given or made by
telecopy or in writing and  telecopied,  mailed by certified mail return receipt
requested,  or delivered to the intended  recipient at the "Address for Notices"
specified below its name on the signature pages hereof-,  or, as to any party at
such  other  address  as shall be  designated  by such party in a notice to each
other party given in accordance with this Section.  Except as otherwise provided
in this  Agreement,  all such  communications  shall be deemed to have been duly
given when  transmitted  by  telecopy,  subject  to  telephone  confirmation  of
receipt,  or when personally  delivered or, in the case of a mailed notice, when
duly  deposited  in the mails,  in each case given or  addressed  as  aforesaid;
provided,  however,  notices to the Administrative  Agent pursuant to Article II
shall not be effective until received by the Administrative Agent.

     Section 13.12  Governing  Law.  
                    ---------------

     This  Agreement  shall be governed by and construed in accordance  with the
laws of the Commonwealth of Massachusetts  and the applicable laws of the United
States of America.

     Section 13.13  Counterparts.  
                    -------------

     This Agreement may be executed in one or more  counterparts,  each of which
shall be deemed an original,  but all of which together shall constitute one and
the same instrument.

     Section 13.14  Severability. 
                    -------------

     Any provision of this Agreement  held by a court of competent  jurisdiction
to be invalid or  unenforceable  shall not impair or invalidate the remainder of
this Agreement and the effect thereof shall be confined to the provision held to
be invalid or illegal.

     Section 13.15  Headings.  
                    ---------

     The headings,  captions,  and  arrangements  used in this Agreement are for
convenience only and shall not affect the interpretation of this Agreement.


                                       45

<PAGE>




     Section 13.16  Construction.  
                    -------------

     Borrower, the Administrative Agent, and each Bank acknowledges that each of
them  has had the  benefit  of  legal  counsel  of its own  choice  and has been
afforded an  opportunity  to review this  Agreement and the other Loan Documents
with its legal counsel.

     Section 13.17  Independence of Covenants.  
                    --------------------------

     All  covenants  hereunder  shall be given  independent  effect so that if a
particular  action or condition is not permitted by any of such  covenants,  the
fact that it would be permitted by an exception  to, or be otherwise  within the
limitations of, another  covenant shall not avoid the occurrence of a Default if
such action is taken or such condition exists.

     Section 13.18  Confidentiality.
                    ----------------

     (a) The Agents and the Banks shall treat the  Confidential  Information  in
confidence and undertake the following obligations with respect thereto:

     (i) The Agents and each Bank and each Other Recipient (hereinafter defined)
shall  not  make  use of,  disseminate,  or in any  way  disclose,  directly  or
indirectly,  to any other  Person other than the senior  executives,  employees,
attorneys, accountants and examiners of the Agents and each Bank, who reasonably
require access to the  Confidential  Information  for the proper  performance of
their assigned duties,  and any  contemplated  assignee of all or a portion of a
Bank's rights and  obligations  under this Agreement  (collectively,  the "Other
Recipients")  any  Confidential  Information  without  receiving  prior  written
permission from Borrower. Each Other Recipient will be informed of the terms and
provisions of this Section  13.18,  and the Banks shall be liable for any breach
of any term or provision of this Section 13.18 by any Other Recipient as if such
person was a signatory  hereto,  unless such Other  Recipient has entered into a
confidentiality agreement directly with Borrower; and

     (ii) The  Agents  and each  Bank and each  Other  Recipient  shall  use the
Confidential  Information  solely in  connection  with the Loan  Documents or in
connection  with the  ordinary  course of  business  of the  Agents or the Banks
(except  if such  ordinary  course of  business  activities  are  adverse to the
Companies' interests) and shall not use any of such Confidential Information for
any other  purpose or aid any Person  (other  than the  Agents,  any Bank or any
Other  Recipient) in learning of or using it or permit others to learn of or use
it.

     (b) In the event that any Agent,  any Bank or any Other  Recipient  becomes
legally  compelled to disclose  any of the  Confidential  Information,  it shall
provide  Borrower with notice promptly after receiving  notice of any proceeding
relating to such disclosure so that the Companies may seek a protective order or
other  appropriate  remedy.  In the event  that such  protective  order or other
remedy is not obtained on or before the date that  disclosure must be made, such
Agent,  such Bank or the Other Recipient,  as the case may be, will furnish only
that portion of the  Confidential  Information  which it is legally  required to
disclose.

     (c) The  Agents  and the Banks  are  aware,  and agree to inform  all Other
Recipients,  that the United States  securities laws prohibit any Person who has
received material, non-public information such as is the subject of this Section
13.18 from an issuer from purchasing or selling the securities of such issuer or
from communicating  such information to any other Person under  circumstances in
which it is  reasonably  foreseeable  that such  Person is likely to purchase or
sell such securities.

     (d) The Companies and the Agents and the Banks agree that monetary  damages
would not be a  sufficient  remedy for any breach of this  Section  13.18 by the
Agents,  the Banks or any Other  Recipient  and that,  in  addition to all other
remedies, the Companies shall be entitled to specific performance and injunction
or other equitable relief as a remedy for any such breach.

     (e) The  restrictions  and  obligations of this Section 13.18 shall survive
the  repayment of the  Obligations  and shall  continue to bind the Agents,  the
Banks and the Other Recipients.


                                       46

<PAGE>




     Section 13.19  Renewal  and  Increase.  
                    -----------------------

     The  Revolving  Credit  Loan is in  renewal,  extension,  modification  and
amendment of the Original  Credit  Agreement and the loan documents  executed in
connection  therewith,  and all liens and security  interests  securing  payment
thereof.

     Section 13.20  WAIVER OF JURY TRIAL.  
                    ---------------------

     TO  THE  FULLEST  EXTENT  PERMITTED  BY  APPLICABLE  LAW,  BORROWER  HEREBY
IRREVOCABLY  AND  EXPRESSLY  WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY  ACTION,
PROCEEDING,  OR COUNTERCLAIM  (WHETHER BASED UPON CONTRACT,  TORT, OR OTHERWISE)
ARISING  OUT OF OR  RELATING TO ANY OF THE LOAN  DOCUMENTS  OR THE  TRANSACTIONS
CONTEMPLATED THEREBY OR THE ACTIONS OF ANY AGENT OR ANY BANK IN THE NEGOTIATION,
ADMINISTRATION, OR ENFORCEMENT THEREOF.

     Section 13.21  CHOICE OF FORUM; CONSENT TO SERVICE OF PROCESS AND
                    JURISDICTION.  
                    ---------------------------------------------------

     Any suit,  action or  proceeding  against  Borrower  with  respect  to this
Agreement or the Loan Documents, or any judgment entered by any court in respect
thereof,  may be  brought in the courts of the  Commonwealth  of  Massachusetts,
County of Suffolk, or in the United States courts located in the Commonwealth of
Massachusetts  as  the  Administrative  Agent  shall,  at the  direction  of the
Required Banks elect in their sole discretion,  and Borrower irrevocably submits
to the  non-exclusive  jurisdiction  of such courts for the purpose of any suit,
action or proceeding. Borrower irrevocably consents to the service of process in
any suit,  action or  proceeding  in said  court by the  mailing  thereof by the
Administrative  Agent by  registered  or  certified  mail,  postage  prepaid  to
Borrower's  address  shown  opposite  its name on the  signature  pages  hereof.
Nothing herein or in any of the other Loan  Documents  shall affect the right of
the  Administrative  Agent to serve process in any other manner permitted by law
or shall  limit the  right of the  Administrative  Agent to bring any  action or
proceeding  against Borrower or with respect to any of its property in courts in
other jurisdictions. Borrower irrevocably waives any objections which it may now
or hereafter have to laying of venue of any suit,  action or proceeding  arising
out of or relating to this Agreement or the other Loan Documents  brought in the
courts located in the  Commonwealth  of  Massachusetts,  County of Suffolk,  and
hereby  further  irrevocably  waives  any claim  that any such  suit,  action or
proceeding brought in any such court has been brought in any inconvenient forum.
Any action or proceeding  by Borrower  against the  Administrative  Agent or any
Bank shall be brought only in a court located in Suffolk County, Massachusetts.

                   [Balance of Page Intentionally Left Blank]

                                       47

<PAGE>




     IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.

                                                BORROWER:

                                                PRIME MEDICAL SERVICES, INC.

                                                By:
                                                     Cheryl Williams
                                                     Vice President - Finance

                                                Address for Notices:

                                               1301 Capital of Texas Highway
                                                  Suite C-300
                                               Austin, Texas 78746
                                               Attention: President

                                               Fax No.: (512) 328-8510
                                               Telephone No.: (512) 328-2892




                                       48

<PAGE>




                                  FNBB:

                                  THE FIRST NATIONAL BANK OF BOSTON,
                                  as Administration Agent, Syndication Agent, 
                                  and  a Bank

                                  By:
                                       Oscar C. Jazdowski
                                  Managing Director, High Technology
                                  Division, Medical Technology Group

                                  Address for Notices:

                                  100 Federal Street
                                  P.O. Box 2016
                                  Boston, Massachusetts 02100
                                  Attention: Oscar C. Jazdowski

                                  Fax No.: (617)  434-0819
                                  Telephone No.: (617)  434-2824

                                  Lending Office for Base Rate Advances:
                                  100 Federal Street
                                  P. 0. Box 2016
                                  Boston, Massachusetts 02100

                                  Lending Office for Eurodollar Advances:
                                  100 Federal Street
                                  P.O. Box 2016
                                  Boston, Massachusetts 02100




                                       49

<PAGE>




                                  NATIONSBANK:

                                  NATIONSBANK OF TEXAS, N.A.,
                                  as Documentation Agent and a Bank

                                  By:
                                  Cecil G. Edwards, Jr.
                                  Senior Vice President

                                  Address for Notices:
                                  901 Main Street, 7th Floor
                                  Post Office Box 831000
                                  Dallas, Texas 75283-1000
                                  Attention: Cecil G. Edwards, Jr.

                                  Fax No.: (214) 508-0314
                                  Telephone No.: (512) 508-3140

                                  Lending Office for Base Rate Advances:
                                  901 Main Street, 7th Floor
                                  Post Office Box 831000
                                  Dallas, Texas 75283-1000

                                  Lending Office for Eurodollar Advances:
                                  901 Main Street, 7th Floor
                                  Post Office Box 831000
                                  Dallas, Texas 75283-1000


                                       50

<PAGE>