Document:

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                          TENET HEALTHCARE CORPORATION

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

                                  $400,000,000
                          9 1/4% SENIOR NOTES due 2010

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

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

                                    INDENTURE

                            Dated as of June 16, 2000

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

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

                              THE BANK OF NEW YORK

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

                                   as Trustee

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                               TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                 Page
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<S>               <C>                                                            <C>
                                  ARTICLE I
                         DEFINITIONS AND INCORPORATION
                                 BY REFERENCE

SECTION 1.01.     DEFINITIONS ....................................................  1
SECTION 1.02.     OTHER DEFINITIONS .............................................. 11
SECTION 1.03.     INCORPORATION BY REFERENCE OF TIA .............................. 11
SECTION 1.04.     RULES OF CONSTRUCTION .......................................... 12

                                    ARTICLE 2
                                 THE SECURITIES

SECTION 2.01.     FORM AND DATING ................................................ 12
SECTION 2.02.     FORM OF LEGEND FOR GLOBAL SECURITY ............................. 12
SECTION 2.03.     EXECUTION AND AUTHENTICATION ................................... 13
SECTION 2.04.     REGISTRAR AND PAYING AGENT ..................................... 13
SECTION 2.05.     PAYING AGENT TO HOLD MONEY IN TRUST ............................ 14
SECTION 2.06.     HOLDER LISTS ................................................... 14
SECTION 2.07.     TRANSFER AND EXCHANGE .......................................... 14
SECTION 2.08.     PERSONS DEEMED OWNERS .......................................... 15
SECTION 2.09.     REPLACEMENT SECURITIES ......................................... 16
SECTION 2.10.     OUTSTANDING SECURITIES ......................................... 16
SECTION 2.11.     TREASURY SECURITIES ............................................ 16
SECTION 2.12.     TEMPORARY SECURITIES ........................................... 17
SECTION 2.13.     CANCELLATION . .. .............................................. 17
SECTION 2.14.     DEFAULTED INTEREST ............................................. 17
SECTION 2.15.     RECORD DATE .................................................... 17
SECTION 2.16.     CUSIP NUMBER ................................................... 17

                                    ARTICLE 3
                                   REDEMPTION

SECTION 3.01.     NOTICES TO TRUSTEE ............................................. 18
SECTION 3.02.     SELECTION OF SECURITIES TO BE REDEEMED ......................... 18
SECTION 3.03.     NOTICE OF REDEMPTION ........................................... 18
SECTION 3.04.     EFFECT OF NOTICE OF REDEMPTION ................................. 19
SECTION 3.05.     DEPOSIT OF REDEMPTION PRICE .................................... 19
SECTION 3.06.     SECURITIES REDEEMED IN PART .................................... 20
SECTION 3.07.     OPTIONAL REDEMPTION ............................................ 20
SECTION 3.08.     MANDATORY REDEMPTION ........................................... 21

                                      -i-
<PAGE>

                                    ARTICLE 4
                                    COVENANTS

SECTION 4.01.     PAYMENT OF SECURITIES .......................................... 21
SECTION 4.02.     MAINTENANCE OF OFFICE OR AGENCY ................................ 21
SECTION 4.03.     COMMISSION REPORTS ............................................. 22
SECTION 4.04.     COMPLIANCE CERTIFICATE ......................................... 23
SECTION 4.05.     TAXES .......................................................... 24
SECTION 4.06.     STAY, EXTENSION AND USURY LAWS ................................. 24
SECTION 4.07.     LIMITATIONS ON RESTRICTED PAYMENTS ............................. 24
SECTION 4.08.     LIMITATIONS ON DIVIDEND AND OTHER PAYMENT
                  RESTRICTIONS AFFECTING SUBSIDIARIES ............................ 26
SECTION 4.09.     LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND
                  ISSUANCE OF PREFERRED STOCK .................................... 27
SECTION 4.10.     LIMITATIONS ON TRANSACTIONS WITH AFFILIATES .................... 28
SECTION 4.11.     LIMITATIONS ON LIENS ........................................... 29
SECTION 4.12.     CHANGE OF CONTROL . ............................................ 29
SECTION 4.13.     CORPORATE EXISTENCE ............................................ 30
SECTION 4.14.     LINE OF BUSINESS ............................................... 31
SECTION 4.15.     LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY
                  SUBSIDIARIES ................................................... 31
SECTION 4.16.     NO AMENDMENT TO SUBORDINATION PROVISIONS OF SENIOR
                  SUBORDINATED NOTE INDENTURE .................................... 31

                                    ARTICLE 5
                                   SUCCESSORS

SECTION 5.01.     LIMITATIONS ON MERGERS, CONSOLIDATIONS OR SALES OF
                  ASSETS ......................................................... 31
SECTION 5.02.     SUCCESSOR CORPORATION SUBSTITUTED .............................. 32

                                    ARTICLE 6
                              DEFAULTS AND REMEDIES

SECTION 6.01.     EVENTS OF DEFAULT .............................................. 33
SECTION 6.02.     ACCELERATION ................................................... 34
SECTION 6.03.     OTHER REMEDIES ................................................. 35
SECTION 6.04.     WAIVER OF PAST DEFAULTS ........................................ 35
SECTION 6.05.     CONTROL BY MAJORITY ............................................ 35
SECTION 6.06.     LIMITATION ON SUITS ............................................ 35
SECTION 6.07.     RIGHTS OF HOLDERS TO RECEIVE PAYMENT ........................... 36
SECTION 6.09.     COLLECTION SUIT BY TRUSTEE ..................................... 36
SECTION 6.09.     TRUSTEE MAY FILE PROOFS OF CLAIM ............................... 36
SECTION 6.10.     PRIORITIES ..................................................... 37
SECTION 6.11.     UNDERTAKING FOR COSTS .......................................... 37
</TABLE>

                                      -ii-

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                                    ARTICLE 7
                                     TRUSTEE
<TABLE>
<S>               <C>                                                              <C>
SECTION 7.01.     DUTIES OF TRUSTEE .............................................. 37
SECTION 7.02.     RIGHTS OF TRUSTEE .............................................. 38
SECTION 7.03.     INDIVIDUAL RIGHTS OF TRUSTEE ................................... 39
SECTION 7.04.     TRUSTEE'S DISCLAIMER ........................................... 39
SECTION 7.05.     NOTICE OF DEFAULTS ............................................. 39
SECTION 7.06.     REPORTS BY TRUSTEE TO HOLDERS .................................. 40
SECTION 7.07.     COMPENSATION AND INDEMNITY ..................................... 40
SECTION 7.08.     REPLACEMENT OF TRUSTEE ......................................... 41
SECTION 7.09.     SUCCESSOR TRUSTEE OR AGENT BY MERGER, ETC. ..................... 42
SECTION 7.10.     ELIGIBILITY; DISQUALIFICATION .................................. 42
SECTION 7.11.     PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY .............. 42

                                    ARTICLE 8
                             DISCHARGE OF INDENTURE

SECTION 8.01.     DEFEASANCE AND DISCHARGE OF THIS INDENTURE AND THE SECURITIES .. 42
SECTION 8.02.     LEGAL DEFEASANCE AND DISCHARGE  ................................ 42
SECTION 8.03.     COVENANT DEFEASANCE ............................................ 43
SECTION 8.04.     CONDITIONS TO LEGAL OR COVENANT DEFEASANCE ..................... 43
SECTION 8.05.     DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE
                  HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS .................. 45
SECTION 8.06.     REPAYMENT TO COMPANY ........................................... 45
SECTION 8.07.     REINSTATEMENT .................................................. 46

                                   ARTICLE 9
                         AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.01.     WITHOUT CONSENT OF HOLDERS ..................................... 46
SECTION 9.02.     WITH CONSENT OF HOLDERS ........................................ 47
SECTION 9.03.     COMPLIANCE WITH TIA ............................................ 48
SECTION 9.04.     REVOCATION AND EFFECT OF CONSENTS .............................. 48
SECTION 9.05.     NOTATION ON OR EXCHANGE OF SECURITIES .......................... 48
SECTION 9.06.     TRUSTEE TO SIGN AMENDMENTS, ETC. ............................... 49

                               ARTICLE 10
                              MISCELLANEOUS

SECTION 10.01.    TIA CONTROLS ................................................... 49
SECTION 10.02.    NOTICES ........................................................ 49
SECTION 10.03.    COMMUNICATION BY HOLDERS WITH OTHER HOLDERS .................... 50
SECTION 10.04.    CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT ............. 50

                                      -iii-

<PAGE>

SECTION 10.05.    STATEMENTS REQUIRED IN CERTIFICATE OR OPINION .................. 51
SECTION 10.06.    RULES BY TRUSTEE AND AGENTS .................................... 51
SECTION 10.07.    LEGAL HOLIDAYS ................................................. 51
SECTION 10.08.    NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
                  EMPLOYEES AND SHAREHOLDERS ..................................... 51
SECTION 10.09.    DUPLICATE ORIGINALS ............................................ 51
SECTION 10.10.    GOVERNING LAW .................................................. 52
SECTION 10.11.    NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS .................. 52
SECTION 10.12.    SUCCESSORS ..................................................... 52
SECTION 10.13.    SEVERABILITY ................................................... 52
SECTION 10.14.    COUNTERPART ORIGINALS .......................................... 52
SECTION 10.15.    TABLE OF CONTENTS, HEADINGS, ETC. .............................. 52
</TABLE>

                                   SIGNATURES

APPENDIX A
APPENDIX B  FORM OF SUPPLEMENTAL INDENTURE

                                      -iv-
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                             CROSS-REFERENCE TABLE

<TABLE>
<CAPTION>
TRUST INDENTURE
  ACT SECTION                                                                            INDENTURE SECTION
----------------                                                                         -----------------
<S>                                                                                      <C>
31O (a)(1).......................................................................              7.10
    (a)(2).......................................................................              7.10
    (a)(3).......................................................................              N.A.
    (a)(4).......................................................................              N.A.
    (a)(5).......................................................................              7.10
    (b)..........................................................................              7.08; 7.10
    (c)..........................................................................              N.A.
311 (a)..........................................................................              7.11
    (b)..........................................................................              7.11
    (c)..........................................................................              N.A.
312 (a)..........................................................................              2.06
    (b)..........................................................................              10.03
    (c)..........................................................................              10.03
313 (a)..........................................................................              7.06
    (b)(1).......................................................................              N.A.
    (b)(2).......................................................................              7.06
    (c)..........................................................................              7.06; 10.02
    (d)..........................................................................              N.A.
314 (a)..........................................................................              4.03; 10.02
    (b)..........................................................................              N.A.
    (c)(1).......................................................................              10.04
    (c)(2).......................................................................              10.04
    (c)(3).......................................................................              N.A.
    (d)..........................................................................              N.A.
    (e)..........................................................................              10.05
    (f)..........................................................................              N.A.
315 (a)..........................................................................              7.01(iii)(b)
    (b)..........................................................................              7.05; 10.02
    (c)..........................................................................              7.01(i)
    (d)..........................................................................              7.01(iii)
    (e)..........................................................................              6.11
316 (a)(last sentence)...........................................................              2.11
    (a)(1)(A)....................................................................              6.05
    (a)(1)(B)....................................................................              6.04
    (a)(2).......................................................................              N.A.
    (b)..........................................................................              6.07
    (c)..........................................................................              2.15; 9.04
</TABLE>

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

 * This Cross-Reference Table is not part of the indenture.

                                      -v-

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<TABLE>
<CAPTION>
TRUST INDENTURE
  ACT SECTION                                                                            INDENTURE SECTION
----------------                                                                         ------------------
<S>                                                                                      <C>
317 (a)(1).......................................................................              6.08
    (a)(2).......................................................................              6.09
    (b)..........................................................................              2.05
318 (a)..........................................................................              10.01
    (b)..........................................................................              N.A.
    (c)..........................................................................              10.01
</TABLE>

N.A. means not applicable

                                      -vi-

<PAGE>

                  INDENTURE dated as of June 16, 2000 between Tenet Healthcare
Corporation, a Nevada corporation (the "COMPANY"), and The Bank of New York, as
trustee (the "TRUSTEE").

                  The Company and the Trustee agree as follows for the
benefit of each other and for the equal and ratable benefit of the Holders of
the 9 1/4% Senior Notes due 2010:

                                    ARTICLE I
                          DEFINITIONS AND INCORPORATION
                                  BY REFERENCE

SECTION 1.01.     DEFINITIONS.

                  "ACQUIRED DEBT" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.

                  "AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or otherwise;
PROVIDED that beneficial ownership of 10% or more of the voting securities of a
Person shall be deemed to be control.

                  "AGENT" means any Registrar, Paying Agent or co-registrar.

                  "ASSET SALE" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback) other than in the ordinary course of business consistent with past
practices and (ii) the issuance or sale by the Company or any of its
Subsidiaries of Equity Interests of any of the Company's Subsidiaries, in the
case of either clause (i) or (ii), whether in a single transaction or a series
of related transactions (a) that have a fair market value in excess of $25.0
million or (b) for net proceeds in excess of $25.0 million. Notwithstanding the
foregoing: (a) a transfer of assets by the Company to a Subsidiary or by a
Subsidiary to the Company or to another Subsidiary, (b) an issuance of Equity
Interests by a Subsidiary to the Company or to another Subsidiary, (c) a
Restricted Payment that is permitted by Section 4.07 hereof and (d) a Hospital
Swap shall not be deemed to be an Asset Sale.

                  "BOARD OF DIRECTORS" means the Board of Directors of the
Company or any authorized committee thereof.

                  "BUSINESS DAY" means any day other than a Legal Holiday.

<PAGE>

                  "CAPITAL LEASE" means, at the time any determination thereof
is to be made, any lease of property, real or personal, in respect of which the
present value of the minimum rental commitment would be capitalized on a balance
sheet of the lessee in accordance with GAAP.

                   "CAPITAL LEASE OBLIGATION" means, at the time any
determination thereof is to be made, the amount of the liability in respect of a
Capital Lease that would at such time be required to be capitalized on a balance
sheet in accordance with GAAP.

                   "CAPITAL STOCK" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.

                   "CHANGE OF CONTROL" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition, in
one or a series of related transactions, of all or substantially all of the
assets of the Company and its Subsidiaries taken as a whole to any Person or
group (as such term is used in Sections 13(d)(3) and 14(d)(2) of the Exchange
Act) other than to a Person or group who, prior to such transaction, held a
majority of the voting power of the voting stock of the Company, (ii) the
acquisition by any Person or group (as defined above) of a direct or indirect
interest in more than 50% of the voting power of the voting stock of the
Company, by way of merger or consolidation or otherwise, or (iii) the first day
on which a majority of the members of the Board of Directors of the Company are
not Continuing Directors.

                   "CHANGE OF CONTROL TRIGGERING EVENT" means the occurrence of
both a Change of Control and a Rating Decline.

                   "CLOSING DATE" means June 16, 2000.

                   "COMMISSION" means the Securities and Exchange Commission.

                   "COMPANY" means Tenet Healthcare Corporation, as obligor
under the Securities, unless and until a successor replaces Tenet Healthcare
Corporation, in accordance with Article 5 hereof and thereafter includes such
successor.

                   "CONSOLIDATED CASH FLOW" means, with respect to any Person
for any period, the Consolidated Net Income of such Person for such period PLUS
in each case, without duplication (i) an amount equal to any extraordinary loss
plus any net loss realized in connection with an Asset Sale (to the extent such
losses were deducted in computing such Consolidated Net Income), (ii) provision
for taxes based on income or profits of such Person and its Subsidiaries for
such period, to the extent that such provision for taxes was included in
computing such Consolidated Net Income, (iii) the Fixed Charges of such Person
and its Subsidiaries for such period, to the extent that such Fixed Charges were
deducted in computing such Consolidated Net Income, (iv) depreciation and
amortization (including amortization of goodwill and other intangibles but
excluding amortization of prepaid cash expenses that were paid in a prior
period) of such Person and its Subsidiaries for such period to the extent that
such depreciation and amortization were deducted in computing such Consolidated
Net Income, in each case, on a consolidated basis and determined in accordance
with GAAP, (v) the amount of any restructuring charges deducted in such
period in computing Consolidated Net Income for such period, (vi) the amount of
all losses related

                                      -2-
<PAGE>

to discontinued operations deducted in such period in computing Consolidated
Net Income for such period, (vii) the amount of all non-recurring charges and
expenses related to acquisitions and mergers deducted in such period in
computing Consolidated Net Income for such period and (viii) any non-cash
charges reducing Consolidated Net Income for such period (excluding any
portion of such charge requiring an accrual of a cash reserve for anticipated
cash charges for any future period). Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization of, a Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow only to the extent
(and in same proportion) that the Net Income of such Subsidiary was included
in calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Subsidiary without prior approval (that has
not been obtained), pursuant to the terms of its charter and all agreements,
instruments, judgments, decrees, orders, statutes, rules and governmental
regulations applicable to that Subsidiary or its stockholders.

    "CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Subsidiaries
for such period, on a consolidated basis, determined in accordance with GAAP;
PROVIDED that(i) the Net Income of any Person that is not a Subsidiary or
that is accounted for by the equity method of accounting shall be included
only to the extent of the amount of dividends or distributions paid in cash
to the referent Person or a Wholly Owned Subsidiary thereof, (ii) the Net
Income of any Subsidiary shall be excluded to the extent that the declaration
or payment of dividends or similar distributions by that Subsidiary of that
Net Income is not at the date of determination permitted without any prior
governmental approval (that has not been obtained) or, directly or
indirectly, by operation of the terms of its charter or any agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to that Subsidiary or its stockholders, (iii) the Net Income of
any Person acquired in a pooling of interests transaction for any period
prior to the date of such acquisition shall be excluded and (iv) the
cumulative effect of a change in accounting principles shall be excluded.

    "CONSOLIDATED NET WORTH" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders of
such Person and its consolidated Subsidiaries as of such date PLUS (ii) the
respective amounts reported on such Person's balance sheet as of such date
with respect to any series of preferred stock (other than Disqualified
Stock), LESS all write-ups (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made in accordance with GAAP as a result of the acquisition of such
business) subsequent to the Closing Date in the book value of any asset owned
by such Person or a consolidated Subsidiary of such Person, and excluding the
cumulative effect of a change in accounting principles, all as determined in
accordance with GAAP.

    "CONTINUING DIRECTORS" means, as of any date of determination, any member
of the Board of Directors of the Company who (i) was a member of such Board
of Directors on the Closing Date or (ii) was nominated for election or
elected to such Board of Directors with the approval of a majority of the
Continuing Directors who were members of such Board at the time of such
nomination or election.

    "CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 10.02 hereof or such other address as to which
the Trustee may give notice to the Company.

                                        -3-

<PAGE>

    "DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.

    "DEPOSITARY" means a clearing agency registered under the Exchange Act
that is designated to act as Depositary for the Securities.

    "DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof, in whole or in part, on or prior to
September 1, 2010.

    "EQUITY INTERESTS" means any Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that
is convertible into, or exchangeable for, Capital Stock).

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

    "EXCHANGE SECURITIES" shall have the meaning set forth in Appendix A.

    "EXISTING CREDIT FACILITY" means that certain Credit Agreement by and
among the Company and Morgan Guaranty Trust Company of New York and the other
banks that are party thereto, providing for $2.8 billion in aggregate
principal amount of Indebtedness, including any related notes, instruments,
and agreements executed in connection therewith, as amended, modified,
extended, renewed, refunded, replaced or refinanced, in whole or in part,
from time to time.

    "EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Existing Credit Facility) in
existence on the Closing Date, until such amounts are repaid, including all
reimbursement obligations with respect to letters of credit outstanding as of
the Closing Date.

    "FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the Company or any of its Subsidiaries incurs, assumes, Guarantees or redeems
any Indebtedness (other than revolving credit borrowings) or issues preferred
stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on which the event
for which the calculation of the Fixed Charge Coverage Ratio is made (the
"CALCULATION DATE"), then the Fixed Charge Coverage Ratio shall be calculated
giving PRO FORMA effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation
referred to above, (i) acquisitions that have been made by the Company or any
of its Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter
reference period or subsequent to such reference period and on or prior to
the Calculation Date shall be deemed to have occurred on the first day of the
four-quarter reference period, and (ii) the Consolidated Cash Flow and Fixed
Charges attributable to discontinued operations, as determined in accordance
with GAAP, and operations or business disposed of prior to the Calculation
Date, shall be excluded.

                                        -4-

<PAGE>

    "FIXED CHARGES" means, with respect to any Person for any period, the sum
of (i) the consolidated interest expense of such Person and its Subsidiaries
for such period, whether paid or acrrued (including, without limitation,
amortization of original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of
letters of credit or bankers' acceptance financing, and net payments or
receipts (if any) pursuant to Hedging Obligations) and (ii) the consolidated
interest expense of such Person and its Subsidiaries that was capitalized
during such period, and (iii) any interest expense on Indebtedness of another
Person that is Guaranteed by such Person or one of its Subsidiaries or
secured by a Lien on assets of such Person or one of its Subsidiaries
(whether or not such Guarantee or Lien is called upon) and (iv) the product
of (a) all cash dividend payments (and non-cash dividend payments in the case
of a Person that is a Subsidiary) on any series of preferred stock of such
Person, TIMES (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person, expressed as a decimal, in each
case, on a consolidated basis and in accordance with GAAP.

    "GAAP" means accounting principles generally accepted in the United
States of America as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as have been
approved by a significant segment of the accounting profession, as in effect
from time to time.

    "GLOBAL SECURITY" means a Security that evidences all or part of the
Securities of any series and bears the legend set forth in Section 2.02.

    "GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged.

    "GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.

    "HEDGING OBLIGATIONS" means, with respect to any Person, the obligations
of such Person under (i) interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, (ii) forward foreign exchange
contracts or currency swap agreements and (iii) other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency values.

    "HOLDER" means a Person in whose name in a Security is registered.

    "HOSPITAL" means a hospital, outpatient clinic, long-term care facility
or other facility or business that is used or useful in or related to the
provision of healthcare services.

    "HOSPITAL SWAP" means an exchange of assets by the Company or a
Subsidiary of the Company for one or more Hospitals and/or one or more
Related Businesses or for the Capital Stock of any Person owning one or more
Hospitals and/or one or more Related Businesses.

                                          -5-

<PAGE>

      "INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations or the balance deferred
and unpaid of the purchase price of any property or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing indebtedness (other
than letters of credit and Hedging Obligations) would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP, as well
as all indebtedness of others secured by a Lien on any asset of such Person
(whether or not such indebtedness is assumed by such Person) and, to the extent
not otherwise included, the Guarantee by such Person of any indebtedness of
any other Person.

      "INDENTURE" means this Indenture, as amended or supplemented from time
to time.

      "INITIAL SECURITIES" shall have the meaning set forth in Appendix A.

      "INVESTMENT GRADE" means a rating of BBB- or higher by S&P or Baa3 or
higher by Moody's or the equivalent of such ratings by S&P or Moody's. In the
event that the Company shall select any other Rating Agency, the equivalent
of such ratings by such Rating Agency shall be used.

      "LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset
given to secure Indebtedness, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option or other
agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction with respect to any such lien,
pledge, charge or security interest).

      "MOODY'S" means Moody's Investors Services, Inc. and its successors.

      "NET INCOME" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction
in respect of preferred stock dividends, excluding, however, (i) any gain
(but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions)
or (b) the disposition of any securities by such Person or any of its
Subsidiaries or the extinguishment of any Indebtedness of such Person or any
of its Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not
loss), together with any related provision for taxes on such extraordinary or
nonrecurring gain (but not loss).

      "OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.

      "OFFICERS" means the Chairman of the Board, the Chief Executive
Officer, the President, the Chief Operating Officer, the Chief Financial
Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary
and any Vice President of the Company or any Subsidiary, as the case may be.

      "OFFICERS' CERTIFICATE" means a certificate signed by two Officers, one
of whom must be the principal executive officer, principal financial officer
or principal accounting officer of the Company.

                                      -6-

<PAGE>

      "OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company, any Subsidiary or the Trustee.

      "PAYMENT DEFAULT" means any failure to pay any scheduled installment of
interest or principal on any Indebtedness within the grace period provided
for such payment in the documentation governing such Indebtedness.

      "PERMITTED LIENS" means (i) Liens in favor of the Company; (ii) Liens
on property of a Person existing at the time such Person is merged into or
consolidated with the Company or any Subsidiary of the Company or becomes a
Subsidiary of the Company; PROVIDED that such Liens were in existence prior
to the contemplation of such merger, consolidation or acquisition (unless
such Liens secure Indebtedness that was incurred in connection with or in
contemplation of such acquisition and is used to refinance tax-exempt
Indebtedness) and do not extend to any assets or the Company or its
Subsidiaries other than those of the Person merged into or consolidated with
the Company or that becomes a Subsidiary of the Company; (iii) Liens on
property existing at the time of acquisition thereof by the Company or any
Subsidiary of the Company; PROVIDED that such Liens were in existence prior
to the contemplation of such acquisition (unless such Liens secure
Indebtedness that was incurred in connection with or in contemplation of
such acquisition and is used to refinance tax-exempt Indebtedness); (iv)
Liens to secure the performance of statutory obligations, tender, bid,
performance, government contract, surety or appeal bonds or other obligations
of a like nature incurred in the ordinary course of business; (v) Liens
existing on the Closing Date; (vi) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded; PROVIDED that any reserve or other appropriate
provision as shall be required in conformity with GAAP shall have been made
therefor; (vii) other Liens on assets of the Company or any Subsidiary of
the Company securing Indebtedness that is permitted by the terms hereof to be
outstanding having an aggregate principal amount at any one time outstanding
not to exceed 10% of the Stockholders' Equity of the Company; and (viii)
Liens to secure Permitted Refinancing Indebtedness incurred to refinance
Indebtedness that was secured by a Lien permitted hereunder and that was
incurred in accordance with the provisions hereof; PROVIDED that such Liens
do not extend to or cover any property or assets of the Company or any
Subsidiary other than assets or property securing the Indebtedness so
refinanced.

      "PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the
Company or any of its Subsidiaries issued in exchange for, or the net
proceeds of which are used solely to extend, refinance, renew, replace,
defease or refund, other Indebtedness of the Company or any of its
Subsidiaries; PROVIDED that, except in the case of Indebtedness of the
Company issued in exchange for, or the net proceeds of which are used solely
to extend, refinance, renew, replace, defease or refund, Indebtedness of a
Subsidiary of the Company: (i) the principal amount of such Permitted
Refinancing Indebtedness (or if such Permitted Refinancing Indebtedness is
issued at a discount, the initial issuance price of such Permitted
Refinancing Indebtedness) does not exceed the principal amount of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded (plus the amount of any premiums paid and reasonable expenses
incurred in connection therewith); (ii) such Permitted Refinancing
Indebtedness has a final maturity date later than the final maturity date of,
and has a Weighted Average Life to Maturity equal to or greater than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded; (iii) if the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded is subordinated in right of payment to the Securities, such
Permitted Refinancing Indebtedness has a final maturity date

                                      -7-

<PAGE>

later than the final maturity date of, and is subordinated in right of
payment to, the Securities on subordination terms at least as favorable to
the Holders of Securities as those contained in the documentation governing
the Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; (iv) such Indebtedness is incurred by the Company if the Company is
the obligor on the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; and (v) such Indebtedness is incurred by the
Company or a Subsidiary if a Subsidiary is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.

      "PERSON" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust or unincorporated organization
(including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).

      "PHYSICIAN JOINT VENTURE DISTRIBUTIONS" means distributions made by the
Company or any of its Subsidiaries to any physician, pharmacist or other
allied healthcare professional in connection with the unwinding, liquidation
or other termination of any joint venture or similar arrangement between any
such Person and the Company or any of its Subsidiaries.

      "PHYSICIAN SUPPORT OBLIGATIONS" means any obligation or Guarantee
incurred in the ordinary course of business by the Company or a Subsidiary of
the Company in connection with any advance, loan or payment to, or on behalf
of or for the benefit of any physician, pharmacist or other allied healthcare
professional for the purpose of recruiting, redirecting or retaining the
physician, pharmacist or other allied healthcare professional to provide
service to patients in the service area of any Hospital or Related Business
owned or operated by the Company or any of its Subsidiaries; EXCLUDING,
HOWEVER, compensation for services provided by physicians, pharmacists or
other allied healthcare professionals to any Hospital or Related Business
owned or operated by the Company or any of its Subsidiaries.

      "QUALIFIED EQUITY INTERESTS" shall mean all Equity Interests of the
Company other than Disqualified Stock of the Company.

      "RATING AGENCIES" means (i) S&P and (ii) Moody's or (iii) if neither
S&P nor Moody's shall make a rating of the Securities publicly available, a
nationally recognized securities rating agency or agencies, as the case may
be, selected by the Company, which shall be substituted for S&P or Moody's or
both, as the case may be.

      "RATING CATEGORY" means (i) with respect to S&P, any of the following
categories: BB, B, CCC, CC, C and D (or equivalent successor categories);
(ii) with respect to Moody's, any of the following categories: Ba, B, Caa, Ca,
C and D (or equivalent successor categories); and (iii) the equivalent of any
such category of S&P or Moody's used by another Rating Agency. In determining
whether the rating of the Securities has decreased by one or more gradations,
gradations within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's;
or the equivalent gradations for another Rating Agency) shall be taken into
account (e.g., with respect to S&P, a decline in a rating from BB+ to BB, as
well as from BB- to B+, shall constitute a decrease of one gradation).

      "RATING DATE" means the date which is 90 days prior to the earlier of
(i) a Change of Control and (ii) the first public notice of the occurrence of
a Change of Control or of the intention by the Company to effect a Change of
Control.

                                       -8-

<PAGE>

      "RATING DECLINE" means the occurrence on or within 90 days after the
date of the first public notice of the occurrence of a Change of Control or
of the intention by the Company to effect a Change of Control (which period
shall be extended so long as the rating of the Securities is under publicly
announced consideration for possible downgrade by any of the Rating Agencies)
of: (a) in the event the Securities are rated by either Moody's or S&P on the
Rating Date as Investment Grade, a decrease in the rating of the Securities
by both Rating Agencies to a rating that is below Investment Grade, or (b) in
the event the Securities are rated below Investment Grade by both Rating
Agencies on the Rating Date, a decrease in the rating of the Securities by
either Rating Agency by one or more gradations (including gradations within
Rating Categories as well as between Rating Categories).

      "RELATED BUSINESS" means a healthcare business affiliated or associated
with a Hospital or any business related or ancillary to the provision of
healthcare services or information or the investment in, management, leasing
or operation of a Hospital.

      "RESPONSIBLE OFFICER" when used with respect to the Trustee, means any
officer within the corporate trust department of the Trustee (or any
successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the
above designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is referred
because of his knowledge of and familiarity with the particular subject.

      "SECURITIES" means the securities described above, issued under this
Indenture.

      "SECURITIES ACT" means the Securities Act of 1933, as amended.

      "SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation
S-X, promulgated pursuant to the Securities Act, as such Regulation is in
effect on the Closing Date.

      "S&P" means Standard & Poor's Corporation and its successors.

      "SPECIFIED EXCHANGE" means any retirement of Indebtedness upon the
exercise by a holder of such Indebtedness, pursuant to the terms thereof, of
any right to exchange such Indebtedness for shares of common stock of Ventas,
Inc. or any successor thereto or any other equity securities, other than
Equity Interests of a subsidiary, owned by the Company as of October 11,
1995, or for any securities or other property received with respect to such
common stock or equity securities or cash in lieu thereof, whether or not
such right is subject to the Company's ability to pay an amount in cash in
lieu thereof.

      "STOCKHOLDERS' EQUITY" means, with respect to any Person as of any
date, the stockholders' equity of such Person determined in accordance with
GAAP as of the date of the most recent available internal financial
statements of such Person, and calculated on a PRO FORMA basis to give effect
to any acquisition or disposition by such Person consummated or to be
consummated since the date of such financial statements and on or prior to
the date of such calculation.

      "SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total
voting power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more

                                      -9-

<PAGE>

of the other Subsidiaries of that Person (or a combination thereof) and (ii)
any partnership (a) the sole general partner or the managing general partner
of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or of one or more Subsidiaries of
such Person (or any combination thereof).

      "TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
Section 77aaa-77bbbb) as in effect on the date on which this Indenture is
qualified under the TIA, except as provided in Section 9.03 hereof.

      "TRANSFER RESTRICTION" means, with respect to the Company's
Subsidiaries, any encumbrance or restriction on the ability of any Subsidiary
to (i)(a) pay dividends or make any other distributions to the Company or any
of its Subsidiaries (1) on its Capital Stock or (2) with respect to any other
interest or participation in, or measured by, its profits, or (b) pay any
Indebtedness owed to the Company or any of its Subsidiaries, (ii) make loans
or advances to the Company or any of its Subsidiaries, or (iii) transfer any
of its properties or assets to the Company or any of its Subsidiaries.

      "TRUSTEE" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture
and thereafter means the successor serving hereunder.

      "WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the
sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (ii)
the then outstanding principal amount of such Indebtedness.

      "WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of such
Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned Subsidiaries of such Person.

      "2005 EXCHANGEABLE SUBORDINATED NOTES" means the 6% Exchangeable
Subordinated Notes due 2005 of the Company in an aggregate principal amount
of $320.0 million, issued pursuant to the Indenture dated as of January 10,
1996, between the Company and The Bank of New York, as trustee, as amended or
supplemented from time to time.

      "2005 SENIOR SUBORDINATED NOTES" means the 10 1/8% Senior Subordinated
Notes due 2005 of the Company in an aggregate principal amount of $900.0
million, issued pursuant to the Indenture dated as of March 1, 1995, between
the Company and The Bank of New York, as trustee, as amended or supplemented
from time to time.

      "2007 SENIOR SUBORDINATED NOTES" means the 8 5/8% Senior Subordinated
Notes due 2007 of the Company in an aggregate principal amount of $700.0
million, issued pursuant to the Indenture dated as of January 15, 1997,
between the Company and The Bank of New York, as trustee, as amended or
supplemented from time to time.

                                      -10-

<PAGE>

      "2008 SENIOR SUBORDINATED NOTES" means the 8 1/8% Senior Subordinated
Notes due 2008 of the Company in an aggregate principal amount of $1,005
million, issued pursuant to the Indenture dated as of May 21, 1998, between
the Company and The Bank of New York, as trustee, as amended or supplemented
from time to time.

SECTION 1.02.         OTHER DEFINITIONS.

<TABLE>
<CAPTION>
                                            DEFINED IN
TERM                                         SECTION
----                                        ----------
<S>                                         <C>
"Affiliate Transaction".....................  4.10
"Bankruptcy Law"............................  6.01
"Change of Control Offer"...................  4.12
"Change of Control Payment".................  4.12
"Change of Control Payment Date"............  4.12
"Company Deposit"...........................  9.04
"Covenant Defeasance".......................  8.03
"Custodian".................................  6.01
"Deposits"..................................  9.04
"Event of Default"..........................  6.01
"incur".....................................  4.09
"Legal Defeasance"..........................  8.02
"Legal Holiday"............................. 10.07
"New Lender Deposit"........................  9.04
"New Loan"..................................  9.04
"New Loan Agreement"........................  9.04
"Notice of Default".........................  6.01
"Paying Agent"..............................  2.03
"Registrar".................................  2.03
"Restricted Payments".......................  4.07
</TABLE>

SECTION 1.03.         INCORPORATION BY REFERENCE OF TIA.

      Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.

      The following TIA terms used in this Indenture have the following
meanings:

      "INDENTURE SECURITIES" means the Securities;

      "INDENTURE SECURITY HOLDER" means a Holder;

      "INDENTURE TO BE QUALIFIED" means this Indenture;

      "INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;

      "OBLIGOR" on the Securities means the Company and any successor obligor
upon the Securities.

                                      -11-

<PAGE>

                  All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by the Commission
rule under the TIA have the meanings so assigned to them.

SECTION 1.04.              RULES OF CONSTRUCTION.

                  Unless the context otherwise requires:

                  (1) a term has the meaning assigned to it;

                  (2) an accounting term not otherwise defined has the meaning
         assigned to it in accordance with GAAP;

                  (3) "or" is not exclusive;

                  (4) words in the singular include the plural, and in the
         plural include the singular; and

                  (5) provisions apply to successive events and transactions.

                                    ARTICLE 2
                                 THE SECURITIES

SECTION 2.01.              FORM AND DATING.

                  Provisions relating to the Initial Securities and the Exchange
Securities are set forth in the Rule 144A/Regulation S Appendix attached hereto
("Appendix A"), which is hereby incorporated in and expressly made part of this
Indenture. The Initial Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit 1 to Appendix A,
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Securities and the Trustee's certificate of authentication shall be
substantially in the form of Exhibit 2 to Appendix A, which is hereby
incorporated in and expressly made a part of this Indenture. The Securities may
have notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
Each Security shall be dated the date of its authentication. The terms of the
Securities set forth in Appendix A and the Exhibits thereto are part of the
terms of this Indenture. The Securities shall be issuable only in registered
form, without coupons, in denominations of $1,000 and integral multiples
thereof. The Securities may be Global Securities, as determined by the officers
executing such Securities, as evidenced by their execution of such Securities.

SECTION 2.02.              FORM OF LEGEND FOR GLOBAL SECURITY.

                  Every Global Security authenticated and delivered hereunder
shall bear a legend in substantially the following form:

                           "This Security is a Global Security within the
         meaning of the Indenture hereinafter referred to and is registered in
         the name of a Depositary or a nominee thereof. This

                                      -12-
<PAGE>

        Security may not be exchanged in whole or in part for a Security
        registered, and no transfer of this Security in whole or in part may be
        registered, in the name of any person other than such Depositary or a
        nominee thereof, except in the limited circumstances described in the
        Indenture."

SECTI0N 2.03.              EXECUTION AND AUTHENTICATION.

                  An Officer of the Company shall sign the Securities for the
Company by manual or facsimile signature.

                  If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.

                  A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature of the Trustee shall be
conclusive evidence that the Security has been authenticated under this
Indenture. The form of Trustee's certificate of authentication to be borne by
the Securities shall be substantially as set forth in Appendix A and the
exhibits thereto.

                  The Trustee shall, upon a written order of the Company signed
by two Officers of the Company, authenticate Securities for original issue up to
the aggregate principal amount stated in paragraph 4 of the Securities. The
aggregate principal amount of Securities outstanding at any time shall not
exceed the amount set forth herein except as provided in Section 2.09 hereof.

                  The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company or an Affiliate of the Company.

                  Each Global Security authenticated under this Indenture shall
be registered in the name of the Depositary designated for such Global Security
or a nominee thereof and delivered to such Depositary or a nominee thereof or
custodian therefor, and each such Global Security shall constitute a single
Security for all purposes of this Indenture.

                  The Company initially appoints The Depository Trust Company as
the Depositary.

SECTION 2.04.              REGISTRAR AND PAYING AGENT.

                  The Company shall maintain (i) an office or agency where
Securities may be presented for registration of transfer or for exchange
(including any co-registrar, the "REGISTRAR") and (ii) an office or agency
where Securities may be presented for payment (the "PAYING AGENT"). The
Registrar shall keep a register of the Securities and of their transfer and
exchange. The Company may appoint one or more co-registrars and one or more
additional paying agents. The term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent, Registrar or
co-registrar without prior notice to any Holder. The Company shall notify the
Trustee and the Trustee shall notify the Holders of the name and address of
any Agent not a party to this Indenture. If the Company fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act
as such. The Company or any of its Subsidiaries may act as Paying Agent,
Registrar or co-registrar. The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, which shall

                                      -13-

<PAGE>

incorporate the provisions of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such Agent. The Company shall notify
the Trustee of the name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, or fails to give the foregoing notice, the
Trustee shall act as such, and shall be entitled to appropriate compensation in
accordance with Section 7.07 hereof.

                  The Company initially appoints the Trustee as Registrar,
Paying Agent and agent for service of notices and demands in connection with the
Securities.

SECTION 2.05.              PAYING AGENT TO HOLD MONEY IN TRUST.

                  On or prior to the due date of principal of, premium, if any,
and interest on any Securities, the Company shall deposit with the Trustee or
the Paying Agent money sufficient to pay such principal, premium, if any, and
interest becoming due. The Company shall require each Paying Agent other than
the Trustee to agree in writing that the Paying Agent shall hold in trust for
the benefit of the Holders or the Trustee all money held by the Paying Agent for
the payment of principal of, premium, if any, and interest on the Securities,
and shall notify the Trustee of any Default by the Company in making any such
payment. While any such Default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company) shall have no
further liability for the money delivered to the Trustee. If the Company acts as
Paying Agent, it shall segregate and hold in a separate trust fund for the
benefit of the Holders all money held by it as Paying Agent.

SECTION 2.06.              HOLDER LISTS.

                  The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at least
seven Business Days before each interest payment date and at such other times as
the Trustee may request in writing a list in such form and as of such date as
the Trustee may reasonably require of the names and addresses of Holders,
including the aggregate principal amount of the Securities held by each
thereof, and the Company shall otherwise comply with TIA Section 312(a).

SECTION 2.07.              TRANSFER AND EXCHANGE.

                  When Securities are presented to the Registrar with a request
to register the transfer or to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall register the transfer or
make the exchange if its requirements for such transactions are met; PROVIDED,
HOWEVER, that any Security presented or surrendered for registration of transfer
or exchange shall be duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar and the Trustee duly executed by
the Holder thereof or by his attorney duly authorized in writing. To permit
registrations of transfer and exchanges, the Company shall issue and the Trustee
shall authenticate Securities at the Registrar's request, subject to such rules
as the Trustee may reasonably require.

                  Neither the Company nor the Registrar shall be required to (i)
register the transfer or exchange of Securities during a period beginning at the
opening of business on a Business Day 15 days before the day of mailing of a
notice of redemption of Securities for redemption under Section 3.03

                                      -14-
<PAGE>

hereof and ending at the close of business on the day of such mailing, (ii)
register the transfer or exchange of any Security selected for redemption in
whole or in part, except the unredeemed portion of any Security being redeemed
in part or (iii) register the transfer or exchange of a Security between the
record date and the next succeeding interest payment date.

                  No service charge shall be made to any Holder for any
registration of transfer or exchange (except as otherwise expressly permitted
herein), but the Company may require payment of a sum sufficient to cover any
transfer tax or similar govemmental charge payable in connection therewith
(other than such transfer tax or similar governmental charge payable upon
exchanges pursuant to Sections 2.12 or 9.05 hereof, which shall be paid by the
Company).

                  Notwithstanding the foregoing, a Global Security may not be
transferred except as a whole by the Depositary to a nominee of the Depositary
or any such nominee to a successor of the Depositary or a nominee of such
successor, unless:

                           (i) the Depositary is at any time unwilling or unable
         to continue as depository or if at any time the Depositary ceases to be
         a clearing agency registered under the Exchange Act and a successor
         depository is not appointed by the Company within 90 days,

                           (ii) an Event of Default under this Indenture with
         respect to the Securities has occurred and is continuing and the
         beneficial owners representing a majority in principal amount of the
         Securities advise the Depositary to cease acting as depositary or

                           (iii) the Company, in its sole discretion, determines
         at any time that the Securities shall no longer be represented by a
         Global Security, the Company will issue individual Securities of the
         applicable amount and in certificated form in exchange for a Global
         Security. In any such instance, an owner of a beneficial interest in
         the Global Security will be entitled to physical delivery of individual
         securities in certificated form of like tenor, equal in principal
         amount to such beneficial interest and to have such Securities in
         certificated form registered in its name.

SECTION 2.08.              PERSONS DEEMED OWNERS.

                  Prior to due presentment for registration of transfer of any
Security, the Trustee, any Agent and the Company may deem and treat the Person
in whose name any Security is registered as the absolute owner of such Security
for the purpose of receiving payment of principal of, premium, if any, and
interest on such Security and for all other purposes whatsoever, whether or not
such Security is overdue, and neither the Trustee, any Agent nor the Company
shall be affected by notice to the contrary.

                  So long as the Depositary or its nominee is the registered
Holder of a Global Security, the Depositary or its nominee, as the case may be,
will be treated as the sole owner of it for all purposes under the Indenture and
the beneficial owners of the Securities will be entitled only to those rights
and benefits afforded to them in accordance with the Depositary's regular
operating procedures.  Except as provided in Section 2.07, owners of beneficial
interests in a Global Security will not be entitled to have Securities
represented by a Global Security registered in their names, will not receive or
be entitled to receive physical delivery of Securities in certificated form and
will not be considered the registered Holders thereof under the Indenture.

                                      -15-

<PAGE>

                  None of the Company, the Trustee, any Paying Agent or the
Registrar will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial ownership
interests of a Global Security or for maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.

SECTION 2.09.              REPLACEMENT SECURITIES.

                  If any mutilated Security is surrendered to the Trustee or the
Company, or the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee, upon the written order of the Company signed by two Officers of the
Company, shall authenticate a replacement Security if the Trustee's requirements
for replacements of Securities are met. An indemnity bond must be supplied by
the Holder that is sufficient in the judgment of the Trustee and the Company to
protect the Company, the Trustee, any Agent and any authenticating agent from
any loss which any of them may suffer if a Security is replaced. Each of the
Company and the Trustee may charge for its expenses in replacing a Security.

                  Every replacement Security is an additional obligation of the
Company.

SECTION 2.10.              OUTSTANDING SECURITIES.

                  The Securities outstanding at any time are all the Securities
authenticated by the Trustee except for those cancelled by it, those delivered
to it for cancellation and those described in this Section as not outstanding.

                  If a Security is replaced pursuant to Section 2.09 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Security is held by a bona fide purchaser.

                  If the principal amount of any Security is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue.

                  Subject to Section 2.11 hereof, a Security does not cease to
be outstanding because the Company or an Affiliate of the Company holds the
Security.

SECTION 2.11.              TREASURY SECURITIES.

                  In determining whether the Holders of the required principal
amount of Securities then outstanding have concurred in any demand, direction,
waiver or consent, Securities owned by the Company or any Affiliate of the
Company shall be considered as though not outstanding, except that for purposes
of determining whether the Trustee shall be protected in relying on any such
demand, direction, waiver or consent, only Securities that a Responsible Officer
actually knows to be so owned shall be so considered. Notwithstanding the
foregoing, Securities that are to be acquired by the Company or an Affiliate of
the Company pursuant to an exchange offer, tender offer or other agreement shall
not be deemed to be owned by the Company or an Affiliate of the Company until
legal title to such Securities passes to the Company or such Affiliate, as the
case may be.

SECTION 2.12.              TEMPORARY SECURITIES.

                                      -16-

<PAGE>

                  Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee, upon receipt of the written order of the
Company signed by two Officers of the Company, shall authenticate temporary
Securities. Temporary Securities shall be substantially in the form of
definitive Securities but may have variations that the Company and the Trustee
consider appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee, upon receipt of the written order of the
Company signed by two Officers of the Company, shall authenticate definitive
Securities in exchange for temporary Securities. Until such exchange, temporary
Securities shall be entitled to the same rights, benefits and privileges as
definitive Securities.

SECTION 2.13.              CANCELLATION.

                  The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return such
cancelled Securities to the Company. The Company may not issue new Securities to
replace Securities that it has paid or that have been delivered to the Trustee
for cancellation.

SECTION 2.14.              DEFAULTED INTEREST.

                  If the Company defaults in a payment of interest on the
Securities, it shall pay the defaulted interest in any lawful manner plus, to
the extent lawful, interest payable on the defaulted interest, to the Persons
who are Holders on a subsequent special record date, which date shall be at the
earliest practicable date but in all events at least five Business Days prior to
the related payment date, in each case at the rate provided in the Securities
and in Section 4.01 hereof. The Company shall, with the consent of the Trustee,
fix or cause to be fixed each such special record date and payment date. At
least 15 days before the special record date, the Company (or the Trustee, in
the name of and at the expense of the Company) shall mail to Holders a notice
that states the special record date, the related payment date and the amount of
such interest to be paid.

SECTION 2.15.              RECORD DATE.

                  The record date for purposes of determining the identity of
Holders entitled to vote or consent to any action by vote or consent authorized
or permitted under this Indenture shall be determined as provided for in TIA
Section 316(c).

SECTION 2.16.              CUSIP NUMBER.

                  The Company in issuing the Securities may use a "CUSIP"
number, and if it does so, the Trustee shall use the CUSIP number in notices to
Holders; PROVIDED that any such notice may state that no representation is made
as to the correctness or accuracy of the CUSIP number printed in the notice or
on the Securities and that reliance may be placed only on the other
identification numbers printed on the Securities. The Company shall promptly
notify the Trustee of any change in the CUSIP number.

                                      -17-
<PAGE>

                                    ARTICLE 3
                                   REDEMPTION

SECTION 3.01.              NOTICES TO TRUSTEE.

                  If the Company elects to redeem Securities pursuant to the
optional redemption provisions of Section 3.07 hereof, it shall furnish to the
Trustee, at least 45 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the Section of this Indenture pursuant
to which the redemption shall occur, (ii) the redemption date, (iii) the
principal amount of Securities to be redeemed and (iv) the redemption price.

                  If the Company is required to make an offer to purchase
Securities pursuant to the provisions of Section 4.12 hereof, it shall furnish
to the Trustee an Officers' Certificate setting forth (i) the Section of this
Indenture pursuant to which the purchase shall occur, (ii) the purchase date,
(iii) the principal amount of Securities to be purchased, (iv) the purchase
price and (v) a statement to the effect that a Change of Control has occurred
and the conditions set forth in Section 4.12 hereof have been satisfied, as
applicable.

SECTION 3.02.              SELECTION OF SECURITIES TO BE REDEEMED.

                  If less than all of the Securities are to be redeemed at any
time, the Trustee shall select the Securities to be redeemed among the Holders
in compliance with the requirements of the principal national securities
exchange, if any, on which the Securities are then listed, or, if the Securities
are not so listed, on a PRO RATA basis, by lot or by such method the Trustee
shall deem fair and appropriate; PROVIDED that Securities with a principal
amount of $1,000 shall not be redeemed in part.

                  The Trustee shall promptly notify the Company in writing of
the Securities selected for redemption and, in the case of any Security selected
for partial redemption, the principal amount thereof to be redeemed. Securities
and portions of them selected shall be in the amounts of $1,000 or whole
multiples of $1,000; except that if all of the Securities of a Holder are to be
redeemed, the entire outstanding amount of Securities held by such Holders, even
if not a multiple of $1,000, shall be redeemed. Except as provided in the
preceding sentence, provisions of this Indenture that apply to Securities called
for redemption also apply to portions of Securities called for redemption.

SECTION 3.03.              NOTICE OF REDEMPTION.

                  At least 30 days but not more than 60 days before a redemption
date, the Company shall mail or cause to be mailed by first class mail a notice
of redemption to each Holder of Securities to be redeemed at its registered
address.

                  The notice shall identify the Securities to be redeemed
(including CUSIP number) and shall state:

                  (1)      the redemption date;

                  (2)      the redemption price;

                                      -18-

<PAGE>

                  (3)      if any Security is being redeemed in part, the
                           portion of the principal amount of such Security to
                           be redeemed and that, after the redemption date upon
                           surrender of such Security, a new Security or
                           Securities in principal amount equal to the
                           unredeemed portion shall be issued;

                  (4)      the name and address of the Paying Agent;

                  (5)      that Securities called for redemption must be
                           surrendered to the Paying Agent to collect the
                           redemption price;

                  (6)      that, unless the Company defaults in making such
                           redemption payment, interest on Securities called for
                           redemption ceases to accrue on and after the
                           redemption date;

                  (7)      the paragraph of the Securities and/or Section of
                           this Indenture pursuant to which the Securities
                           called for redemption are being redeemed; and

                  (8)      that no representation is made as to the correctness
                           or accuracy of the CUSIP number, if any, listed in
                           such notice or printed on the Securities.

                  At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense; PROVIDED, HOWEVER, that the
Company shall have delivered to the Trustee, at least 40 days prior to the
redemption date, unless the Trustee shall agree to a shorter period, an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph. The notice mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the Holder receives such notice.
In any case, failure to give such notice by mail or any defect in the notice to
the Holder of any Security shall not affect the validity of the proceeding for
the redemption of any other Security.

SECTION 3.04.              EFFECT OF NOTICE OF REDEMPTION.

                  Once notice of redemption is mailed in accordance with Section
3.03 hereof, Securities called for redemption become due and payable on the
redemption date at the redemption price plus accrued and unpaid interest, if
any, to such date.

SECTION 3.05.              DEPOSIT OF REDEMPTION PRICE.

                  One Business Day prior to the redemption date, the Company
shall deposit with the Trustee or with the Paying Agent money sufficient to pay
the redemption price of, and accrued interest on, all Securities to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the Company
in excess of the amounts necessary to pay the redemption price of (including any
applicable premium), and accrued interest on, all Securities to be redeemed.

                  On and after the redemption date, interest ceases to accrue on
the Securities or the portions of Securities called for redemption. If a
Security is redeemed on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Security was registered at the close of
business on such record date. If

                                      -19-

<PAGE>

any Security called for redemption shall not be so paid upon surrender for
redemption because of the failure of the Company to comply with the preceding
paragraph, interest shall be paid on the unpaid principal, from the redemption
date until such principal is paid, and to the extent lawful on any interest not
paid on such unpaid principal, in each case the rate provided in the Securities
and in Section 4.01 hereof.

SECTION 3.06.              SECURITIES REDEEMED IN PART.

                  Upon surrender of a Security that is redeemed in part, the
Company shall issue and the Trustee shall authenticate for the Holder at the
expense of the Company a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.

SECTION 3.07.              OPTIONAL REDEMPTION.

                  The Securities shall be redeemable, in whole, at any time, or
in part, from time to time, at the option of the Company upon not less than 30
nor more than 60 days' notice at a redemption price equal to the Make-Whole
Price. "Make-Whole Price" means an amount equal to the greater of (i) 100% of
the principal amount of the Securities and (ii) as determined by an Independent
Investment Banker (as defined herein), the sum of the present values of the
remaining scheduled payments of principal and interest thereon (excluding
accrued and unpaid interest to the date of redemption) discounted to the date of
redemption on a semiannual basis (assuming a 360-day year consisting of twelve
30-day months) at the Adjusted Treasury Rate (as defined herein), plus, in each
case, accrued and unpaid interest thereon to the date of redemption.

                  "Adjusted Treasury Rate" means, with respect to any redemption
date, the rate per annum equal to the semiannual equivalent yield to maturity of
the Comparable Treasury Issue (as defined), assuming a price for the Comparable
Treasury Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price (as defined) for such redemption date, plus 0.5%.

                  "Comparable Treasury Issue" means the United States Treasury
security selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of the Securities to be redeemed that would be
utilized, at the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of comparable
maturity to the remaining term of the Securities.

                  "Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third Business Day preceding such redemption date, as set forth in the
daily statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such Business Day, (A) the average
of the Reference Treasury Dealer Quotations for such redemption date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations,
or (B) if the Trustee obtains fewer than three such Reference Treasury Dealer
Quotations, the average of all such quotations. "Reference Treasury Dealer
Quotations" means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of the bid and asked
prices for the Comparable Treasury Issue (expressed in each case as a percentage
of its principal amount) quoted in writing to the Trustee by such Treasury
Reference Dealer at 5:00 p.m. on the third Business Day preceding such
redemption date.

                                      -20-
<PAGE>

                  "Independent Investment Banker" means one of the Reference
Treasury Dealers (as defined) appointed by the Company.

                  "Reference Treasury Dealer" means Donaldson, Lufkin & Jenrette
Securities Corporation and its successors; PROVIDED, HOWEVER, that if the
foregoing shall cease to be a primary U.S. Government securities dealer in New
York City (a "Primary Treasury Dealer"), the Company shall substitute therefor
another Primary Treasury Dealer.

SECTION 3.08.     MANDATORY REDEMPTION.

                  Subject to the Company's obligation to make an offer to
repurchase Securities under certain circumstances pursuant to Section 4.12
hereof, the Company shall not be required to make any mandatory redemption or
sinking fund payments with respect to the Securities.

                                   ARTICLE 4
                                   COVENANTS

SECTION 4.01.     PAYMENT OF SECURITIES.

                  The Company shall pay or cause to be paid the principal of,
premium, if any, and interest on the Securities on the dates and in the
manner provided in this Indenture and the Securities. Principal, premium, if
any, and interest shall be considered paid on the date due if the Paying
Agent, if other than the Company or a Subsidiary of the Company, holds as of
10:00 a.m. Eastern Time on the due date money deposited by the Company in
immediately available funds and designated for and sufficient to pay all
principal, premium, if any, and interest then due. Such Paying Agent shall
return to the Company, no later than five days following the date of payment,
any money (including accrued interest) that exceeds such amount of principal,
premium, if any, and interest to be paid on the Securities.

                  The Company shall pay interest (including post-petition
interest in any proceeding under any Bankruptcy Law) on overdue principal at the
rate equal to 1% per annum in excess of the interest rate then applicable to the
Securities to the extent lawful. In addition, it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest (without regard to any applicable grace period) at the
same rate to the extent lawful.

SECTION 4.02.     MAINTENANCE OF OFFICE OR AGENCY.

                  The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee, Registrar or co-registrar) where Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company shall give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee.

                  The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from

                                      -21-
<PAGE>

time to time rescind such designations; PROVIDED, HOWEVER, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain an office or agency in the Borough of Manhattan, The City
of New York for such purposes. The Company shall give prompt written notice to
the Trustee of any such designation or rescission and of any change in the
location of any such other office or agency.

                  The Company hereby designates the Bank of New York, 101
Barclay Street, 21 West, New York, New York 10286 as one such office or agency
of the Company in accordance with Section 2.04 hereof.

SECTION 4.03.     COMMISSION REPORTS.

                  (i)      So long as any of the Securities remain outstanding,
         the Company shall provide to the Trustee within 15 days after the
         filing thereof with the Commission copies of the annual reports and of
         the information, documents and other reports (or copies of such
         portions of any of the foregoing as the Commission may by rules and
         regulations prescribe) that the Company is required to file with the
         Commission pursuant to Section 13 or 15(d) of the Exchange Act. All
         obligors on the Securities shall comply with the provisions of TIA
         Section 314(a). Nothwithstanding that the Company may not be subject
         to the reporting requirements of Section 13 or 15(d) of the Exchange
         Act or otherwise report on an annual and quarterly basis on forms
         provided for such annual and quarterly reporting pursuant to rules
         and regulations promulgated by the Commission, the Company shall
         file with the Commission and provide to the Trustee (a) within 90
         days after the end of each fiscal year, annual reports on Form 10-K
         (or any successor or comparable form) containing the information
         required to be contained therein (or required in such successor or
         comparable form), including a "MANAGEMENT'S DISCUSSION AND ANALYSIS
         OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and a report
         thereon by the Company's certified public accountants; (b) within 45
         days after the end of each of the first three fiscal quarters of
         each fiscal year, reports on Form 10-Q (or any successor or
         comparable form) containing the information required to be
         contained therein (or required in any successor or comparable form),
         including a "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS"; and (c) promptly from time to
         time after the occurrence of an event required to be therein
         reported, such other reports on Form 8-K (or any successor or
         comparable form) containing the information required to be contained
         therein (or required in any successor or comparable form); PROVIDED,
         HOWEVER, that the Company shall not be in default of the provisions
         of this Section 4.03(i) for any failure to file reports with the
         Commission solely by the refusal of the Commission to accept the
         same for filing. Each of the financial statements contained in such
         reports shall be prepared in accordance with GAAP.

                  (ii)     The Trustee, at the Company's request and expense,
         shall promptly mail copies of all such annual reports, information,
         documents and other reports provided to the Trustee pursuant to Section
         4.03(i) hereof to the Holders at their addresses appearing in the
         register of Securities maintained by the Registrar.

                  (iii)    Whether or not required by the rules and regulations
         of the Commission, the Company shall file a copy of all such
         information and reports with the Commission for public availability
         and make such information available to securities analysts and
         prospective investors upon request.

                                      -22-
<PAGE>

                  (iv)     The Company shall provide the Trustee with a
         sufficient number of copies of all reports and other documents and
         information that the Trustee may be required to deliver to the Holders
         under this Section 4.03.

                  (v)      Delivery of such reports, information and documents
         to the Trustee is for informational purposes only and the Trustee's
         receipt of such shall not constitute constructive notice of any
         information contained therein or determinable from information
         contained therein, including the Company's compliance with any of its
         covenants hereunder (as to which the Trustee is entitled to rely
         exclusively on Officers' Certificates).

SECTION 4.04.     COMPLIANCE CERTIFICATE.

                  (i)      The Company shall deliver to the Trustee, within 120
         days after the end of each fiscal year, an Officers' Certificate
         stating that a review of the activities of the Company and its
         Subsidiaries during the preceding fiscal year has been made under the
         supervision of the signing Officers with a view to determining whether
         each has kept, observed, performed and fulfilled its obligations under
         this Indenture, and further stating, as to each such Officer signing
         such certificate, that to the best of his or her knowledge each entity
         has kept, observed, performed and fulfilled each and every covenant
         contained in this Indenture and is not in default in the performance or
         observance of any of the terms, provisions and conditions of this
         Indenture (or, if a Default or Event of Default shall have occurred,
         describing all such Defaults or Events of Default of which he or she
         may have knowledge and what action each is taking or proposes to take
         with respect thereto), all without regard to periods of grace or notice
         requirements, and that to the best of his or her knowledge no event
         has occurred and remains in existence by reason of which payments on
         account of the principal of or interest, if any, on the Securities is
         prohibited or if such event has occurred, a description of the event
         and what action each is taking or proposes to take with respect
         thereto.

                  (ii)     So long as not contrary to the then current
         recommendations of the American Institute of Certified Public
         Accountants, the year-end financial statements delivered pursuant to
         Section 4.03 above shall be accompanied by a written statement of
         the Company's certified independent public accountants (who shall
         be a firm of established national reputation) that in making the
         examination necessary for certification of such financial statements
         nothing has come to their attention which would lead them to believe
         that the Company or any Subsidiary of the Company has violated any
         provisions of Article 4 or of Article 5 of this Indenture or, if any
         such violation has occurred, specifying the nature and period of
         existence thereof, it being understood that such accountants shall
         not be liable directly or indirectly to any Person for any failure
         to obtain knowledge of any such violation.

                  (iii)    The Company shall, so long as any of the Securities
         are outstanding, deliver to the Trustee, forthwith upon any Officer
         becoming aware of (a) any Default or Event of Default or (b) any event
         of default under any other mortgage, indenture or instrument referred
         to in Section 6.01(v) hereof, an Officers' Certificate specifying such
         Default, Event of Default or event of default and what action the
         Company is taking or proposes to take with respect thereto.

SECTION 4.05.     TAXES.

                                      -23-
<PAGE>

    The Company shall pay, and shall cause each of its Subsidiaries to pay,
prior to delinquency, all material taxes, assessments, and governmental
levies except (i) as contested in good faith by appropriate proceedings and
with respect to which appropriate reserves have been taken in accordance with
GAAP or (ii) where the failure to effect such payment is not adverse in
any material respect to the Holders.

SECTION 4.06.  STAY, EXTENSION AND USURY LAWS.

    The Company covenants (to the extent that it may lawfully do so) that it
shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantage
of any such law, and covenants that it shall not, by resort to any such law,
hinder, delay or impede the execution of any power herein granted to the
Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.

SECTION 4.07.  LIMITATIONS ON RESTRICTED PAYMENTS.

    The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly: (i) declare or pay any dividend or make any
distribution on account of the Company's or any of its Subsidiaries' Equity
Interests (other than (w) Physician Joint Venture Distributions, (x)
dividends or distributions payable in Qualified Equity Interests of the
Company, (y) dividends or distributions payable to the Company or any
Subsidiary of the Company, and (z) dividends or distributions by any
Subsidiary of the Company payable to all holders of a class of Equity
Interests of such Subsidiary on a PRO RATA basis); (ii) purchase, redeem or
otherwise acquire or retire for value any Equity Interests of the Company; or
(iii) make any principal payment on, or purchase, redeem, defease or
otherwise acquire or retire for value any Indebtedness that is subordinated
to the Securities, except at the original final maturity date thereof or
pursuant to a Specified Exchange (all such payments and other actions set
forth in clauses (i) through (iii) above being collectively referred to as
"RESTRICTED PAYMENTS"), unless, at the time of and after giving effect to
such Restricted Payment (the amount of any such Restricted Payment, if other
than cash, shall be the fair market value (as conclusively evidenced by a
resolution of the Board of Directors set forth in an Officers' Certificate
delivered to the Trustee within 60 days prior to the date of such Restricted
Payment) of the asset(s) proposed to be transferred by the Company or such
Subsidiary, as the case may be, pursuant to such Restricted Payment):

               (a)  no Default or Event of Default shall have occurred and be
     continuing or would occur as a consequence thereof; and

               (b)  the Company would, at the time of such Restricted Payment
     and after giving PRO FORMA effect thereto as if such Restricted Payment had
     been made at the beginning of the most recently ended four full fiscal
     quarter period for which internal financial statements are available
     immediately preceding the date of such Restricted Payment, have been
     permitted to incur at least $1.00 of additional Indebtedness pursuant to
     the Fixed Charge Coverage Ratio test set forth in the first paragraph of
     Section 4.09 hereof; and

               (c) such Restricted Payment, together with the aggregate of all
     other Restricted Payments made by the Company and its Subsidiaries after
     March 1, 1995 (excluding Restricted Payments permitted by clauses (ii),
     (iii) and (iv) of the next succeeding paragraph), is less than

                                      -24-
<PAGE>

the sum of (1) 50% of the Consolidated Net Income of the Company for the
period (taken as one accounting period) from the beginning of the first
fiscal quarter commencing March 1, 1995 to the end of the Company's most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated
Net Income for such period is a deficit, less 100% of such deficit), PLUS (2)
100% of the aggregate net cash proceeds received by the Company from the
issue or sale (other than to a Subsidiary of the Company) since March 1, 1995
of Qualified Equity Interests of the Company or of debt securities of the
Company or any of its Subsidiaries that have been converted into or exchanged
for such Qualified Equity Interests of the Company, PLUS (3) $50.0 million.

         If no Default or Event of Default has occurred and is continuing, or
would occur as a consequence thereof, the foregoing provisions shall not
prohibit the following Restricted Payments:

        (i)   the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions hereof;

        (ii)  the payment of cash dividends on any series of Disqualified
Stock issued after the Closing Date in an aggregate amount not to exceed the
cash received by the Company since the  Closing Date upon issuance of such
Disqualified Stock;

        (iii) the redemption, repurchase, retirement or other aquisition of
any Equity Interests of the Company or any Subsidiary in exchange for, or out
of the net cash proceeds of, the substantially concurrent sale (other than to
a Subsidiary of the Company) of Qualified Equity Interests of the Company;
PROVIDED that the amount of any such net cash proceeds that are utilized for
any such redemption, repurchase, retirement or other aquisition shall be
excluded from clause (c)(2) of the preceding paragraph;

        (iv)  the defeasance, redemption or repurchase of subordinated
Indebtedness with the net cash proceeds from an incurrence of Permitted
Refinancing Indebtedness or in exchange for or out of the net cash proceeds
from the substantially concurrent sale (other than to a Subsidiary of the
Company) of Qualified Equity Interests of the Company; PROVIDED that the
amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded
from clause (c)(2) of the preceding paragraph;

         (v)  the repurchase, redemption or other acquisition or retirement
for value of (A) any Equity Interests of the Company or any Subsidiary of the
Company held by any member of the Company's (or any of its Subsidiaries')
management pursuant to any management equity subscription agreement or stock
option agreement or (B) any Equity Interests of the Company which are or
intended to be used to satisfy issuances of such Equity Interests upon
exercise of employee stock options or upon exercise or satisfaction of other
similar instruments outstanding under employee benefit plans of the Company
or any subsidiary of the Company; PROVIDED that the aggregate price paid for
all such repurchased, redeemed, acquired or retired Equity Interests shall
not exceed $25.0 million in any twelve-month period; and

        (vi)  the making and consummation of (A) a senior subordinated asset
sale offer in accordance with the provisions of the indenture relating to the
2005 Senior Subordinated Notes or (B) a change of control offer with respect
to any of the 2008 Senior Subordinated Notes, the

                                      -25-
<PAGE>

2007 Senior Subordinated Notes, the 2005 Senior Subordinated Notes or the
2005 Exchangeable Subordinated Notes in accordance with the provisions of the
indentures relating thereto.

         Not later than the date of making any Restricted Payment, the
Company shall deliver to the Trustee an Officers' Certificate stating that
such Restricted Payment is permitted and setting forth the basis upon which
the calculations required by this covenant were computed.

SECTION 4.08  LIMITATIONS ON DIVIDEND AND OTHER PAYMENT RESTRICTIONS
              AFFECTING SUBSIDIARIES.

         The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual Transfer Restriction, except for such
Transfer Restrictions existing under or by reason of:

         (a)  Existing Indebtedness as in effect on the Closing Date,

         (b)  this Indenture,

         (c)  applicable law,

         (d)  any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Subsidiaries as in effect at the
time of such acquisition (except to the extent such Indebtedness was incurred
in connection with or in contemplation of such acquisition, unless such
Indebtedness was incurred in connection with or in contemplation of such
acquisition for the purpose of refinancing Indebtedness which was tax-exempt,
or in violation of Section 4.09 hereof), which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person,
other than the Person, or the property or assets of the Person, so acquired,
PROVIDED that the Consolidated Cash Flow of such Person shall not be taken
into account in determining whether such acquisition was permitted by the
terms hereof except to the extent that such Consolidated Cash Flow would be
permitted to be dividends to the Company without the prior consent or
approval of any third party,

         (e)  customary non-assignment provisions in leases entered into in the
ordinary course of business,

         (f)  purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the ability of any of the
Company's Subsidiaries to transfer the property so acquired to the Company or
any of its Subsidiaries,

         (g)  Permitted Refinancing Indebtedness, PROVIDED that the
restrictions contained in the agreements governing such Permitted Refinancing
Indebtedness are no more restrictive than those contained in the agreements
governing the Indebtedness being refinanced, or

         (h)  the Existing Credit Facility and related documentation as the
same is in effect on the Closing Date and as amended, modified, extended,
renewed, refunded, refinanced, restated or replaced from time to time,
PROVIDED that no such amendment or replacement is more restrictive
as to Transfer Restrictions than the Existing Credit Facility and related
documentation as in effect on the Closing Date.

                                      -26-

<PAGE>

SECTION 4.09.   LIMITATIONS ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
                PREFERRED STOCK.

    The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, issue, assume, Guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively "INCUR") after the Closing Date any Indebtedness (including
Acquired Debt), and the Company shall not issue any Disqualified Stock and
shall not permit any of its Subsidiaries to issue any shares of preferred
stock; PROVIDED, HOWEVER, that the Company may incur Indebtedness (including
Acquired Debt) and the Company may issue shares of Disqualified Stock if the
Fixed Charge Coverage Ratio for the Company's most recently ended four full
fiscal quarters for which internal financial statements are available
immediately preceding the date on which such additional Indebtedness is
incurred or such Disqualified Stock is issued would have been at least 2.5 to
1, determined on a PRO FORMA basis (including a PRO FORMA application of the
net proceeds therefrom), as if the additional Indebtedness had been incurred
or the Disqualified Stock had been issued, as the case may be, at the
beginning of such four-quarter period. Indebtedness consisting of
reimbursement obligations in respect of a letter of credit shall be deemed to
be incurred when the letter of credit is first issued.

    The foregoing provisions shall not apply to:

    (a) the incurrence by the Company of Indebtedness pursuant to the
Existing Credit Facility in an aggregate principal amount at the time
outstanding not to exceed an amount equal to $2.8 billion less the aggregate
amount of all mandatory repayments applied to permanently reduce the
commitments with respect to such Indebtedness;

    (b) the incurrence by the Company of Indebtedness represented by the
Securities;

    (c) the incurrence by the Company and its Subsidiaries of the Existing
Indebtedness;

    (d) the incurrence by the Company or any of its Subsidiaries of Permitted
Refinancing Indebtedness is exchange for, or the net proceeds of which are
used to extend, refinancing, renew, replace, defease or refund, Indebtedness
that was permitted by this Indenture to be incurred (including, without
limitation, Existing Indebtedness);

    (e) the incurrence by the Company or any of its Subsidiaries of
intercompany Indebtedness between or among the Company and any of its
Subsidiaries;

    (f) the incurrence by the Company of Hedging Obligations that are incurred
for the purpose of fixing or hedging interest rate or currency risk with
respect to any fixed or floating rate Indebtedness that is permitted by the
terms hereof to be outstanding or any receivable or liability the payment of
which is determined by reference to a foreign currency; PROVIDED that the
notional principal amount of any such Hedging Obligation does not exceed the
principal amount of the Indebtedness to which such Hedging Obligation relates;

    (g) the incurrence by the Company or any of its Subsidiaries of Physician
Support Obligations;

    (h) the incurrence by the Company or any of its Subsidiaries of
Indebtedness represented by tender, bid, performance, government contract,
surety or appeal bonds, standby

                                     -27-

<PAGE>

letters of credit or warranty or contractual service obligations of like
nature, in each case to the extent incurred in the ordinary course of business
of the Company or such Subsidiary;

    (i) the incurrence by any Subsidiary of the Company of Indebtedness, the
aggregate principal amount of which, together with all other Indebtedness of
the Company's Subsidiaries at the time outstanding (excluding the Existing
Indebtedness until repaid or refinanced and excluding Physician Support
Obligations), does not exceed the greater of (1) 10% of the Company's
Stockholders' Equity as of the date of incurrence or (2) $10.0 million;
PROVIDED that, in the case of clause (1) only, the Fixed Charge Coverage
Ratio for the Company's most recently ended four full fiscal quarters for
which internal financial statements are available immediately preceding the
date on which such Indebtedness is incurred would have been at least 2.5 to
1, determined on a PRO FORMA basis (including a PRO FORMA application of the
net proceeds therefrom), as if such Indebtedness had been incurred at the
beginning of such four-quarter period; and

    (j) the incurrence by the Company of Indebtedness (in addition to
Indebtedness permitted by any other clause of this covenant) in an aggregate
principal amount at any time outstanding not to exceed $400.0 million.

SECTION 4.10.  LIMITATIONS ON TRANSACTIONS WITH AFFILIATES.

     The Company shall not, and shall not permit any of its Subsidiaries to,
sell, lease, transfer or otherwise dispose of any of its properties or assets
to, or purchase any property or assets from, or enter into or make any
contract, agreement, understanding, loan, advance or Guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "AFFILIATE
TRANSACTION"), unless (i) such Affiliate Transaction, is on terms that are no
less favorable to the Company or the relevant Subsidiary than those that
could have been obtained in a comparable transaction by the Company or such
Subsidiary with an unrelated Person and (ii) the Company delivers to the
Trustee (a) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $5.0 million, a resolution of the Board of
Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction was approved by a majority of the disinterested members of the
Board of Directors and (b) with respect to any Affiliate Transaction
involving aggregate consideration in excess of $15.0 million, an opinion as
to the fairness to the Company or such Subsidiary of such Affiliate
Transaction from a financial point of view issued by an investment banking
firm of national standing; PROVIDED that (x) transactions or payments
pursuant to any employment arrangements or employee or director benefit plans
entered into by the Company or any of its Subsidiaries in the ordinary course
of business and consistent with the past practice of the Company or such
Subsidiary, (y) transactions between or among the Company and/or its
Subsidiaries and (z) transactions permitted under Section 4.07 hereof, in
each case, shall not be deemed to be Affiliate Transactions.

SECTION 4.11.  LIMITATIONS ON LIENS.

    The Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or suffer to exist any Lien
(except Permitted Liens) on any asset now owned or hereafter acquired, or any
income or profits therefrom or assign or convey any right to receive income
therefrom unless all payments due hereunder and under the Securities are
secured on an equal and ratable basis with the Obligations so secured until
such time as such Obligations are no longer secured by a Lien.

                                     -28-

<PAGE>

SECTION 4.12.  CHANGE OF CONTROL

    Upon the occurrence of a Change of Control Triggering Event, each Holder
of Securities shall have the right to require the Company to repurchase all
or any part (equal to $1,000 or an integral multiple thereof) of such
Holder's Securities pursuant to the offer described below (the "CHANGE OF
CONTROL OFFER") at an offer price in cash equal to 101% of the aggregate
principal amount thereof plus accrued and unpaid interest, if any, thereon to
the date of purchase (the "CHANGE OF CONTROL PAYMENT") on a date that is not
more than 90 days after the occurrence of such Change of Control Triggering
Event (the "CHANGE OF CONTROL PAYMENT DATE").

    Within 30 days following any Change of Control Triggering Event, the
Company shall mail, or at the Company's request the Trustee shall mail, a
notice of a Change of Control to each Holder (at its last registered address
with a copy to the Trustee and the Paying Agent) offering to repurchase the
Securities held by such Holder pursuant to the procedure specified in such
notice. The Change of Control Offer shall remain open from the time of
mailing until the close of business on the Business Day next preceding the
Change of Control Payment Date. The notice, which shall govern the terms of
the Change of Control Offer, shall contain all instructions and materials
necessary to enable the Holders to tender Securities pursuant to the Change
of Control Offer and shall state:

    (1)  that the Change of Control Offer is being made pursuant to this
Section 4.12 and that all Securities tendered will be accepted for payment;

    (2)  the Change of Control Payment and the Change of Control Payment
Date, which date shall be no earlier than 30 days nor later than 60 days from
the date such notice is mailed;

    (3)  that any Security not tendered will continue to accrue interest in
accordance with the terms of this Indenture;

    (4)  that, unless the Company defaults in the payment of the Change of
Control Payment, all Securities accepted for payment pursuant to the Change
of Control Offer will cease to accrue interest after the Change of Control
Payment Date;

    (5)  that Holders electing to have a Security purchased pursuant to any
Change of Control Offer will be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on the reserve of the
Security completed, to the Company, a depositary, if appointed by the
Company, or a Paying Agent at the address specified in the notice prior to the
close of business on the Business Day next preceding the Change of Control
Payment Date;

    (6)  that Holders will be entitled to withdraw their election if the
Company, depositary or Paying Agent, as the case may be, receives, not later
than the close of business on the Business Day next preceding the Change of
Control Payment Date, a facsimile transmission or letter setting forth the
name of the Holder, the principal amount of the Security the Holder delivered
for purchase, and a statement that such Holder is withdrawing his election to
have such Security purchased;

    (7)  that Holders whose Securities are being purchased only in part will
be issued new Securities equal in principal amount to the unpurchased portion
of the Securities

                                          -29-
<PAGE>

         surrendered, which unpurchased portion must be equal to $1,000 in
         principal amount or an integral multiple thereof; and

                  (8)      the circumstances and relevant facts regarding such
         Change of Control (including, but not limited to, information with
         respect to PRO FORMA historical financial information after giving
         effect to such Change of Control, information regarding the Person or
         Persons acquiring control and such Person's or Persons' business plans
         going forward) and any other information that would be material to a
         decision as to whether to tender a Security pursuant to the Change of
         Control Offer.

                  On the Change of Control Payment Date, the Company shall,
to the extent lawful, (i) accept for payment all Securities or portions
thereof properly tendered and not withdrawn pursuant to the Change of Control
Offer, (ii) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all Securities or portions thereof so tendered
and (iii) deliver or cause to be delivered to the Trustee the Securities so
accepted together with an Officers' Certificate stating the aggregate
principal amount of Securities or portions thereof being purchased by the
Company. The Paying Agent shall promptly mail to each Holder of Securities so
tendered the Change of Control Payment for such Securities, and the Trustee
shall promptly authenticate and mail (or cause to be transferred by book
entry) to each Holder a new Security equal in principal amount to any
unpurchased portion of the Securities surrendered, if any; PROVIDED that each
such new Security shall be in a principal amount of $1,000 or an integral
multiple thereof. The Company shall publicly announce the results of the
Change of Control Offer on or as soon as practicable after the Change of
Control Payment Date.

                  The Company shall comply with the requirements Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent such laws and regulations are applicable in connection with the
repurchase of Securities as a result of a Change of Control Triggering Event.

SECTION 4.13.     CORPORATE EXISTENCE.

                  Subject to Section 4.12 and Article 5 hereof, the Company
shall do or cause to be done all things necessary to preserve and keep in full
force and effect (i) its corporate existence, and the corporate, partnership or
other existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of each
Subsidiary and (ii) the rights (charter and statutory), licenses and franchises
of the Company and its Subsidiaries; PROVIDED, HOWEVER, that the Company shall
not be required to preserve any such right, license or franchise, or the
corporate, partnership or other existence of any of its Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Subsidiaries,
taken as a whole, and that the loss thereof is not adverse in any material
respect to the Holders.

SECTION 4.14      LINE OF BUSINESS.

                  The Company shall not, and shall not permit any of its
Subsidiaries to, engage in any material extent in any business other than the
ownership, operation and management of Hospitals and Related Businesses.

                                      -30-

<PAGE>

SECTION 4.15      LIMITATIONS ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS BY
                  SUBSIDIARIES.

                  The Company shall not permit any Subsidiary, directly or
indirectly, to Guarantee or secure the payment of any other Indebtedness of
the Company or any of its Subsidiaries (except Indebtedness of a Subsidiary
of such Subsidiary or Physician Support Obligations) unless such Subsidiary
simultaneously executes and delivers a supplemental indenture to this
Indenture, in substantially the form attached hereto as Appendix B, providing
for the Guarantee of the payment of the Securities by such Subsidiary, which
Guarantee shall be senior to or PARI PASSU with such Subsidiary's Guarantee
of or pledge to secure such other Indebtedness. Notwithstanding the
foregoing, any such Guarantee by a Subsidiary of the Securities shall provide
by its terms that it shall be automatically and unconditionally released and
discharged upon the sale or other disposition, by way of merger of otherwise,
to any Person not an Affiliate of the Company, of all of the Company's stock
in, or all or substantially all the assets of, such Subsidiary. The foregoing
provisions shall not be applicable to any one or more Guarantees that
otherwise would be prohibited of up to $25.0 million in aggregate principal
amount of Indebtedness of the Company or its Subsidiaries at any time
outstanding.

SECTION 4.16      NO AMENDMENT TO SUBORDINATION PROVISIONS OF SENIOR
                  SUBORDINATED NOTE INDENTURE.

                  The Company shall not amend, modify or alter the indentures
relating to the 2005 Senior Subordinated Notes, the 2007 Senior Subordinated
Notes or the 2005 Exchangeable Subordinated Notes or the 2008 Senior
Subordinated Notes in any way that would (i) increase the principal of, advance
the final maturity date of or shorten the Weighted Average Life to Maturity of
the 2008 Senior Subordinated Notes, 2005 Senior Subordinated Notes, 2007 Senior
Subordinated or 2005 Exchangeable Subordinated Notes or (ii) amend the
subordination provisions of the indentures relating to the 2008 Senior
Subordinated Notes, the 2005 Senior Subordinated Notes, the 2007 Senior
Subordinated Notes or the 2005 Exchangeable Subordinated Notes or any of the
defined terms used therein a manner that would be adverse to the Holders of the
Securities.

                                   ARTICLE 5
                                   SUCCESSORS

SECTION 5.01      LIMITATIONS ON MERGERS, CONSOLIDATIONS OR SALES OF ASSETS.

                  The Company may not consolidate or merge with or into (whether
or not the Company is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all of its properties
or assets in one or more related transactions, to another corporation, Person or
entity unless:

                  (i)      the Company is the surviving corporation or the
         entity or the Person formed by or surviving any such consolidation or
         merger (if other than the Company) or to which such sale, assignment,
         transfer, lease, conveyance or other disposition shall have been made
         is a corporation organized or existing under the laws of the United
         States, any state thereof or the District of Columbia;

                                      -31-

<PAGE>

                  (ii)     the entity or Person formed by or surviving any such
         consolidation or merger (if other than the Company) or the entity or
         Person to which such sale, assignment, transfer, lease, conveyance or
         other disposition shall have been made assumes all the Obligations of
         the Company under this Indenture and the Securities pursuant to a
         supplemental indenture in a form reasonably satisfactory to the
         Trustee;

                  (iii)    immediately after such transaction no Default or
         Event of Default exists; and

                  (iv)     the Company or the entity or Person formed by or
         surviving any such consolidation or merger (if other than the Company),
         or to which such sale, assignment, transfer, lease, conveyance or other
         disposition shall have been made (A) shall have a Consolidated Net
         Worth immediately after the transaction equal to or greater than the
         Consolidated Net Worth of the Company immediately preceding the
         transaction and (B) shall, at the time of such transaction and after
         giving PRO FORMA effect thereto as if such transaction had occurred at
         the beginning of the applicable four-quarter period, be permitted to
         incur at least $1.00 of additional Indebtedness pursuant to the Fixed
         Charge Coverage Ratio test set forth in the first paragraph of Section
         4.09 hereof.

                  The Company shall deliver to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate to the
foregoing effect and an Opinion of Counsel, covering clauses (i) though (iv)
above, stating that the proposed transaction and such supplemental indenture
comply with this Indenture. The Trustee shall be entitled to conclusively rely
upon such Officers' Certificate and Opinion of Counsel.

SECTION 5.02.     SUCCESSOR CORPORATION SUBSTITUTED.

                  Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all of
the assets of the Company is accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which the Company is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, assignment, transfer, lease,
conveyance or other disposition, the provisions of this Indenture referring to
the "Company" shall refer instead to the successor corporation), and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor Person has been named as the Company, herein.

                                   ARTICLE 6
                             DEFAULTS AND REMEDIES

SECTION 6.01.     EVENTS OF DEFAULT.

                  Each of the following constitutes an "EVENT OF DEFAULT":

                  (i)      default for 30 days in the payment when due of
         interest on the Securities;

                  (ii)     default in payment when due of the principal of or
         premium, if any, on the Securities at maturity or otherwise;

                                      -32-

<PAGE>

                  (iii) failure by the Company to comply with the provisions
         of Sections 4.07, 4.09 or 4.12 hereof;

                  (iv)  failure by the Company to comply with any other
         covenant or agreement in the Indenture or the Securities for the
         period and after the notice specified below;

                  (v)   any default that occurs under any mortgage, indenture
         or instrument under which there may be issued or by which there may
         be secured or evidenced any Indebtedness for money borrowed by the
         Company or any of its Significant Subsidiaries (or the payment of
         which is Guaranteed by the Company or any of its Significant
         Subsidiaries), whether such Indebtedness or Guarantee exists on the
         Closing Date or is created after the Closing Date, which default (a)
         constitutes a Payment Default or (b) results in the acceleration of
         such Indebtedness prior to its express maturity and, in each case,
         the principal amount of any such Indebtedness, together with the
         principal amount of any other such Indebtedness under which there
         has been a Payment Default or that has been so accelerated,
         aggregates $25.0 million or more;

                  (vi)  failure by the Company or any of its Significant
         Subsidiaries to pay a final judgment or final judgments aggregating
         in excess of $25.0 million entered by a court or courts of competent
         jurisdiction against the Company or any of its Significant
         Subsidiaries if such final judgment or judgments remain unpaid or
         undischarged for a period (during which execution shall not be
         effectively stayed) of 60 days after their entry;

                  (vii) the Company or any Significant Subsidiary thereof
         pursuant to or within the meaning of any Bankruptcy Law:

                           (a)    commences a voluntary case,

                           (b)    consents to the entry of an order for
                  relief against it in an involuntary case in which it is the
                  debtor,

                           (c)    consents to the appointment of a Custodian
                  of it or for all or substantially all of its property,

                           (d)    makes a general assignment for the benefit
                  of its creditors, or

                           (e)    admits in writing its inability generally
                  to pay its debts as the same become due; and

                  (viii) a court of competent jurisdiction enters an order or
         decree under any Bankruptcy Law that:

                           (a)    is for relief against the Company or any
                  Significant Subsidiary thereof in an involuntary case in
                  which it is the debtor,

                           (b)    appoints a Custodian of the Company or any
                  Significant Subsidiary thereof or for all or substantially
                  all of the property of the Company or any Significant
                  Subsidiary thereof, or

                                     -33-

<PAGE>

                           (c)    orders the liquidation of the Company or
                  any Significant Subsidiary thereof, and the order or decree
                  remains unstayed and in effect for 60 days.

                  The term "BANKRUPTCY LAW" means title 11, U.S. Code or any
similar federal or state law for the relief of debtors. The term "CUSTODIAN"
means any receiver, trustee, assignee, liquidator or similar official under
any Bankruptcy Law.

                  A Default under clause (iv) is not an Event of Default
until the Trustee notifies the Company in writing, or the Holders of at least
25% in principal amount of the then outstanding Securities notify the Company
and the Trustee in writing, of the Default and the Company does not cure the
Default within 60 days after receipt of such notice. The written notice must
specify the Default, demand that it be remedied and state that the notice is
a "NOTICE OF DEFAULT".

SECTION 6.02.              ACCELERATION.

                  In any Event of Default (other than an Event of Default
specified in clause (vii) or (viii) of Section 6.01 hereof) occurs and is
continuing, the Trustee by notice to the Company, or the Holders of at least
25% in principal amount of the then outstanding Securities by written notice
to the Company and the Trustee, may declare the unpaid principal of, premium,
if any, and any accrued and unpaid interest on all the Securities to be due
and payable immediately. Upon such declaration the principal, premium, if
any, and interest shall be due and payable immediately. If an Event of
Default specified in clause (vii) or (viii) of Section 6.01 hereof occurs
with respect to the Company or any Significant Subsidiary thereof such an
amount shall IPSO FACTO become and be immediately due and payable without
further action or notice on the part of the Trustee or any Holder.

                  In the case of any Event of Default occurring by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Securities pursuant to Section 3.07 hereof, an equivalent premium shall also
become and be immediately due and payable to the extent permitted by law upon
the acceleration of the Securities.

                  Any determination regarding the primary purpose of any such
action or inaction, as the case may be, shall be made by and set forth in a
resolution of the Board of Directors (including the concurrence of a majority
of the independent directors of the Company then serving) delivered to the
Trustee after consideration of the business reasons for such action or
inaction, other than the avoidance of payment of such premium or prohibition
on redemption. In the absence of fraud, each such determination shall be
final and binding upon the Holders of Securities. Subject to Section 7.01
hereof, the Trustee shall be entitled to rely on the determination set forth
in any such resolutions delivered to the Trustee.

SECTION 6.03.              OTHER REMEDIES.

                  If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy to collect the payment of principal
or interest on the Securities or to enforce the performance of any provision
of the Securities or this Indenture.

                  The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder in

                                      -34-

<PAGE>

exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.

SECTION 6.04.              WAIVER OF PAST DEFAULTS.

                  The Holders of not less than a majority in aggregate
principal amount of the Securities then outstanding by written notice to the
Trustee may on behalf of the Holders of all of the Securities waive any
existing Default or Event of Default and its consequences under this
Indenture except a continuing Default or Event of Default in the payment of
the principal of, premium, if any, or interest on any Security. Upon any such
waiver, such Default shall cease to exist, and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default
or impair any right consequent thereon.

SECTION 6.05.              CONTROL BY MAJORITY.

                  Holders of a majority in principal amount of the then
outstanding Securities shall have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee or exercising any trust or power conferred on it. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture that the Trustee determines may be unduly prejudicial to the rights
of other Holders or that may involve the Trustee in personal liability. The
Trustee may take any other action which it deems proper which is not
inconsistent with any such direction.

SECTION 6.06.              LIMITATION ON SUITS.

                  A Holder may pursue a remedy with respect to this Indenture
or the Securities only if:

                  (i)    the Holder gives to the Trustee written notice of a
         continuing Event of Default;

                  (ii)   the Holders of at least 25% in principal amount of
         the then outstanding Securities make a written request to the
         Trustee to pursue the remedy;

                  (iii)  such Holder or Holders offer and, if requested,
         provide to the Trustee indemnity satisfactory to the Trustee against
         any loss, liability or expense;

                  (iv)   the Trustee does not comply with the request within
         60 days after receipt of the request and the offer and, if
         requested, the provision of indemnity; and

                  (v)    during such 60-day period the Holders of a majority
         in principal amount of the then outstanding Securities do not give
         the Trustee a direction inconsistent with the request.

                  A Holder may not use this Indenture to prejudice the rights
of another Holder or to obtain a preference or priority over another Holder.

SECTION 6.07.              RIGHTS OF HOLDERS TO RECEIVE PAYMENT.

                                      -35-

<PAGE>

                  Notwithstanding any other provision of this Indenture, the
right of any Holder to receive payment of principal, premium, if any, and
interest on the Security, on or after the respective due dates expressed in
the Security, or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of the Holder.

SECTION 6.08.              COLLECTION SUIT BY TRUSTEE.

                  If an Event of Default specified in Section 6.01(i) or (ii)
hereof occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as trustee of an express trust against the
Company or any other obligor for the whole amount of principal, premium, if
any, and interest remaining unpaid on the Securities and interest on overdue
principal and, to the extent lawful, interest and such further amount as
shall be sufficient to cover amounts due the Trustee under Section 7.07
hereof, including the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the
Trustees, its agents and counsel.

SECTION 6.09.              TRUSTEE MAY FILE PROOFS OF CLAIM.

                  The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Holders allowed in any judicial proceedings relative to
the Company (or any other obligor upon the Securities), its creditors or its
property and shall be entitled and empowered to collect, receive and
distribute any money or other property payable or deliverable on any such
claims and any custodian in any such judicial proceeding is hereby authorized
by each Holder to make such payments to the Trustee, and in the event that the
Trustee shall consent to the making of such payments directly to the Holders,
to pay to the Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel,
and any other amounts due the Trustee under Section 7.07 hereof. To the
extent that the payment of any such compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such
proceeding, shall be denied for any reason, payment of the same shall be
secured by a Lien on, and shall be paid out of, any and all distributions,
dividends, money, securities and other properties which the Holders may be
entitled to receive in such proceeding whether in liquidation or under any
plan of reorganization or arrangement or otherwise. Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any
Holder thereof, or to authorize the Trustee to vote in respect of the claim
of any Holder in any such proceeding.

SECTION 6.10.              PRIORITIES.

                  If the Trustee collects any money pursuant to this Article,
it shall pay out the money in the following order:

                  First: to the Trustee, its agents and attorneys for amounts
due under Section 7.07, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;

                                      -36-

<PAGE>

                  Second: to Holders for amounts due and unpaid on the
Securities for principal, premium, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable
on the Securities for principal, premium, if any and interest, respectively;
and

                  Third: to the Company or to such party as a court of
competent jurisdiction shall direct.

                  The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section 6.10 upon five Business Days
prior notice to the Company.

SECTION 6.11.              UNDERTAKING FOR COSTS.

                  In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any action taken
or omitted by it as a Trustee, a court in its discretion may require the
filing by any party litigant in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant
in the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section does not apply to a suit by
the Trustee, a suit by a Holder pursuant to Section 6.07 hereof, or a suit by
Holders of more than 10% in principal amount of the then outstanding
Securities.

                                  ARTICLE 7
                                   TRUSTEE

SECTION 7.01.              DUTIES OF TRUSTEE.

                  (i)      If an Event of Default has occurred and is
         continuing, the Trustee shall exercise such of the rights and powers
         vested in it by this Indenture, and use the same degree of care and
         skill in their exercise, as a prudent man would exercise or use
         under the circumstances in the conduct of his own affairs.

                  (ii)     Except during the continuance of an Event of
         Default known to the Trustee:

                           (a)    the duties of the Trustee shall be
                  determined solely by the express provisions of this
                  Indenture or the TIA and the Trustee need perform only
                  those duties that are specifically set forth in this
                  Indenture or the TIA and no others, and no implied
                  covenants or obligations shall be read into this Indenture
                  against the Trustee, and

                           (b)    in the absence of bad faith on its part,
                  the Trustee may conclusively rely, as to the truth of the
                  statements and the correctness of the opinions expressed
                  therein, upon certificates or opinions furnished to the
                  Trustee and conforming to the requirements of this
                  Indenture. However, in the case of any such certificates or
                  opinions which by any provisions hereof are required to be
                  furnished to the Trustee, the Trustee shall examine the
                  certificates and opinions to determine whether or not they
                  conform to the requirements of this Indenture.

                  (iii)    The Trustee may not be relieved from liabilities
         for its own negligent action, its own negligent failure to act, or
         its own willful misconduct, except that:

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<PAGE>

                           (a)    this paragraph does not limit the effect of
                  paragraph (ii) of this Section;

                           (b)    the Trustee shall not be liable for any
                  error of judgment made in good faith by a Responsible
                  Officer, unless it is proved that the Trustee was negligent
                  in ascertaining the pertinent facts; and

                           (c)    the Trustee shall not be liable with
                  respect to any action it takes or omits to take in good faith
                  in accordance with a direction received by it pursuant to
                  Section 6.05 hereof.

                  (iv)     Whether or not therein expressly so provided every
         provision of this Indenture that in any way relates to the Trustee
         is subject to paragraphs (i), (ii), and (iii) of this Section.

                  (v)      No provision of this Indenture shall require the
         Trustee to expend or risk its own funds or incur any liability. The
         Trustee may refuse to perform any duty or exercise any right or
         power unless it receives security and indemnity satisfactory to it
         against any loss, liability or expense.

                  (vi)     The Trustee shall not be liable for interest on
         any money received by it except as the Trustee may agree in writing
         with the Company. Absent written instruction from the Company, the
         Trustee shall not be required to invest any such money. Money held
         in trust by the Trustee need not be segregated from other funds
         except to the extent required by law.

                  (vii)    The Trustee shall not be deemed to have knowledge
         of any matter unless such matter is actually known to a Responsible
         Officer.

SECTION 7.02.              RIGHTS OF TRUSTEE.

                  (i)      The Trustee may conclusively rely upon any
         document believed by it to be genuine and to have been signed or
         presented by the proper Person. The Trustee need not investigate any
         fact or matter stated in the document.

                  (ii)     Before the Trustee acts or refrains from acting,
         it may require an Officers' Certificate or an Opinion of Counsel or
         both. The Trustee shall not be liable for any action it takes or
         omits to take in good faith in reliance on such Officers'
         Certificate or Opinion of Counsel. The Trustee may consult with
         counsel of its selection and the written advice of such counsel or
         any Opinion of Counsel shall be full and complete authorization and
         protection from liability in respect of any action taken, suffered
         or omitted by it hereunder in good faith and in reliance thereon.

                  (iii)    The Trustee may act through its attorneys and
         agents and shall not be responsible for the misconduct or negligence
         of any agent appointed with due care.

                  (iv)     The Trustee shall not be liable for any action it
         takes or omits to take in good faith which it believes to be
         authorized or within its rights or powers conferred upon it by this
         Indenture. A permissive right granted to the Trustee hereunder shall
         not be deemed an obligation to act.

                                      -38-

<PAGE>

                  (v)      Unless otherwise specifically provided in this
         Indenture, any demand, request, direction or notice from the Company
         shall be sufficient if signed by an Officer of the Company.

                  (vi)     The Trustee shall not be deemed to have notice of
         any Default or Event of Default unless a Responsible Officer of the
         Trustee has actual knowledge thereof or unless written notice of any
         event which is in fact such a default is received by the Trustee at
         the Corporate Trust Office of the Trustee, and such notice
         references the Securities and this Indenture.

                  (vii)    The rights, privileges, protections, immunities
         and benefits given to the Trustee, including, without limitation,
         its right to be indemnified, are extended to, and shall be
         enforceable by, the Trustee in each of its capacities hereunder, and
         to each agent, custodian and other Person employed to act hereunder.

SECTION 7.03.              INDIVIDUAL RIGHTS OF TRUSTEE.

                  The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with the
Company or any Affiliate of the Company with the same rights it would have if
it were not Trustee. Any Agent may do the same with like rights. However, the
Trustee is subject to Sections 7.10 and 7.11 hereof.

SECTION 7.04.              TRUSTEE'S DISCLAIMER.

                  The Trustee shall not be responsible for and makes no
representation as to the validity or adequacy of this Indenture or the
Securities, nor shall it be accountable for the Company's use of the proceeds
from the Securities or any money paid to the Company or upon the Company's
direction under any provision of this Indenture, nor shall it be responsible
for the use or application of any money received by any Paying Agent other
than the Trustee, nor shall it be responsible for any statement or recital
herein or any statement in the Securities or any other document in connection
with the sale of the Securities or pursuant to this Indenture other than its
certificate of authentication.

SECTION 7.05.              NOTICE OF DEFAULTS.

                  If a Default or Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to Holders a notice
of the Default or Event of Default within 90 days after it occurs. Except in
the case of a Default or Event of Default in payment on any Security, the
Trustee may withhold the notice if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is
in the interests of the Holders.

SECTION 7.06.              REPORTS BY TRUSTEE TO HOLDERS.

                  Within 60 days after each December 31 beginning with the
December 31 following the Closing Date, the Trustee shall mail to the Holders
a brief report dated as of such reporting date that complies with TIA Section
313(a) (but if no event described in TIA Section 313(a) has occurred within
the twelve months preceding the reporting date, no report need be
transmitted). The Trustee also shall comply with TIA Section 313(b). The
Trustee shall also transmit by mail all reports as required by TIA Section
313(c).

                                      -39-

<PAGE>

                  A copy of each report at the time of its mailing to the
Holders shall be mailed to the Company and filed with the Commission and each
stock exchange on which the Securities are listed. The Company shall promptly
notify the Trustee when the Securities are listed on any stock exchange or of
any delisting thereof.

SECTION 7.07.              COMPENSATION AND INDEMNITY.

                  The Company shall pay to the Trustee from time to time such
compensation for its acceptance of this Indenture and services hereunder as
the Company and Trustee shall agree in writing. The Trustee's compensation
shall not be limited by any law on compensation of a trustee of an express
trust. The Company shall reimburse the Trustee promptly upon request for all
reasonable disbursements, advances and expenses incurred or made by it in
addition to the compensation for its services. Such expenses shall include
the reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel.

                  The Company shall indemnify the Trustee against any and all
losses, liabilities, damages, claims or expenses incurred by it arising out
of or in connection with the acceptance of its duties and the administration
of the trusts under this Indenture, except as set forth below. The Trustee
shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve
the Company of its obligations hereunder. The Company shall defend the claim
and the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel. The Company need not pay for any settlement made without its
consent, which consent shall not be unreasonably withheld.

                  The obligations of the Company under this Section 7.07
shall survive the satisfaction and discharge of this Indenture.

                  The Company need not reimburse any expense or indemnify
against any loss or liability incurred by the Trustee through its own
negligence or bad faith.

                  To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Securities on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Securities. Such Lien shall survive the
satisfaction and discharge of this Indenture.

                  When the Trustee incurs expenses or renders services after
an Event of Default specified in Section 6.01(vii) or (viii) hereof occurs,
the expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.

SECTION 7.08.              REPLACEMENT OF TRUSTEE.

                  A resignation or removal of the Trustee and appointment of
a successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section.

                  The Trustee may resign in writing at any time and be
discharged from the trust hereby created by so notifying the Company. The
Holders of a majority in principal amount of the then

                                      -40-

<PAGE>

outstanding Securities may remove the Trustee by so notifying the Trustee and
the Company in writing. The Company may remove the Trustee if:

                  (1)      the Trustee fails to comply with Section 7.10 hereof;

                  (2)      the Trustee is adjudged a bankrupt or an insolvent
         or an order for relief is entered with respect to the Trustee under
         any Bankruptcy Law;

                  (3)      a Custodian or public officer takes charge of the
         Trustee or its property; or

                  (4)      the Trustee becomes incapable of acting.

                  If the Trustee resigns or is removed or if a vacancy exists
in the office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding
Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.

                  If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of at least 10% in principal amount of the then
outstanding Securities may petition any court of competent jurisdiction for
the appointment of a successor Trustee.

                  If the Trustee after written request by any Holder who has
been a Holder for at least six months fails to comply with Section 7.10
hereof, such Holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.

                  A successor Trustee shall deliver a written acceptance of
its appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Holders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, provided all sums
owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.07 hereof. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under
Section 7.07 hereof shall continue for the benefit of the retiring Trustee.

SECTION 7.09.              SUCCESSOR TRUSTEE OR AGENT BY MERGER, ETC.

                  If the Trustee or any Agent consolidates, merges or
converts into, or transfers all or substantially all of its corporate trust
business to, another corporation, the successor corporation without any
further act shall be the successor Trustee or Agent.

SECTION 7.10.              ELIGIBILITY; DISQUALIFICATION.

                  There shall at all times be a Trustee hereunder which shall
be a corporation organized and doing business under the laws of the United
States of America or of any state thereof authorized under such laws to
exercise corporate trustee power, shall be subject to supervision or
examination by federal or state authority and shall have a combined capital
and surplus of at least $100.0 million as set forth in its most recent
published annual report of condition.

                                      -41-

<PAGE>

                  This Indenture shall always have a Trustee who satisfies
the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is
subject to TIA Section 310(b).

SECTION 7.11.              PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

                  The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.

                                    ARTICLE 8
                             DISCHARGE OF INDENTURE

SECTION 8.01.              DEFEASANCE AND DISCHARGE OF THIS INDENTURE AND THE
                           SECURITIES.

                  The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
with respect to the Securities, elect to have either Section 8.02 or 8.03
hereof be applied to all outstanding Securities subject to compliance with
the conditions set forth below in this Article 8. Subject to such compliance,
the application of Section 8.02 or 8.03 hereof shall occur on the date of a
New Lender Deposit (as defined below) or on the 91st day after the date of a
Company Deposit (as defined below), as the case may be.

SECTION 8.02.              LEGAL DEFEASANCE AND DISCHARGE.

                  Upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.02, the Company shall be deemed to
have been discharged from its obligations with respect to all outstanding
Securities on the date the conditions set forth below are satisfied
(hereinafter, "LEGAL DEFEASANCE"). For this purpose, such Legal Defeasance
means that the Company shall be deemed to have paid and discharged the entire
Indebtedness represented by the outstanding Securities, which shall
thereafter be deemed to be "outstanding" only for the purposes of Section
8.05 hereof and the other Sections of this Indenture referred to in clauses
(i) and (ii) of this Section 8.02, and to have satisfied all its other
obligations under such Securities and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper
instruments acknowledging the same), except for the following provisions
which shall survive until otherwise terminated or discharged hereunder: (i)
the rights of Holders of outstanding Securities to receive solely from the
trust fund described in Section 8.04 hereof, and as more fully set forth in
such Section, payments in respect of the principal of, premium, if any, and
interest on such Securities when such payments are due, (ii) the Company's
obligations with respect to such Securities under Article 2 and Section 4.02
hereof, (iii) the rights, powers, trusts, duties and immunities of the
Trustee hereunder, including, without limitation, the Trustee's rights under
Section 7.07 hereof, and the Company's obligations in connection therewith
and (iv) this Article 8. Subject to compliance with this Article 8, the
Company may exercise its option under this Section 8.02 notwithstanding the
prior exercise of its option under Section 8.03 hereof with respect to the
Securities.

SECTION 8.03.              COVENANT DEFEASANCE.

                  Upon the Company's exercise under Section 8.01 hereof of
the option applicable to this Section 8.03, the Company shall be released
from its obligations under the covenants contained in

                                      -42-

<PAGE>

Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.14, 4.15, and 4.16 and Article
5 hereof with respect to the outstanding Securities on and after the date the
conditions set forth below are satisfied (hereinafter, "COVENANT
DEFEASANCE"), and the Securities shall thereafter be deemed not "outstanding"
for the purposes of any direction, waiver, consent or declaration or act of
Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other
purposes hereunder (it being understood that such Securities shall not be
deemed outstanding for accounting purposes). For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Securities, the
Company may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether
directly or indirectly, by reason of any reference elsewhere herein to any
such covenant or by reason of any reference in any such covenant to any other
provision herein or in any other document and such omission to comply shall
not constitute a Default or an Event of Default under Section 6.01(iii)
hereof, but, except as specified above, the remainder of this Indenture and
such Securities shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.01 hereof of the option applicable to this
Section 8.03, Sections 6.01(iv) through 6.01(vi) hereof shall not constitute
Events of Default.

SECTION 8.04.              CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.

                  The following shall be the conditions to application of
either Section 8.02 or Section 8.03 hereof to the outstanding Securities:

                  (i)      The Company shall irrevocably have deposited or
         caused to be deposited (a "Company Deposit") or an entity other than
         the Company (a "New Lender") shall irrevocably have deposited or
         caused to be deposited (a "New Lender Deposit" and, together with
         the Company Deposit, the "Deposits") with the Trustee (or another
         trustee satisfying the requirements of Section 7.10 who shall agree
         to comply with the provisions of this Article 8 applicable to it) as
         trust funds in trust for the purpose of making the following
         payments, specifically pledged as security for, and dedicated solely
         to, the benefit of the Holders of such Securities, (a) cash in U.S.
         Dollars in an amount, or (b) non-callable Government Securities that
         through the scheduled payment of principal and interest in respect
         thereof in accordance with their terms will provide, not later than
         one day before the due date of any payment, cash in U.S. Dollars in
         an amount, or (c) a combination thereof, in such amounts as will be
         sufficient, in the opinion of a nationally recognized firm of
         independent public accountants expressed in a written certification
         thereof delivered to the Trustee, to pay and discharge and which
         shall be applied by the Trustee (or other qualifying trustee) to pay
         and discharge the principal of, premium, if any, interest and
         liquidated damages, if any, on such outstanding Securities on the
         stated maturity date or the applicable redemption date, as the case
         may be.

                  (ii)     Simultaneously with any Deposit, the Company shall
         have delivered to the Trustee (or other qualifying trustee) a notice
         specifying whether the Company is exercising its option under
         Section 8.02 or Section 8.03 hereof or both and whether the
         Securities are being defeased to maturity or to a particular
         redemption date.

                  (iii)    In the case of an election under Section 8.02
         hereof, the Company shall have delivered to the Trustee an Opinion
         of Counsel in the United States confirming that (a) the Company has
         received from, or there has been published by, the Internal Revenue
         Service a ruling or (b) since the Closing Date, there has been a
         change in the applicable federal income tax law, in either case to
         the effect that, and based thereof such Opinion of Counsel shall
         confirm

                                      -43-

<PAGE>

         that, the Holders of the outstanding Securities will not recognize
         income, gain or loss for federal income tax purposes as a result of
         such Legal Defeasance and will be subject to federal income tax on
         the same amounts, in the same manner and at the same times as would
         have been the case if such Legal Defeasance had not occurred.

                  (iv)     In the case of an election under Section 8.03
         hereof before the date that is one year prior to the final maturity
         of the Securities, the Company shall have delivered to the Trustee
         an Opinion of Counsel in the United States confirming that the
         Holders of the outstanding Securities will not recognize income,
         gain or loss for federal income tax purposes as a result of such
         Covenant Defeasance and will be subject to federal income tax on the
         same amounts, in the same manner and at the same times as would have
         been the case if such Covenant Defeasance had not occurred.

                  (v)      No Default or Event of Default with respect to the
         Securities shall have occurred and be continuing (a) on the date of
         such deposit (other than a Default or Event of Default resulting
         from the borrowing of funds to be applied to such deposit) or, (b)
         in the case of a Company Deposit, insofar as Section 6.01(vii) or
         6.01(viii) hereof is concerned, at any time within 90 days after the
         date of such deposit (it being understood that this condition shall
         not be deemed satisfied until the expiration of such period).

                  (vi)     Such Legal Defeasance or Covenant Defeasance shall
         not result in a breach or violation of, or constitute a default under
         any material agreement or instrument (other than this Indenture) to
         which the Company or any of its Subsidiaries is a party or by which
         the Company or any of its Subsidiaries is bound (other than a
         breach, violation or default resulting from the borrowing of funds
         to be applied to such deposit).

                  (vii)    The Company shall have delivered to the Trustee an
         Opinion of Counsel to the effect that (a) on and after the date of
         the New Lender Deposit or after the 90th day following the Company
         Deposit, as the case may be, the trust funds will not be subject to
         the effect of any applicable bankruptcy, insolvency, reorganization
         or similar laws affecting creditors' rights generally and (b) all
         conditions precedent provided for relating to either the Legal
         Defeasance under Section 8.02 hereof or the Covenant Defeasance under
         Section 8.03 hereof (as the case may be) have been complied with as
         contemplated by this Section 8.04.

                  (viii)   The Company shall have delivered to the Trustee an
         Officers' Certificate stating that the deposit made by the Company
         pursuant to its election under Section 8.02 or 8.03 hereof was not
         made by the Company with the intent of preferring the Holders of the
         Securities over the other creditors of the Company with the intent
         of defeating, hindering, delaying or defrauding creditors of the
         Company or others.

                  (ix)     The Company shall have delivered to the Trustee an
         Officers' Certificate stating that all conditions precedent provided
         for relating to either the Legal Defeasance under Section 8.02
         hereof or the Covenant Defeasance under Section 8.03 hereof (as the
         case may be) have been complied with as contemplated by this Section
         8.04.

                  (x)      In the case of a New Lender Deposit, the Company
         shall have delivered to the Trustee an Officers' Certificate stating
         that (a) the New Lender made the New Lender Deposit under an
         agreement (the "New Loan Agreement") with the Company; (b) under the
         New Loan

                                      -44-

<PAGE>

         Agreement, the New Lender Deposit constitutes an unsecured loan (the
         "New Loan") by the New Lender to the Company; (c) the maturity date
         of the New Loan is later than the 90th day after the date of the New
         Lender Deposit, and (iv) the New Loan Agreement prohibits
         prepayment of the New Loan on or before the 90th day after the date
         of the New Lender Deposit, except in the event of a default
         thereunder, and the remaining terms of the New Loan Agreement
         (including the interest rate on the New Loan) are consistent with
         ordinary business practice.

SECTION 8.05.              DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE
                           HELD IN TRUST; OTHER MISCELLANEOUS PROVISIONS.

                  Subject to Section 8.06 hereof, all money and non-callable
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this
Section 8.05, the "Trustee") pursuant to Section 8.04 hereof in respect of
the outstanding Securities shall be held in trust and applied by the Trustee,
in accordance with the provisions of such Securities and this Indenture, to
the payment, either directly or through any Paying Agent (including the
Company acting as Paying Agent) as the Trustee may determine, to the Holders
of such Securities of all sums due and to become due thereon in respect of
principal, premium, if any, interest and liquidated damages, if any, but such
money need not be segregated from other funds except to the extent required
by law.

                  The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the cash or
non-callable Government Securities deposited pursuant to Section 8.04 hereof
or the principal and interest received in respect thereof other than any such
tax, fee or other charge which by law is for the account of the Holders of
the outstanding Securities.

                  Anything in this Article 8 to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon the
Company's request any money or non-callable Government Securities held by it
as provided in Section 8.04 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.04(i) hereof), are in excess of the amount thereof
which would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.

SECTION 8.06.               REPAYMENT TO COMPANY.

                  Any money deposited with the Trustee or any Paying Agent,
or then held by the Company, in trust for the payment of the principal of,
premium, if any, or interest on any Security and remaining unclaimed for two
years after such principal, and premium, if any, interest or liquidated
damages, if any, has become due and payable shall be paid to the Company on
its written request or (if then held by the Company) shall be discharged
from such trust; and the Holder of such Security shall thereafter, as an
unsecured general creditor, look only to the Company for payment thereof, and
all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; PROVIDED, HOWEVER, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause
to be published once, in the NEW YORK TIMES and THE WALL STREET JOURNAL
National edition, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such notification or publication, any unclaimed balance of such money then
remaining will be repaid to the Company.

                                       -45-
<PAGE>

SECTION 8.07.              REINSTATEMENT.

                  If the Trustee or Paying Agent is unable to apply any U.S.
Dollars or non-callable Government Securities in accordance with Section 8.02
or 8.03 hereof, as the case may be, by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time
as the Trustee or Paying Agent is permitted to apply all such money in
accordance with Section 8.02 or 8.03 hereof, as the case may be; PROVIDED,
HOWEVER, that, if the Company makes any payment of principal of, premium, if
any, interest or liquidated damages, if any, on any Security following the
reinstatement of its obligations, the Company shall be subrogated to the
rights of the Holders of such Security to receive such payment from the money
held by the Trustee or Paying Agent.

                                    ARTICLE 9
                        AMENDMENT, SUPPLEMENT AND WAIVER

SECTION 9.01.              WITHOUT CONSENT OF HOLDERS.

                  The Company and the Trustee may amend or supplement this
Indenture or the Securities without the consent of any Holder;

                  (i)     to cure any ambiguity, defect or inconsistency;

                  (ii)    to provide for uncertained Securities in addition
         to or in place of certificated Securities;

                  (iii)   to provide for any supplemental indenture required
         pursuant to Section 4.15 hereof;

                  (iv)    to provide for the assumption of the Company's
         obligations to Holders of Securities in the case of a merger,
         consolidation or sale of assets pursuant to Article 5 hereof;

                  (v)     to make any change that would provide any
         additional rights or benefits to the Holders of the Securities or
         that does not adversely affect the legal rights hereunder of any
         such Holder; or

                  (vi)    to comply with requirements of the Commission in
         order to effect or maintain the qualification of this Indenture
         under the TLA.

                  Upon the request of the Company accompanied by a resolution
of its Board of Directors authorizing the execution of any such supplemental
indenture, and upon receipt by the Trustee of the documents described in
Section 9.06 hereof, the Trustee shall join with the Company in the execution
of any supplemental indenture authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations
which may be therein contained, but the Trustee shall not be obligated to
enter into such supplemental indenture which affects its own rights, duties
or immunities under this Indenture or otherwise.

                                      -46-
<PAGE>

SECTION 9.02.              WITH CONSENT OF HOLDERS.

                  Except as provided in Section 9.01 and the next succeeding
paragraphs, this Indenture or the Securities may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the Securities then outstanding (including consents obtained in connection
with a tender offer or exchange offer for such Securities), and any existing
default or compliance with any provision of this Indenture or the Securities
may be waived with the consent of the Holders of a majority in principal
amount of the then outstanding Securities (including consents obtained in
connection with a tender offer or exchange offer for such Securities).

                  Upon the request of the Company accompanied by a resolution
of its Board of Directors authorizing the execution of any such supplemental
indenture, and upon the filing with the Trustee of evidence satisfactory to
the Trustee of the consent of the Holders as aforesaid, and upon receipt by
the Trustee of the documents described in Section 9.06 hereof, the Trustee
shall join with the Company in the execution of such supplemental indenture
unless such supplemental indenture affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise, in which case the Trustee
may in its discretion, but shall not be obligated to, enter into such
supplemental indenture.

                  It shall not be necessary for the consent of the Holders
under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.

                  After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however,
in any way impair or affect the validity of any such supplemental indenture
or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a
majority in aggregate principal amount of the Securities then outstanding may
waive compliance in a particular instance by the Company with any provision
of this Indenture or the Securities. Without the consent of each Holder
affected, however, an amendment or waiver may not (with respect to any
Security held by a non-consenting Holder):

                  (i)     reduce the principal amount of Securities whose
         Holders must consent to an amendment, supplement or waiver;

                  (ii)    reduce the principal of or change the fixed
         maturity of any Security;

                  (iii)   reduce the rate of or change the time for payment
         of interest on any Security;

                  (iv)    waive a Default or Event of Default in the payment
         of principal of or premium, if any, or interest on the Securities
         (except a rescission of acceleration of the Securities by the
         Holders of at least a majority in aggregate principal amount thereof
         and a waiver of the payment default that resulted from such
         acceleration);

                  (v)     make any Security payable in money other than that
         stated in the Securities;

                  (vi)    make any change in Section 6.04 or 6.07 hereof; or

                  (vii)   make any change in this sentence of this Section 9.02.

                                       -47-
<PAGE>

SECTION 9.03.              COMPLIANCE WITH TIA.

                  Every amendment to this Indenture of the Securities shall be
set forth in a supplemental indenture that complies with the TIA as then in
effect.

SECTION 9.04               REVOCATION AND EFFECT OF CONSENTS.

                  Until an amendment or waiver becomes effective, a consent to
it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. However, any such Holder or subsequent Holder may revoke the
consent as to its Security if the Trustee receives written notice of
revocation before the date the waiver or amendment becomes effective. An
amendment or waiver becomes effective in accordance with its terms and
thereafter binds every Holder.

                  The Company may, but shall not be obligated to, fix a record
date for determining which Holders must consent to such amendment or waiver.
If the Company fixes a record date, the record date shall be fixed at (i) the
later 30 days prior to the first solicitation of such consent or the date of
the most recent list of Holders furnished to the Trustee prior to such
solicitation  pursuant to Section 2.06 hereof or (ii) such other date as the
Company shall designate.

SECTION 9.05.              NOTATION ON OR EXCHANGE OF SECURITIES.

                  The Trustee may place an appropriate notation about an
amendment or waiver on any Security thereafter authenticated. The Company in
exchange for all Securities may issue and the Trustee shall authenticate new
Securities that reflect the amendment or waiver.

                  Failure to make the appropriate notation or issue a new
Security shall not affect the validity and effect of such amendment or waiver.

SECTION 9.06.              TRUSTEE TO SIGN AMENDMENTS, ETC.

                  The Trustee shall sign any amendment or supplemental
indenture authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, or liabilities or immunities of the
Trustee. If if does, the Trustee may, but need not, sign it. In signing or
refusing to sign such amendment or supplemental indenture, the Trustee shall
be entitled to receive and, subject to Section 7.01, shall be fully protected
in relying upon an Officers' Certificate and an Opinion of Counsel as
conclusive evidence that such amendment or Supplemental Indenture is
authorized or permitted by this Indenture, that it is not inconsistent
herewith, and that it shall be valid and binding upon the Company in
accordance with its terms. The Company may not sign an amendment or
supplemental indenture until the Board of Directors approves it.

                                     -48-
<PAGE>

                                  ARTICLE 10
                                 MISCELLANEOUS

SECTION 10.01.             TIA CONTROLS.

                  If any provision of this Indenture limits, qualifies or
conflicts with the duties imposed by TIA Section 318(c), the imposed duties
shall control.

SECTION 10.02.             NOTICES.

                  Any notice or communication by the Company or the Trustee
to the other is duly given if in writing and delivered in person or mailed by
first class mail (registered or certified, return receipt requesteed),
telecopier or overnight air courier guaranteeing next day delivery, to the
other's address:

                  If to the Company:

                  Tenet Healthcare Corporation
                  3820 State Street
                  Santa Barbara, California 93105
                  Telecopier No.: (805) 563-7070
                  Attention: Treasurer

                  With a copy to:

                  Skadden, Arps, Slate, Meagher & Flom
                  300 South Grand Avenue, Suite 3400
                  Los Angeles, California 90071
                  Telecopier No.: (213) 687-5600
                  Attention: Nicholas P. Saggese

                  If to the Trustee:

                  The Bank of New York
                  101 Barclay Street, 21 West
                  New York, New York 10286
                  Telecopier No.: (212) 815-5915
                  Attention: Corporate Trust Trustee Administration

                  The Company or the Trustee, by notice to the others may
designate additional or different addresses for subsequent notices or
communications.

                  All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; five Business Days after being deposited in
the mail, postage prepaid, if mailed; when receipt acknowledged, if
telecopied; and the next Business Day after timely delivery to the courier,
if sent by overnight air courier guaranteeing next day delivery.

                                     -49-
<PAGE>

                  Unless otherwise set forth above, any notice or
communication to a Holder shall be mailed by first class mail, or by
overnight air courier guaranteeing next day delivery to its address shown on
the register kept by the Registrar. Any notice or communication shall also be
so mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other
Holders.

                  If a notice or communication is mailed in the manner
provided above within the time prescribed, it is duly given, whether or not the
addressee receives it.

                  If the Company mails a notice or communication to Holders,
it shall mail a copy to the Trustee and each Agent at the same time.

SECTION 10.03.             COMMUNICATION BY HOLDERS WITH OTHER HOLDERS.

                  Holders may communicate pursuant to TIA Section 312(b) with
other Holders with respect to their rights under this Indenture or the
Securities.  The Company, the Trustee, the Registrar and anyone else shall
have the protection of TIA Section 312(c).

SECTION 10.04.             CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.

                  Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company shall furnish
to the Trustee:

                  (1)     an Officers' Certificate (which shall include the
         statements set forth in Section 10.05 hereof) stating that, in the
         opinion of the signers, all conditions precedent and covenants, if
         any, provided for in this Indenture relating to the proposed action
         have been satisfied; and

                  (2)     an Opinion of Counsel (which shall include the
         statements set forth in Section 10.05 hereof) stating that, in the
         opinion of such counsel, all such conditions precedent and covenants
         have been satisfied.

SECTION 10.05.             STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.

                  Each certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture (other than a
certificate provided pursuant to TIA Section 314(a)(4)) shall include:

                  (1)     a statement that the person making such certificate
         or opinion has read such covenant or condition;

                  (2)     a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;

                  (3)     a statement that, in the opinion of such person, he
         has made such examination or investigation as is necessary to enable
         him to express an informed opinion as to whether or not such
         covenant or condition has been satisfied; and

                                     -50-
<PAGE>

                  (4) a statement as to whether or not, in the opinion of such
         person, such condition or covenant has been satisfied; PROVIDED,
         HOWEVER, that with respect to matters of fact, an Opinion of Counsel
         may rely on an Officers' Certificate or certificates of public
         officials.

SECTION 10.06.             RULES BY TRUSTEE AND AGENTS.

                  The Trustee may make reasonable rules for action by or at a
meeting of Holders. The Registrar or Paying Agent may make reasonable rules and
set reasonable requirements for its functions.

SECTION 10.07.             LEGAL HOLIDAYS.

                  A "LEGAL HOLIDAY" is a Saturday, a Sunday or a day on which
banking institutions in The City of New York or at a place of payment are
authorized or obligated by law, regulation or executive order to remain
closed. If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.

SECTION 10.08.             NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS,
                           EMPLOYEES AND SHAREHOLDERS.

                  No director, officer, employee, incorporator or shareholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Securities, the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder of
the Securities by accepting a Security waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Securities. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a waiver
is against public policy.

SECTION 10.09.             DUPLICATE ORIGINALS.

                  The parties may sign any number of copies of this Indenture.
One signed copy is enough to prove this Indenture.

SECTION 10.10.             GOVERNING LAW.

                  The internal law of the State of New York, shall govern and be
used to construe this Indenture and the Securities, without regard to the
conflict of laws provisions thereof.

SECTION 10.11.             NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.

                  This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or its Subsidiaries. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.

SECTION 10.12.             SUCCESSORS.

All agreements of the Company in this Indenture and the Securities shall bind
its successors. All agreements of the Trustee in this Indenture shall bind its
successor.

                                      -51-

<PAGE>

SECTION 10.13.             SEVERABILITY.

                  In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby, it being intended that all of the provisions hereof shall be
enforceable to the full extent permitted by law.

SECTION 10.14.             COUNTERPART ORIGINALS.

                  The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.

SECTION 10.15.             TABLE OF CONTENTS, HEADINGS, ETC.

                  The Table of Contents, Cross-Reference Table and Headings of
the Articles and Sections of this Indenture have been inserted for convenience
of reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.

                                      -52-

<PAGE>

                                   SIGNATURES

Dated as of June 16, 2000              TENET HEALTHCARE CORPORATION

                                       By:    /s/ David L. Dennis
                                         ------------------------------
                                         Name: David L. Dennis
                                         Title: Chief Corporate Officer

Attest:

/s/ Richard B. Silver
-------------------------
Richard B. Silver

Dated as of June 16, 2000              THE BANK OF NEW YORK,
                                       as Trustee

                                       By: /s/ Van K. Brown
                                         ------------------------------
                                         Name: VAN K. BROWN
                                         Title: Assistant Vice President

Attest:

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

By: /s/ Walter N. Gitlin
   -----------------------
   Authorized Signatory

        WALTER N. GITLIN
        Vice President

                                      -53-

<PAGE>

                                                                      APPENDIX A

            FOR OFFERINGS TO QUALIFIED INSTITUTIONAL BUYERS PURSUANT
                TO RULE 144A AND TO CERTAIN PERSONS IN OFFSHORE
                   TRANSACTIONS IN RELIANCE ON REGULATION S.

                   PROVISIONS RELATING TO INITIAL SECURITIES
                            AND EXCHANGE SECURITIES

                  1. DEFINITIONS

                  1.1 DEFINITIONS

                  For the purposes of this Appendix the following terms shall
have the meanings indicated below:

                  "Depositary" means The Depository Trust Company, its nominees
and their respective successors.

                  "Exchange Offer" means the exchange and issuance by the
Company, pursuant to the Registration Rights Agreement, of a principal amount of
Exchange Securities equal to the outstanding principal amount of Initial
Securities that are tendered by the Holders in connection with such exchange and
issuance.

                  "Exchange Securities" means the 9 1/4% Senior Notes due
2010 to be issued pursuant to this Indenture in connection with a Registered
Exchange Offer pursuant to the Registration Rights Agreement.

                  "Initial Purchasers" means Donaldson, Lufkin & Jenrette
Securities Corporation, J.P. Morgan Securities Inc., Banc of America Securities
LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

                  "Initial Securities" means the 9 1/4% Senior Notes due
2010, issued under this Indenture on or about the date hereof.

                  "Purchase Agreement" means the Purchase Agreement, dated June
13, 2000, among the Company and the Initial Purchasers.

                  "QIB" means a "qualified institutional buyer" as defined in
Rule 144A.

                  "Registration Rights Agreement" means the Registration Rights
Agreement, dated June 16, 2000, among the Company and the Initial Purchasers.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Shelf Registration Statement" means the registration
statement, if any, filed by the Company, in connection with the offer and sale
of Initial Securities, pursuant to the Registration Rights Agreement.

<PAGE>

                  "Transfer Restricted Securities" means Securities that bear or
are required to bear the legend set forth in Section 2.3(b) hereto.

                  1.2      OTHER DEFINITIONS

<TABLE>
<CAPTION>

                                                                 DEFINED IN
                  TERM                                            SECTION:
                  ----                                            --------
<S>                                                                 <C>
"Global Security" ..................................................2.1(a)
"Regulation S" .....................................................2.1(a)
"Rule 144A" ........................................................2.1(a)

</TABLE>

                  2.       THE SECURITIES

                  2.1      FORM AND DATING

                  The Initial Securities are being offered and sold by the
Company pursuant to the Purchase Agreement. Initial Securities offered and sold
to a QIB in reliance on Rule 144A under the Securities Act ("Rule 144A") or in
reliance on Regulation S under the Securities Act ("Regulation S"), in each case
as provided in the Purchase Agreement, shall be issued initially in the form of
one or more permanent global Securities in definitive, fully registered form
without interest coupons with the global securities legend and restricted
securities legend set forth in Exhibit 1 hereto (each, a "Global Security"),
which shall be deposited on behalf of the purchasers of the Initial Securities
represented thereby with the Trustee, at its New York, New York office, as
custodian for the Depositary (or with such other custodian as the Depositary may
direct), and registered in the name of the Depositary or a nominee of the
Depositary, duly executed by the Company and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the Global Securities
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depositary or its nominee.

                  2.2      AUTHENTICATION.

                  The Trustee shall authenticate and deliver: (1) Initial
Securities for original issue in an aggregate principal amount of $400,000,000
and (2) Exchange Securities for issue only in a Exchange Offer pursuant to the
Registration Rights Agreement, for a like principal amount of Initial
Securities, in each case pursuant to Section 2.03 of this Indenture. The Company
Order shall specify the amount of the Securities to be authenticated and the
date on which the original issue of Securities is to be authenticated and
whether the Securities are to be Initial Securities or Exchange Securities. The
aggregate principal amount of Securities outstanding at any time may not exceed
$400,000,000 except as provided in Section 2.09 of this Indenture.

                  2.3      LEGEND. (i) Except as permitted by the following
paragraphs (ii), (iii) and (iv), each Security (and all Securities issued in
exchange therefor or in substitution thereof) shall bear a legend in
substantially the following form:

                  "THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
                  THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
                  ACT") AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
                  OTHERWISE TRANSFERRED

                                     -2-
<PAGE>

                  WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT
                  OR BENEFIT OF, U.S. PERSONS, EXCEPT AS SET FORTH IN
                  THE FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF
                  OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
                  REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
                  BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES
                  ACT) (A "QIB"), OR (B) IT IS NOT A U.S. PERSON, IS
                  NOT ACQUIRING THIS NOTE FOR THE ACCOUNT OR BENEFIT
                  OF A U.S. PERSON AND IS ACQUIRING THIS NOTE IN AN
                  OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
                  UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL
                  NOT, WITHIN THE TIME PERIOD REFERRED TO UNDER
                  RULE 144(k) (TAKING INTO ACCOUNT THE PROVISIONS OF
                  RULE 144(d) UNDER THE SECURITIES ACT, IF APPLICABLE)
                  UNDER THE SECURITIES ACT AS IN EFFECT ON THE DATE OF
                  THE TRANSFER OF THIS NOTE, RESELL OR OTHERWISE
                  TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR
                  ANY SUBSIDIARY THEREOF, (B) TO A PERSON WHOM THE
                  HOLDER REASONABLY BELIEVES IS A QIB PURCHASING FOR
                  ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN
                  COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
                  (C) OUTSIDE THE UNITED STATES IN AN OFFSHORE
                  TRANSACTION IN COMPLIANCE WITH RULE 903 OR RULE 904
                  UNDER THE SECURITIES ACT, (D) PURSUANT TO THE
                  EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
                  UNDER THE SECURITIES ACT (IF AVAILABLE), (E)
                  PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
                  UNDER THE SECURITIES ACT OR (F) IN ACCORDANCE WITH
                  ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS
                  OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
                  COUNSEL ACCEPTABLE TO THE COMPANY) AND, IN EACH
                  CASE, IN ACCORDANCE WITH APPLICABLE STATE SECURITIES
                  LAWS, AND (3) AGREES THAT IT WILL DELIVER TO EACH
                  PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
                  TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
                  OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
                  TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
                  HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
                  REGULATION S UNDER THE SECURITIES ACT. THE
                  INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE
                  TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN
                  VIOLATION OF THE FOREGOING RESTRICTIONS."

                  (ii)  Prior to any sale or transfer of a Transfer
Restricted Security, the Holder must complete the Assignment Form and present
it to the Registrar. Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act, in the case of any
Transfer Restricted Security that is represented by a Global Security, the
Registrar shall permit the Holder thereof to exchange such Transfer
Restricted Security for a Security in certificated or global form that does
not bear the legend set forth

                                     -3-

<PAGE>

above and rescind any restriction on the transfer of such Transfer Restricted
Security, if the Holder certifies in writing to the Registrar that its request
for such exchange was made in reliance on Rule 144 (such certification to be
in the form set forth on the reverse of the Security).

                  (iii) After a transfer of any Initial Securities during the
period of the effectiveness of a Shelf Registration Statement with respect to
such Initial Securities, all requirements pertaining to legends on such
Initial Security will cease to apply, and an Initial Security in certificated
or global form that does not bear the legend set forth above will be
available to the transferee of the Holder of such Initial Securities upon
exchange of such transferring Holder's certificated Initial Security or
directions to transfer such Holder's interest in the Global Security, as
applicable.

                  (iv)  Upon the consummation of an Exchange Offer with
respect to the Initial Securities pursuant to which Holders of such Initial
Securities are offered Exchange Securities in exchange for their Initial
Securities, Exchange Securities in certificated or global form without
restrictive legends, in the form set forth in Exhibit 2 hereto, will be
available to Holders that exchange such Initial Securities in such Exchange
Offer. Initial Securities not exchanged for Exchange Securities shall
continue to bear the legend set forth in Exhibit 1 hereto.

                                     -4-

<PAGE>

                                                                      EXHIBIT 1
                                                                             to
                                                                     APPENDIX A

                             (Face of Initial Security)

                           [Restricted Securities Legend]

                  THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN
                  REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
                  AS AMENDED (THE "SECURITIES ACT") AND,
                  ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR
                  OTHERWISE TRANSFERRED WITHIN THE UNITED STATES OR
                  TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
                  EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
                  ITS ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST
                  HEREIN, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
                  "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
                  RULE 144A UNDER THE SECURITIES ACT) (A "QIB"), OR
                  (B) IT IS NOT A U.S. PERSON, IS NOT ACQUIRING THIS
                  NOTE FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON
                  AND IS ACQUIRING THIS NOTE IN AN OFFSHORE
                  TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER
                  THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT,
                  WITHIN THE TIME PERIOD REFERRED TO UNDER RULE 144(k)
                  (TAKING INTO ACCOUNT THE PROVISIONS OF RULE 144(d)
                  UNDER THE SECURITIES ACT, IF APPLICABLE) UNDER THE
                  SECURITIES ACT AS IN EFFECT ON THE DATE OF THE
                  TRANSFER OF THIS NOTE, RESELL OR OTHERWISE TRANSFER
                  THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY SUBSIDIARY
                  THEREOF, (B) TO A PERSON WHOM THE HOLDER REASONABLY
                  BELIEVES IS A QIB PURCHASING FOR ITS OWN ACCOUNT OR
                  FOR THE ACCOUNT OF A QIB IN COMPLIANCE WITH
                  RULE 144A UNDER THE SECURITIES ACT, (C) OUTSIDE THE
                  UNITED STATES IN AN OFFSHORE TRANSACTION IN
                  COMPLIANCE WITH RULE 903 OR RULE 904 UNDER THE
                  SECURITIES ACT, (D) PURSUANT TO THE EXEMPTION FROM
                  REGISTRATION PROVIDED BY RULE 144 UNDER THE
                  SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO AN
                  EFFECTIVE REGISTRATION STATEMENT UNDER THE
                  SECURITIES ACT OR (F) IN ACCORDANCE WITH ANOTHER
                  EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
                  SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
                  ACCEPTABLE TO THE COMPANY) AND, IN EACH CASE, IN
                  ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS,
                  AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON
                  TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
                  TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
                  OF THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE
                  TRANSACTION," "UNITED STATES" AND "U.S. PERSON"
                  HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF
                  REGULATION S UNDER THE SECURITIES ACT. THE
                  INDENTURE CONTAINS A PROVISION REQUIRING THE
                  TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS
                  NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS.

<PAGE>

                             9 1/4 Senior Note
                           due September 1, 2010

CUSIP:
No.                                                   $
                                                       ----------------------

                        TENET HEALTHCARE CORPORATION

promises to pay to

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

or its registered assigns, the principal sum of                    Dollars on
                                               --------------------
September 1, 2010.

Interest Payment Dates: March 1 and September 1 commencing September 1, 2000.

Record Dates: February 15 and August 15 (whether or not a Business Day).

This Security is a Global Security within the meaning of the Indenture
hereinafter referred to and is registered in the name of a Depositary or a
nominee thereof. This Security may not be exchanged in whole or in part for a
Security registered, and no transfer of this Security in whole or in part may
be registered, in the name of any person other than such Depositary or a
nominee thereof, except in the limited circumstances described in the
Indenture.

TENET HEALTHCARE CORPORATION

By:
   --------------------------------

(SEAL)

Dated:
      -------------------, --------

Trustee's Certificate of Authentication:

This is one of the Securities referred
to in the within-mentioned Indenture:

The Bank of New York, as Trustee

By:
   --------------------------------
   Authorized Signatory

                                       -2-

<PAGE>

                        (Back of Initial Security)

                            9 1/4% Senior Note
                          due September 1, 2010

    Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.

         1.       INTEREST/LIQUIDATED DAMAGES. Tenet Healthcare Corporation,
a Nevada corporation (the "Company"), promises to pay interest on the
principal amount of this Security at the rate and in the manner specified
below.

                  The Company shall pay interest in cash on the principal
amount of this Security at the rate per annum of 9 1/4%. The Company shall
pay interest semiannually in arrears on March 1 and September 1 of each year,
commencing September 1, 2000 to Holders of record on the immediately
preceding February 15 and August 15, respectively, or if any such date of
payment is not a Business Day on the next succeeding Business Day (each an
"Interest Payment Date").

                  However, (i) if the Company fails to file a registration
statement (the "Exchange Offer Registration Statement") under the Securities
Act of 1933, as amended (the "Securities Act"), registering a security
substantially identical to this Security pursuant to an exchange offer (the
"Exchange Offer") upon the terms and conditions set forth in the Registration
Rights Agreement with the Commission on or prior to the 30th day after the
date of the filing of the Company's Annual Report on Form 10-K for the year
ending May 31, 2000 (the "Filing Date"), (ii) if the Exchange Offer
Registration Statement is not declared effective by the Commission on or
prior to the 180th day after the Filing Date, (iii) if the Exchange Offer is
not consummated on or before the 30th business day after the Exchange Offer
Registration Statement is declared effective, (iv) if the Company is
obligated to file the registration statement under the Securities Act
registering this Security for resale (the "Shelf Registration Statement") and
the Company fails to file the Shelf Registration Statement with the
Commission on or prior to the 30th day after such filing obligation arises,
(v) if the Company is obligated to file a Shelf Registration Statement and
the Shelf Registration Statement is not declared effective on or prior to the
60th day after the obligation to file a Shelf Registration Statement arises,
or (vi) if the Exchange Offer Registration Statement or the Shelf
Registration Statement, as the case may be, is declared effective but
thereafter ceases to be effective or useable, for such time of
non-effectiveness or non-usability in connection with resales of the Transfer
Related Securities (as defined below) (each, a "Registration Default"), the
Company agrees to pay to each Holder of Transfer Restricted Securities
affected thereby liquidated damages ("Liquidated Damages") in an amount equal
to $0.05 per week per $1,000 in principal amount of Transfer Restricted
Securities held by such Holder for each week or portion thereof that the
Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default. The amount of the
Liquidated Damages shall increase by an additional $0.05 per week per $1,000
in principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up
to a maximum amount of Liquidated Damages of $0.35 per week per $1,000 in
principal amount of Transfer Restricted Securities. The Company shall not be
required to pay Liquidated Damages for more than one Registration Default at
any given time. Following the cure of all Registration Defaults, the accrual
of Liquidated Damages will cease.

                  All accrued Liquidated Damages shall be paid by the Company
to Holders entitled thereto by wire transfer to the accounts specified by
them or by mailing checks to their registered address if no such accounts
have been specified.

                                       -3-

<PAGE>

                  Interest shall be computed on the basis of a 360-day year
comprised of twelve 30-day months. Interest shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
the date of the original issuance of the Securities. To the extent lawful,
the Company shall pay interest on overdue principal at the rate of 1% per
annum in excess of the interest rate then applicable to the Securities; it
shall pay interest on overdue installments of interest (without regard to any
applicable grace periods) at the same rate to the extent lawful.

         2.       METHOD OF PAYMENT. The Company shall pay interest on the
Securities (except defaulted interest) to the Persons who are registered
Holders of Securities at the close of business on the record date next
preceding the Interest Payment Date, even if such Securities are canceled
after such record date and on or before such Interest Payment Date. The
Holder hereof must surrender this Security to a Paying Agent to collect
principal payments. The Company shall pay principal and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. Principal, premium, if any, and interest shall be
payable at the office or agency of the Company maintained for such purpose
within the City and State of New York or, at the option of the Company,
payment of interest may be made by check mailed to the Holder's registered
address. Notwithstanding the foregoing, all payments with respect to
Securities, the Holders of which have given appropriate written wire transfer
instructions, on or before the relevant record date, to the Paying Agent
shall be made by wire transfer of immediately available funds to the accounts
specified by such Holders.

         3.       PAYING AGENT AND REGISTRAR. Initially, the Trustee shall
act as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar or co-registrar without prior notice to any Holder. The Company and
any of its Subsidiaries may act in any such capacity.

         4.       INDENTURE. The Company issued the Securities under an
Indenture, dated as of June 16, 2000 (the "Indenture"), between the Company
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb) (the
"TLA") as in effect on the date of the Indenture. The Securities are subject
to all such terms, and Holders are referred to the Indenture and such act for
a statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Securities. The Securities are
unsecured general obligations of the Company. The Securities are limited to
$400,000,000 in aggregate principal amount.

         5.       MANDATORY REDEMPTION. Subject to the Company's obligation
to make an offer to repurchase Securities under certain circumstances
pursuant to Section 4.12 of the Indenture (as described in paragraph 7
below), the Company shall not be required to make any mandatory redemption or
sinking fund payments with respect to the Securities.

         6.       OPTIONAL REDEMPTION. The Securities shall be redeemable, in
whole, at any time, or in part, from time to time, at the option of the
Company upon not less than 30 nor more than 60 days' notice at a redemption
price equal to the Make-Whole Price. "Make-Whole Price" means an amount equal
to the greater of (i) 100% of the principal amount of the Securities and (ii)
as determined by an Independent Investment Banker (as defined herein), the
sum of the present values of the remaining scheduled payments of principal
and interest thereon (excluding accrued and unpaid interest to the date of
redemption) discounted to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (as defined herein), plus, in each case, accrued and unpaid
interest thereon to the date of redemption.

                  "Adjusted Treasury Rate" means, with respect to any
redemption date, the rate per annum equal to the semiannual equivalent yield
to maturity of the Comparable Treasury Issue (as defined), assuming

                                       -4-

<PAGE>

a price for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price (as defined) for
such redemption date, plus 0.5%

                  "Comparable Treasury Issue" means the United States
Treasury security selected by an Independent Investment Banker as having a
maturity comparable to the remaining term of the Securities to be redeemed
that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of the Securities.

                  "Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) on the third Business Day preceding such redemption date,
as set forth in the daily statistical release (or any successor release)
published by the Federal Reserve Bank of New York and designated "Composite
3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release
(or any successor release) is not published or does not contain such prices
on such Business Day, (A) the average of the Reference Treasury Dealer
Quotations for such redemption date, after excluding the highest and lowest
of such Reference Treasury Dealer Quotation, or (B) if the Trustee obtains
fewer than three such Reference Treasury Dealer Quotations, the average of
all such quotations. "Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any redemption date, the
average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Treasury Reference
Dealer at 5:00 p.m. on the third Business Day preceding such redemption date.

                  "Independent Investment Banker" means one of the Reference
Treasury Dealers (as defined) appointed by the Company.

                  "Reference Treasury Dealer" means Donaldson, Lufkin &
Jenrette Securities Corporation and its successors; PROVIDED, HOWEVER, that
if the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company shall
substitute therefor another Primary Treasury Dealer.

         7.       REPURCHASE AT OPTION OF HOLDER. If there is a Change of
Control Triggering Event, the Company shall offer to repurchase on the Change
of Control Payment Date all outstanding Securities at 101% of the aggregate
principal amount thereof plus accrued and unpaid interest thereon to the
Change of Control Payment Date. Holders that are subject to an offer to
purchase shall receive a Change of Control Offer from the Company prior to
any related Change of Control Payment Date and may elect to have such
Securities purchased by completing the form entitled "Option of Holder to
Elect Purchase" appearing below.

         8.       DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in
registered form without coupons, and in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar and
the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or
register the transfer of any Securities between a record date and the
corresponding Interest Payment Date.

         9.       PERSONS DEEMED OWNERS. Prior to due presentment to the
Trustee for registration of the transfer of this Security, the Trustee, any
Agent and the Company may deem and treat the Person in whose name this
Security is registered as its absolute owner for the purpose of receiving
payment of principal of, premium, if any, and interest on this Security and
for all other purposes whatsoever, whether or not this

                                   -5-

<PAGE>

Security is overdue, and neither the Trustee, any Agent nor the Company shall
be affected by notice to the contrary. The registered Holder of a Security
shall be treated as its owner for all purposes.

        10.       AMENDMENT, SUPPLEMENT AND WAIVERS. Except as provided in
the next succeeding paragraphs, the Indenture or the Securities may be
amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange offer for
such Securities), and any existing default or compliance with any provision
of the Indenture or the Securities may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Securities
(including consents obtained in connection with a tender offer or exchange
offer for such Securities).

                  Without the consent of each Holder affected, an amendment
or waiver may not (with respect to any Security held by a non-consenting
Holder): (i) reduce the principal amount of Securities whose Holders must
consent to an amendment, supplement or waiver; (ii) reduce the principal
of or change the fixed maturity of any Security; (iii) reduce the rate of or
change the time for payment of interest on any Security; (iv) waive a Default
or Event of Default in the payment of principal of or premium, if any, or
interest on the Securities, (except a rescission of acceleration of the
Securities by the Holders of at least a majority in aggregate principal
amount thereof and a waiver of the payment default that resulted from such
acceleration); (v) make any Security payable in money other than that stated
in the Securities; (vi) make any change in the provisions of the Indenture
relating to waivers of past Defaults or the rights of Holders of Securities
to receive payments of principal of or premium, if any, or interest on the
Securities; or (vii) make any change in the foregoing amendment and waiver
provisions.

                  Notwithstanding the foregoing, without the consent of any
Holder of Securities, the Company and the Trustee may amend or supplement the
Indenture or the Securities to cure any ambiguity, defect or inconsistency,
to provide for uncertificated Securities in addition to or in place of
certificated Securities, to provide for any supplemental indenture required
pursuant to Section 4.15 of the Indenture, to provide for the assumption of
the Company's obligations to Holders of Securities in the case of a merger,
consolidation or sale of assets pursuant to Article 5 of the Indenture, to
make any change that would provide any additional rights or benefits to the
Holders of the Securities or that does not adversely affect the legal rights
under the Indenture of any such Holder, or to comply with requirements of the
Commission in order to effect or maintain the qualification of the Indenture
under the TIA.

        11.       DEFAULTS AND REMEDIES. Events of Default under the
Indenture include: (i) a default for 30 days in the payment when due of
interest on the Securities; (ii) a default in payment when due of the
principal of or premium, if any, on the Securities, at maturity or otherwise;
(iii) a failure by the Company to comply with the provisions of Sections
4.07, 4.09 or 4.12 of the Indenture; (iv) a failure by the Company for 60
days after notice to comply with any of its other agreements in the Indenture
or the Securities; (v) any default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the Company or any of its
Significant Subsidiaries (or the payment of which is Guaranteed by the
Company or any of its Significant Subsidiaries), whether such Indebtedness or
Guarantee exists on the date of the Indenture or is created after the date of
the Indenture, which default (a) constitutes a Payment Default or (b) results
in the acceleration of such Indebtedness prior to its express maturity and,
in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has
been a Payment Default or that has been so accelerated, aggregates $25.0
million or more; (vi) failure by the Company or any of its Significant
Subsidiaries to pay a final judgment or final judgments aggregating in excess
of $25.0 million, which judgment or judgments are not paid, discharged or
stayed for a period of 60 days; and (vii) certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Subsidiaries.

                                   -6-

<PAGE>

                  If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Securities by written notice to the Company and the Trustee, may
declare all the Securities to be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events
of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries, all outstanding Securities shall become due and
payable without further action or notice. Holders of the Securities may not
enforce the Indenture or the Securities except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of
the then outstanding Securities may direct the Trustee in its exercise of any
trust or power. The Trustee may withhold from Holders of the Securities
notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in the Holders' interest.

                  In the case of any Event of Default occurring by reason of
any willful action (or inaction) taken (or not taken) by or on behalf of the
Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Securities pursuant to the optional redemption provisions of the Indenture,
an equivalent premium shall also become and be immediately due and payable to
the extent permitted by law upon the acceleration of the Securities.

                  The Holders of not less than a majority in the aggregate
principal amount of the Securities then outstanding by written notice to the
Trustee may on behalf of the Holders of all of the Securities waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Securities.

                  The Company is required to deliver to the Trustee annually
a statement regarding compliance with the Indenture, and the Company is
required upon becoming aware of any Default or Event of Default, to deliver
to the Trustee a statement specifying such Default or Event of Default.

                  The above description of Events of Default and remedies is
qualified by reference, and subject in its entirety, to the more complete
description thereof contained in the Indenture.

        12.       RESTRICTIVE COVENANTS. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to incur
additional indebtedness and issue preferred stock, pay dividends or make
other distributions, repurchase Equity Interests or subordinated
indebtedness, create certain liens, enter into certain transactions with
affiliates, issue or sell Equity Interests of the Company's Subsidiaries,
issue Guarantees of Indebtedness by the Company's Subsidiaries and enter into
certain mergers and consolidations.

        13.       TRUSTEE DEALINGS WITH COMPANY. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and
may otherwise deal with the Company or its Affiliates, as if it were not
Trustee.

        14.       NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
SHAREHOLDERS. No director, officer, employee, incorporator or shareholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Securities, the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
of Securities by accepting a Security waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Securities. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a
waiver is against public policy.

        15.       AUTHENTICATION. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

                                  -7-

<PAGE>

         16.      ABBREVIATIONS. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties). JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).

         17.      CUSIP NUMBERS. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Securities and has directed the
Trustee to use CUSIP numbers as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the
Securities and reliance may be placed only on the other identification
numbers placed thereon.

                  The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture. Request may be made to:

                  Tenet Healthcare Corporation
                  3820 State Street
                  Santa Barbara, California 93105
                  Attention: Treasurer

         18.      GOVERNING LAW. The internal laws of the State of New York
shall govern and be used to construe the Indenture and the Securities,
without regard to conflict of laws provisions thereof.

                                    -8-
<PAGE>
                               ASSIGNMENT FORM

                  To assign this Security, fill in the form below: For value
received (I) or (we) hereby sell, assign and transfer this Security to

______________________________________________________________________________
             (Insert assignee's soc. sec. or tax I.D. no.)

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________

______________________________________________________________________________
          (Print or type assignee's name, address and zip code)

and do hereby irrevocably constitute and appoint _____________________________
_________________________ Attorney to transfer this Security on the books of the
Company with full power of substitution in the premises.

______________________________________________________________________________

Date: ____________________

                                  Your Signature:_____________________________
                                  (Sign exactly as your name appears on the
                                  face of this Security)

Signature Guarantee.*

____________________
    * NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs: (i)
The Securities Transfer Agent Medallion Program (Stamp); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) such other guarantee program acceptable to the
Trustee.

                                     -9-

<PAGE>
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in
Rule 144(k) under the Securities Act, the undersigned confirms that such
Securities are being transferred in accordance with its terms:

CHECK ONE BOX BELOW

         (1)      / /   to the Company or any Subsidiary thereof; or

         (2)      / /   to a person whom the Holder reasonably believes is a
                        "qualified institutional buyer" (as defined in
                        Rule 144A under the Securities Act) purchasing for
                        its own account or for the account of a qualified
                        institutional buyer in compliance with Rule 144A
                        under the Securities Act; or

         (3)      / /   outside the United States in an offshore transaction
                        in compliance with Rule 903 or Rule 904 under the
                        Securities Act; or

         (4)      / /   pursuant to the exemption from registration provided
                        by Rule 144 under the Securities Act.

         (5)      / /   pursuant to an effective registration statement under
                        the Securities Act; or

         (6)      / /   in accordance with another exemption from the
                        registration requirements of the Securities Act of
                        1933.

         Unless one of the boxes is checked, the Trustee will refuse to
         register any of the Securities evidenced by this certificate in the
         name of any person other than the registered holder thereof;
         PROVIDED, HOWEVER, that if box (6) is checked, the Trustee may
         require, prior to registering any such transfer of the Securities,
         such legal opinions, certifications and other information as the
         Company has reasonably requested to confirm that such transfer is
         being made pursuant to an exemption from, or in a transaction not
         subject to, the registration requirements of the Securities Act.

                                                  ____________________________
                                                           Signature

Signature Guarantee:

____________________________                      ____________________________
Signature must be guaranteed                               Signature

                                    -10-
<PAGE>

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

TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.

                  The undersigned represents and warrants that it is
purchasing this Security for its own account or an account with respect to
which it exercises sole investment discretion and that it and any such
account is a "qualified institutional buyer" within the meaning of Rule 144A
under the Securities Act of 1933, and is aware that the sale to it is being
made in reliance on Rule 144A and acknowledges that it has received such
information regarding the Company as the undersigned has requested pursuant
to Rule 144A or has determined not to request such information and that it is
aware that the transferor is relying upon the undersigned's foregoing
representations in order to claim the exemption from registration provided by
Rule 144A.

Dated:______________________           ___________________________
                                       Signature

                                     -11-

<PAGE>

                     OPTION OF HOLDER TO ELECT PURCHASE

                  If you want to elect to have all or any part of this
Security purchased by the Company pursuant to Section 4.12 of the Indenture,
check the box below:

                           / /     Section 4.12
                                   (Change of Control)

                  If you want to have only part of the Security purchased by
the Company pursuant to Section 4.12 of the Indenture, state the amount you
elect to have purchased:

$ ________________

Date: ____________

                             Your Signature:__________________________________
                             (Sign exactly as your name appears on the face of
                             this Security)

Signature Guarantee.*

__________________________

 * NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs: (i)
The Securities Transfer Agent medallion Program (Stamp); (ii) The New York
Stock Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) such other guarantee program acceptable to the
Trustee.

                                      -12-

<PAGE>

                    [TO BE ATTACHED TO GLOBAL SECURITIES]

             SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

                  The following increases or decreases in this Global Security
have been made:

<TABLE>
<CAPTION>
                 Amount of decrease       Amount of increase
                 in Principal             in Principal             Principal amount of this       Signature of authorized
Date of          Amount of this           Amount of this           Global Security following      signatory of Trustee or
Exchange         Global Security          Global Security          such decrease or increase      Depositary
<S>              <C>                      <C>                      <C>                            <C>

</TABLE>

                                     -13-

<PAGE>

                                                                       EXHIBIT 2
                                                                              to
                                                                      APPENDIX A

                         (Face of Exchange Security)

                             9 1/4% Senior Note
                           due September 1, 2010

CUSIP:
No.                                                                  $__________

                         TENET HEALTHCARE CORPORATION

promises to pay to
_________________________________________________________________
or its registered assigns, the principal sum of _________________ Dollars on
September 1, 2010.
Interest Payment Dates: March 1 and September 1 commencing September 1, 2000.
Record Dates: February 15 and August 15 (whether or not a Business Day).

TENET HEALTHCARE CORPORATION

By:_________________________

(SEAL)

Dated:______________________

Trustee's Certificate of Authentication:

This is one of the Securities referred
to in the within-mentioned Indenture:

The Bank of New York, as Trustee

By:_________________________
   Authorized Signatory

<PAGE>

                         (Back of Exchange Security)

                             9 1/4% Senior Note
                            due September 1, 2010

    Capitalized terms used herein have the meanings assigned to them in the
Indenture (as defined below) unless otherwise indicated.

         1.       INTEREST. Tenet Healthcare Corporation, a Nevada
corporation (the "Company"), promises to pay interest on the principal amount
of this Security at the rate and in the manner specified below.

                  The Company shall pay interest in cash on the principal
amount of this Security at the rate per annum of 9 1/4%. The Company shall pay
interest semiannually in arrears on March 1 and September 1 of each year,
commencing September 1, 2000 to Holders of record on the immediately
preceding February 15 and August 15, respectively, or if any such date of
payment is not a Business Day on the next succeeding Business Day (each an
"Interest Payment Date").

                  Interest shall be computed on the basis of a 360-day year
comprised of twelve 30-day months. Interest shall accrue from the most recent
date to which interest has been paid or, if no interest has been paid, from
the date of the original issuance of the Securities. To the extent lawful,
the Company shall pay interest on overdue principal at the rate of 1% per
annum in excess of the interest rate then applicable to the Securities; it
shall pay interest on overdue installments of interest (without regard to any
applicable grace periods) at the same rate to the extent lawful.

         2.       METHOD OF PAYMENT. The Company shall pay interest on the
Securities (except defaulted interest) to the Persons who are registered
Holders of Securities at the close of business on the record date next
preceding the Interest Payment Date, even if such Securities are canceled
after such record date and on or before such Interest Payment Date. The
Holder hereof must surrender this Security to a Paying Agent to collect
principal payments. The Company shall pay principal and interest in money of
the United States that at the time of payment is legal tender for payment of
public and private debts. Principal, premium, if any, and interest shall be
payable at the office or agency of the Company maintained for such purpose
within the City and State of New York or, at the option of the Company,
payment of interest may be made by check mailed to the Holder's registered
address. Notwithstanding the foregoing, all payments with respect to
Securities, the Holders of which have given appropriate written wire transfer
instructions, on or before the relevant record date, to the Paying Agent
shall be made by wire transfer of immediately available funds to the accounts
specified by such Holders.

         3.       PAYING AGENT AND REGISTRAR. Initially, the Trustee shall
act as Paying Agent and Registrar. The Company may change any Paying Agent or
Registrar or co-registrar without prior notice to any Holder. The Company and
any of its Subsidiaries may act in any such capacity.

         4.       INDENTURE. The Company issued the Securities under an
Indenture, dated as of June 16, 2000 (the "Indenture"), between the Company
and the Trustee. The terms of the Securities include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb) (the
"TIA") as in effect on the date of the Indenture. The Securities are subject
to all such terms, and Holders are referred to the Indenture and such act
for a statement of such terms. The terms of the Indenture shall govern any
inconsistencies between the Indenture and the Securities. The Securities are
unsecured general obligations of the Company. The Securities are limited to
$400,000,000 in aggregate principal amount.

                                      -2-

<PAGE>

         5.       MANDATORY REDEMPTION. Subject to the Company's obligation
to make an offer to repurchase Securities under certain circumstances
pursuant to Section 4.12 of the Indenture (as described in paragraph 7
below), the Company shall not be required to make any mandatory redemption or
sinking fund payments with respect to the Securities.

         6.       OPTIONAL REDEMPTION. The Securities shall be redeemable, in
whole, at any time, or in part, from time to time, at the option of the
Company upon not less than 30 nor more than 60 days' notice at a redemption
price equal to the Make-Whole Price. "Make-Whole Price" means an amount equal
to the greater of (i) 100% of the principal amount of the Securities and (ii)
as determined by an Independent Investment Banker (as defined herein), the
sum of the present values of the remaining scheduled payments of principal
and interest thereon (excluding accrued and unpaid interest to the date of
redemption) discounted to the date of redemption on a semiannual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate (as defined herein), plus, in each case, accrued and unpaid
interest thereon to the date of redemption.

                  "Adjusted Treasury Rate" means, with respect to any
redemption date, the rate per annum equal to the semiannual equivalent yield
to maturity of the Comparable Treasury Issue (as defined), assuming a price
for the Comparable Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price (as defined) for such
redemption date, plus 0.5%.

                  "Comparable Treasury Issue" means the United States
Treasury security selected by an Independent Investment Banker as having a
maturity comparable to the remaining term of the Securities to be redeemed
that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt
securities of comparable maturity to the remaining term of the Securities.

                  "Comparable Treasury Price" means, with respect to any
redemption date, (i) the average of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) on the third Business Day preceding such redemption date,
as set forth in the daily statistical release (or any successor release)
published by the Federal Reserve Bank of New York and designated "Composite
3:30 p.m. Quotations for U.S. Government Securities" or (ii) if such release
(or any successor release) is not published or does not contain such prices
on such Business Day, (A) the average of the Reference Treasury Dealer
Quotations for such redemption date, after excluding the highest and lowest
of such Reference Treasury Dealer Quotation, or (B) if the Trustee obtains
fewer than three such Reference Treasury Dealer Quotations, the average of
all such quotations. "Reference Treasury Dealer Quotations" means, with
respect to each Reference Treasury Dealer and any redemption date, the
average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Treasury Reference
Dealer at 5:00 p.m. on the third Business Day preceding such redemption date.

                  "Independent Investment Banker" means one of the Reference
Treasury Dealers (as defined) appointed by the Company.

                  "Reference Treasury Dealer" means Donaldson, Lufkin &
Jenrette Securities Corporation and its successors; PROVIDED, HOWEVER, that
if the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company shall
substitute therefor another Primary Treasury Dealer.

         7.       REPURCHASE AT OPTION OF HOLDER. If there is a Change of
Control Triggering Event, the Company shall offer to repurchase on the Change
of Control Payment Date all outstanding Securities at

                                     -3-

<PAGE>

101% of the aggregate principal amount thereof plus accrued and unpaid
interest thereon to the Change of Control Payment Date. Holders that are
subject to an offer to purchase shall receive a Change of Control Offer from
the Company prior to any related Change of Control Payment Date and may elect
to have such Securities purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below.

         8.         DENOMINATIONS, TRANSFER, EXCHANGE. The Securities are in
registered form without coupons, and in denominations of $1,000 and integral
multiples of $1,000. The transfer of Securities may be registered and
Securities may be exchanged as provided in the Indenture. The Registrar and
the Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture. The Registrar need not exchange or
register the transfer of any Securities between a record date and the
corresponding Interest Payment Date.

         9.         PERSONS DEEMED OWNERS. Prior to due presentment to the
Trustee for registration of the transfer of this Security, the Trustee, any
Agent and the Company may deem and treat the Person in whose name this
Security is registered as its absolute owner for the purpose of receiving
payment of principal of, premium, if any, and interest on this Security and
for all other purposes whatsoever, whether or not this Security is overdue,
and neither the Trustee, any Agent nor the Company shall be affected by
notice to the contrary. The registered Holder of a Security shall be treated
as its owner for all purposes.

         10.         AMENDMENT, SUPPLEMENT AND WAIVERS. Except as provided in
the next succeeding paragraphs, the Indenture or the Securities may be
amended or supplemented with the consent of the Holders of at least a
majority in principal amount of the Securities then outstanding (including
consents obtained in connection with a tender offer or exchange offer for
such Securities), and any existing default or compliance with any provision
of the Indenture or the Securities may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Securities
(including consents obtained in connection with a tender offer or exchange
offer for such Securities).

                     Without the consent of each Holder affected, an
amendment or waiver may not (with respect to any Security held by a
non-consenting Holder): (i) reduce the principal amount of securities whose
Holders must consent to an amendment, supplement or waiver; (ii) reduce the
principal of or change the fixed maturity of any Security; (iii) reduce the
rate of or change the time for payment of interest on any Security; (iv)
waive a Default or Event of Default in the payment of principal of or
premium, if any, or interest on the Securities, (except a rescission of
acceleration of the Securities by the Holders of at least a majority in
aggregate principal amount thereof and a waiver of the payment default that
resulted from such acceleration); (v) make any Security payable in money
other than that stated in the Securities; (vi) make any change in the
provisions of the Indenture relating to waivers of past Defaults or the
rights of Holders of Securities to receive payments of principal of or
premium, if any, or interest on the Securities; or (vii) make any change in
the foregoing amendment and waiver provisions.

                     Notwithstanding the foregoing, without the consent of
any Holder of Securities, the Company and the Trustee may amend or supplement
the Indenture or the Securities to cure any ambiguity, defect or
inconsistency, to provide for uncertificated Securities in addition to or in
place of certificated Securities, to provide for any supplemental indenture
required pursuant to Section 4.15 of the Indenture, to provide for the
assumption of the Company's obligations to Holders of Securities in the case
of a merger, consolidation or sale of assets pursuant to Article 5 of the
Indenture, to make any change that would provide any additional rights or
benefits to the Holders of the Securities or that does not adversely affect
the legal rights under the Indenture of any such Holder, or to comply with
requirements of the Commission in order to effect or maintain the
qualification of the Indenture under the TIA.

                              -4-

<PAGE>

         11.         DEFAULTS AND REMEDIES. Events of Default under the
Indenture include: (i) a default for 30 days in the payment when due of
interest on the Securities; (ii) a default in payment when due of the
principal of or premium, if any, on the Securities, at maturity or otherwise;
(iii) a failure by the Company to comply with the provisions of Sections
4.07, 4.09 or 4.12 of the Indenture; (iv) a failure by the Company for 60
days after notice to comply with any of its other agreements in the Indenture
or the Securities; (v) any default occurs under any mortgage, indenture or
instrument under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by the Company or any of its
Significant Subsidiaries (or the payment of which is Guaranteed by the
Company or any of its Significant Subsidiaries), whether such Indebtedness or
Guarantee exists on the date of the Indenture or is created after the date of
the Indenture, which default (a) constitutes a Payment Default or (b) results
in the acceleration of such Indebtedness prior to its express maturity and,
in each case, the principal amount of any such Indebtedness, together with
the principal amount of any other such Indebtedness under which there has
been a Payment Default or that has been so accelerated, aggregates $25.0
million or more; (vi) failure by the Company or any of its Significant
Subsidiaries to pay a final judgment or final judgments aggregating in excess
of $25.0 million, which judgment or judgments are not paid, discharged or
stayed for a period of 60 days; and (vii) certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Subsidiaries.

                     If any Event of Default occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the then
outstanding Securities by written notice to the Company and the Trustee, may
declare all the Securities to be due and payable immediately. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events
of bankruptcy or insolvency with respect to the Company or any of its
Significant Subsidiaries, all outstanding Securities shall become due and
payable without further action or notice. Holders of the Securities may not
enforce the Indenture or the Securities except as provided in the Indenture.
Subject to certain limitations, Holders of a majority in principal amount of
the then outstanding Securities may direct the Trustee in its exercise of any
trust or power.  The Trustee may withhold from Holders of the Securities
notice of any continuing Default or Event of Default (except a Default of
Event of Default relating to the payment of principal or interest) if it
determines that withholding notice is in the Holders' interest.

                     In the case of any Event of Default occurring by reason
of any willful action (or inaction) taken (or not taken) by or on behalf of
the Company with the intention of avoiding payment of the premium that the
Company would have had to pay if the Company then had elected to redeem the
Securities pursuant to the optional redemption provisions of the Indenture,
an equivalent premium shall also become and be immediately due and payable
to the extent permitted by law upon the acceleration of the Securities.

                     The Holders of not less than a majority in aggregate
principal amount of the Securities then outstanding by written notice to the
Trustee may on behalf of the Holders of all of the Securities waive any
existing Default or Event of Default and its consequences under the Indenture
except a continuing Default or Event of Default in the payment of the
principal of, premium, if any, or interest on the Securities.

                     The Company is required to deliver to the Trustee
annually a statement regarding compliance with the Indenture, and the Company
is required upon becoming aware of any Default or Event of Default, to
deliver to the Trustee a statement specifying such Default or Event of
Default.

                     The above description of Events of Default and remedies
is qualified by reference, and subject in its entirety, to the more complete
description thereof contained in the Indenture.

         12.         RESTRICTIVE COVENANTS. The Indenture imposes certain
limitations on the ability of the Company and its Subsidiaries to incur
additional indebtedness and issue preferred stock, pay dividends or

                             -5-

<PAGE>

make other distributions, repurchase Equity interests or subordinated
indebtedness, create certain liens, enter into certain transactions with
affiliates, issue or sell Equity Interests of the Company's Subsidiaries,
issue Guarantees of Indebtedness by the Company's Subsidiaries and enter into
certain mergers and consolidations.

         13.         TRUSTEE DEALINGS WITH COMPANY. The Trustee under the
Indenture, in its individual or any other capacity, may make loans to, accept
deposits from, and perform services for the Company or its Affiliates, and
may otherwise deal with the Company or its Affiliates, as if it were not
Trustee.

         14.         NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES
AND SHAREHOLDERS. No director, officer, employee, incorporator or shareholder
of the Company, as such, shall have any liability for any obligations of the
Company under the Securities, the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
of Securities by accepting a Security waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Securities. Such waiver may not be effective to waive liabilities under the
federal securities laws and it is the view of the Commission that such a
waiver is against public policy.

         15.         AUTHENTICATION. This Security shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating
agent.

         16.         ABBREVIATIONS. Customary abbreviations may be used in
the name of a Holder or an assignee, such as: TEN COM (= tenants in common),
TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A
(= Uniform Gifts to Minors Act).

         17.         CUSIP NUMBERS. Pursuant to a recommendation promulgated
by the Committee on Uniform Security Identification Procedures, the Company
has caused CUSIP numbers to be printed on the Securities and has directed the
Trustee to use CUSIP numbers as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the
Securities and reliance may be placed only on the other identification
numbers placed thereon.

                     The Company will furnish to any Holder upon written
request and without charge a copy of the Indenture. Request may be made to:

                     Tenet Healthcare Corporation
                     3820 State Street
                     Santa Barbara, California 93105
                     Attention: Treasurer

         18.         GOVERNING LAW. The internal laws of the State of New
York shall govern and be used to construe the Indenture and the Securities,
without regard to conflict of laws provisions thereof.

                                 -6-

<PAGE>

                            ASSIGNMENT FORM

                  To assign this Security, fill in the form below: For value
received (I) or (we) hereby sell, assign and transfer this Security to

__________________________________________________________________________
             (Insert assignee's soc. sec. or tax I.D. no.)

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________
           (Print or type asignee's name, address and zip code)

and do hereby irrevocably constitute and appoint ________________ Attorney to
transfer this Security on the books of the Company with full power of
substitution in the premises.

__________________________________________________________________________

Date: ____________________________

                Your Signature:________________________________________________
                (Sign exactly as your name appears on the face of this Security)

Signature Guarantee.*

_______________________

       *NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs: (i) The
Securities Transfer Agent Medallion Program (Stamp); (ii) The New York Stock
Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program
(SEMP); or (iv) such other guarantee program acceptable to the Trustee.

                                     -7-

<PAGE>

                     OPTION OF HOLDER TO ELECT PURCHASE

                  If you want to elect to have all or any part of this
Security purchased by the Company pursuant to Section 4.12 of the Indenture,
check the box below;

                            / /      Section 4.12
                                     (Change of Control)

                  If you want to have only part of the Security purchased by
the Company pursuant to Section 4.12 of the Indenture, state the amount you
elect to have purchased;

$__________________________

Date:______________________

                               Your Signature:________________________________
                               (Sign exactly as your name appears on the face
                               of this Security)

Signature Guarantee.*

_______________________

       *NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized Signature Guaranty Programs: (i) The
Securities Transfer Agent Medallion Program (Stamp); (ii) The New York Stock
Exchange Medallion Program (MSP); (iii) The Stock Exchange Medallion Program
(SEMP); or (iv) such other guarantee program acceptable to the Trustee.

                                     -8-

<PAGE>

                                                                     APPENDIX B

                         FORM OF SUPPLEMENTAL INDENTURE

                  SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"),
dated as of ________________, between ________________ (the "Guarantor"), a
subsidiary of Tenet Healthcare Corporation (or its successor), a Nevada
corporation (the "Company"), and The Bank of New York, as trustee under the
indenture referred to below (the "Trustee").

                                   WITNESSETH

                  WHEREAS, the Company has heretofore executed and delivered
to the Trustee an indenture (the "Indenture"), dated as of June 16, 2000,
providing for the issuance of an aggregate principal amount of $400,000,000
of 9 1/4% Senior Notes due 2010 (the "Securities");

                  WHEREAS, Section 4.15 of the Indenture provides that under
certain circumstances the Company is required to cause the Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the Guarantor shall guarantee the payment of the Securities pursuant to a
Guarantee on the terms and conditions set forth herein; and

                  WHEREAS, pursuant to Section 9.01 of the Indenture, the
Trustee is authorized to execute and deliver this Supplemental Indenture.

                  NOW THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the Guarantor and the Trustee mutually covenant and agree for
the equal and ratable benefit of the holders of the Securities as follows:

         1.       CAPITALIZED TERMS. Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.

         2.       AGREEMENT TO GUARANTEE. The Guarantor hereby
unconditionally guarantees to each Holder of a Security authenticated and
delivered by the Trustee and to the Trustee and its successors and assigns,
irrespective of the validity and enforceability of the Indenture, the
Securities or the Obligations of the Company hereunder and thereunder, that:
(a) the principal of, premium, if any, and interest on the Securities will be
promptly paid in full when due, whether at maturity, by acceleration,
redemption or otherwise, and interest on the overdue principal, premium, if
any, and (to the extent permitted by law) interest on any interest on the
Securities and all other payment Obligations of the Company to the Holders or
the Trustee hereunder or thereunder will be promptly paid in full, all in
accordance with the terms hereof and thereof; and (b) in case of any
extension of time of payment or renewal of any Securities or any of such
other payment Obligations, that same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration, redemption or otherwise. Failing
payment when due of any amount so guaranteed for whatever reason the
Guarantor shall be obligated to pay the same immediately. An Event of Default
under the Indenture or the Securities shall constitute an event of default
under this Guarantee, and shall entitle the Holders of Securities to
accelerate the Obligations of the Guarantor hereunder in the same manner and
to the same extent as the Obligations of the Company. The Guarantor hereby
agrees that its Obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Securities or the
Indenture, the absence of any action to enforce the same, any waiver or
consent by any Holder of the Securities with respect to any provisions hereof
or thereof, the recovery of any judgment against the Company, any action to
enforce the same or any other

                                     -9-
<PAGE>

circumstance which might otherwise constitute a legal or equitable discharge
or defense of the Guarantor. The Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding
first against the Company, protest, notice and all demands whatsoever and
covenant that this Guarantee will not be discharged except by complete
performance of the Obligations contained in the Securities and the Indenture.
If any Holder or the Trustee is required by any court or otherwise to return
to the Company, the Guarantor, or any Custodian, Trustee, liquidator or other
similar official acting in relation to either the Company or the Guarantor,
any amount paid by either to the Trustee or such Holder, this Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and
effect. The Guarantor agrees that it shall not be entitled to, and hereby
waives, any right of subrogation in relation to the Holders in respect of any
Obligations guaranteed hereby. The Guarantor further agrees that, as between
the Guarantor, on one hand, and the Holders and the Trustee, on the other
hand, (x) the maturity of the Obligations guaranteed hereby may be
accelerated as provided in Article 6 of the Indenture for the purposes of
this Guarantee, notwithstanding any stay, injunction or other prohibition
preventing such acceleration in respect of the Obligations guaranteed hereby,
and (y) in the event of any declaration of acceleration of such Obligations
as provided in Article 6 of the Indenture, such Obligations (whether or not
due and payable) shall forthwith become due and payable by the Guarantor for
the purpose of this Guarantee.

          3.      EXECUTION AND DELIVERY OF GUARANTEE. To evidence its
Guarantee set forth in Section 2, the Guarantor hereby agrees that a notation
of such Guarantee substantially in the form of Exhibit 1 shall be endorsed by
an officer of such Guarantor on each Security authenticated and delivered by
the Trustee and that this Supplemental Indenture shall be executed on behalf
of such Guarantor, by manual or facsimile signature, by its President or one
of its Vice Presidents.

                  The Guarantor hereby agrees that its Guarantee set forth in
Section 2 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a notation of such Guarantee.

                  If an Officer whose signature is on this Supplemental
Indenture or on the Guarantee no longer holds that office at the time the
Trustee authenticates the Security on which a Guarantee is endorsed, the
Guarantee shall be valid nevertheless.

                  The delivery of any Security by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the
Guarantee set forth in this Indenture on behalf of the Guarantors.

         4.       GUARANTORS MAY CONSOLIDATE, ETC. ON CERTAIN TERMS.

                  (a)      Except as set forth in Articles 4 and 5 of the
Indenture, nothing contained in this Supplemental Indenture or in the
Securities shall prevent any consolidation or merger of the Guarantor with or
into the Company or any Subsidiary of the Company that has executed and
delivered a supplemental indenture substantially in the form hereof or shall
prevent any sale or conveyance of the property of the Guarantor as an
entirety or substantially as an entirety, to the Company or any such
Subsidiary of the Company.

                  (b)      Except as provided in Section 4(n) hereof or in a
transaction referred to in Section 5 hereof, the Guarantor shall not
consolidate with or merge with or into, or sell, assign, transfer, lease,
convey or otherwise dispose of all or substantially all of its assets to,
another Person unless (1) either (x) the Guarantor shall be the surviving
Person of such merger or consolidation or (y) the surviving Person or
transferee is a corporation, partnership or trust organized and existing
under the laws of the United States, any state thereof or the District of
Columbia and such surviving Person or transferee shall expressly assume all
the obligations of the Guarantor under this Guarantee and the Indenture
pursuant to a supplemental

                                    -2-

<PAGE>

indenture substantially in the form hereof; (2) immediately after giving
effect to such transaction (including the incurrence of any Indebtedness
incurred or anticipated to be incurred in connection with such transaction)
no Default or Event of Default shall have occurred and be continuing; and (3)
the Company has delivered to the Trustee an Officers' Certificate and Opinion
of Counsel, each stating that such consolidation, merger or transfer complies
with the Indenture, that the surviving Person agrees to be bound thereby, and
that all conditions precedent in the Indenture relating to such transaction
have been satisfied. For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of related
transactions) of all or substantially all of the properties and assets of one
or more Subsidiaries of the Guarantor, the Capital Stock of which constitutes
all or substantially all of the properties and assets of the Guarantor, shall
be deemed to be the transfer of all or substantially all of the properties
and assets of the Guarantor.

                  Upon any consolidation or merger, or any sale, assignment,
transfer, lease, conveyance or other disposition of all or substantially all
of the assets of the Guarantor in accordance with this Section 4(b) hereof,
the successor corporation shall succeed to and be substituted for the
Guarantor with the same effect as if it had been named herein as a Guarantor.
Such successor corporation thereupon may cause to be signed any or all of the
Guarantees to be endorsed upon all of the Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee. All Guarantees so issued shall in all respects have the same legal
rank and benefit under the Indenture as the Guarantees theretofore and
thereafter issued in accordance with the terms of the Indenture as though all
of such Guarantees had been issued at the date of the execution hereof.

         5.       RELEASES FOLLOWING SALE OF ASSETS. Concurrently with any
sale, lease, conveyance or other disposition (by merger, consolidation or
otherwise) of assets of the Guarantor (including, if applicable, disposition
of all of the Capital Stock of the Guarantor), any Liens in favor of the
Trustee in the assets sold, leased, conveyed or otherwise disposed of shall
be released. If the assets sold, leased, conveyed or otherwise disposed of (by
merger, consolidation or otherwise) include all or substantially all of the
assets of the Guarantor or all of the Capital Stock of the Guarantor in each
case, in compliance with the terms of the Indenture, then the Guarantor shall
be automatically and unconditionally released from and relieved of its
Obligations under its Guarantee. Upon delivery by the Company to the
Trustee of an Officers' Certificate to the effect that such sale, lease,
conveyance or other disposition was made by the Company in accordance with
the provisions of the Indenture, the Trustee shall execute any documents
reasonably required in order to evidence the release of the Guarantor from
its Obligations under its Guarantee.

         6.       LIMITATION ON GUARANTOR LIABILITY. For purposes hereof, the
Guarantor's liability will be that amount from time to time equal to the
aggregate liability of the Guarantor hereunder, but shall be limited to the
lesser of (i) the aggregate amount of the Obligations of the Company under
the Securities and the Indenture and (ii) the amount, if any, which would not
have (A) rendered the Guarantor "insolvent" (as such term is defined in the
federal Bankruptcy Law and in the Debtor and Creditor Law of the State of New
York) or (B) left it with unreasonably small capital at the time its
Guarantee of the Securities was entered into, after giving effect to the
incurrence of existing Indebtedness immediately prior to such time; PROVIDED
that it shall be a presumption in any lawsuit or other proceeding in which
the Guarantor is a party that the amount guaranteed pursuant to its Guarantee
is the amount set forth in clause (i) above unless any creditor, or
representative of creditors of the Guarantor, or debtor in possession of
trustee in bankruptcy of the Guarantor, otherwise proves in such a lawsuit
that the aggregate liability of the Guarantor is limited to the amount set
forth in clause (ii). In making any determination as to the solvency or
sufficiency of capital of the Guarantor in accordance with the previous
sentence, the right of the Guarantor to contribution from other Subsidiaries
of the Company that have executed and delivered a supplemental indenture
substantially in the form hereof and any other rights the Guarantor may have,
contractual or otherwise, shall be taken into account.

                                     -3-
<PAGE>

         7.       "TRUSTEE" TO INCLUDE PAYING AGENT. In case at any time any
Paying Agent other than the Trustee shall have been appointed by the Company
and be then acting under the Indenture, the term "Trustee" as used in this
Supplemental Indenture shall in each case (unless the context shall
otherwise require) be construed as extending to and including such Paying
Agent within its meaning as fully and for all intents and purposes as if such
Paying Agent were named in this Supplemental Indenture in place of the
Trustee.

         8.       NO RECOURSE AGAINST OTHERS. No director, officer, employee,
incorporator or stockholder of the Guarantor, as such, shall have any
liability for any obligations of the Company or the Guarantor under the
Securities, any Guarantees, the Indenture or this Supplemental Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder of the Securities by accepting a Security
waives and releases all such liability. The waiver and release are part of
the consideration for issuance of the Securities. Such waiver may not be
effective to waiver liabilities under the federal securities laws and it is
the view of the Commission that such a waiver is against public policy.

         9.       NEW YORK LAW TO GOVERN. The internal law of the State of
New York shall govern and be used to construe this Supplemental Indenture.

         10.      COUNTERPARTS. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all
of them together represent the same agreement.

         11.      EFFECT OF HEADINGS. The Section headings herein are for
convenience only and shall not affect the construction hereof.

                                      -4-

<PAGE>

                     EXHIBIT 1 TO SUPPLEMENTAL INDENTURE
                                  GUARANTEE

                  The Guarantor hereby unconditionally guarantees to each
Holder of a Security authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability of the Indenture, the Securities or the Obligations of the
Company to the Holders of the Trustee under the Securities or under the
Indenture, that: (a) the principal of, and premium, if any, and interest on
the Securities will be promptly paid in full when due, whether at maturity,
by acceleration, redemption or otherwise, and interest on overdue principal,
premium, if any, and (to the extent permitted by law) interest on any
interest on the Securities and all other payment Obligations of the Company
to the Holders or the Trustee under the Indenture or under the Securities
will be promptly paid in full, all in accordance with the terms thereof; and
(b) in case of any extension of time of payment or renewal of any Securities
or any of such other payment Obligations, the same will be promptly paid in
full when due in accordance with the terms of the extension or renewal,
whether at stated maturity, by acceleration, redemption or otherwise. Failing
payment when due of any amount so guaranteed, for whatever reason, the
Guarantor shall be obligated to pay the same immediately.

                  The obligations of the Guarantor to the Holders of
Securities and to the Trustee pursuant to this Guarantee and the Indenture
are expressly set forth in a Supplemental Indenture, dated as of
____________, ______ to the Indenture, and reference is hereby made to the
Indenture, as supplemented, for the precise terms of this Guarantee.

                  This is a continuing Guarantee and shall remain in full
force and effect and shall be binding upon the Guarantor and its respective
successors and assigns to the extent set forth in the Indenture until full
and final payment of all the Company's Obligations under the Securities and
the Indenture and shall inure to the benefit of the successors and assigns of
the Trustee and the Holders of Securities and, in the event of any transfer
or assignment of rights by any Holder of Securities or the Trustee, the
rights and privileges herein conferred upon that party shall automatically
extend to and be vested in such transferee or assignee, all subject to the
terms and conditions hereof. This is a Guarantee of payment and not a
guarantee of collection.

                  This Guarantee shall not be valid or obligatory for any
purpose until the certificate of authentication on the Security upon which
this Guarantee is noted shall have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized signatories.

                  For purposes hereof, the Guarantor's liability will be that
amount from time to time equal to the aggregate liability of the Guarantor
hereunder, but shall be limited to the lesser of (i) the aggregate amount of
the Obligations of the Company under the Securities and the Indenture and
(ii) the amount, if any, which would not have (A) rendered the Guarantor
"insolvent" (as such term is defined in the federal Bankruptcy Law and in the
Debtor and Creditor Law of the State of New York) or (B) left it with
unreasonably small capital at the time its Guarantee of the Securities was
entered into, after giving effect to the incurrence of existing Indebtedness
immediately prior to such time; PROVIDED that it shall be a presumption in
any lawsuit or other proceeding in which the Guarantor is a party that the
amount guaranteed pursuant to its Guarantee is the amount set forth in clause
(i) above unless any creditor, or representative of creditors of the
Guarantor, or debtor in possession or trustee in bankruptcy of the Guarantor,
otherwise proves in such a lawsuit that the aggregate liability of the
Guarantor is limited to the amount set forth in clause (ii). The Indenture
provides that, in making any determination as to the solvency or sufficiency
of capital of a Guarantor in accordance with the previous sentence, the right
of the Guarantor to contribution

<PAGE>

from other Subsidiaries of the Company that have become Guarantors and any other
rights the Guarantor may have, contractual or otherwise, shall be taken into
account.

                  Capitalized terms used herein have the same meanings given
in the Indenture unless otherwise indicated.

                                                  [GUARANTOR]

                                                  By:___________________________
                                                     Name:
                                                     Title:

                                      -2-<PAGE>

                                                                  EXHIBIT 10(a)

                                                           CONFORMED COPY

                                $91,350,000

                           AMENDED AND RESTATED
               LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

                       Dated as of February 28, 1995

                                   among

                    NATIONAL MEDICAL ENTERPRISES, INC.,
                             as Account Party,

          BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
                           THE BANK OF NEW YORK
                         BANKERS TRUST COMPANY and
                 MORGAN GUARANTY TRUST COMPANY OF NEW YORK
                                 as Banks,

                                    and

                           THE BANK OF NEW YORK
                              as Issuing Bank

<PAGE>

                             TABLE OF CONTENTS

                                                                    PAGE

ARTICLE I.      DEFINITIONS

         SECTION 1.01.     Definitions................................  3
         SECTION 1.02.     Certain Usages.............................  9
         SECTION 1.03.     Interpretation............................. 10

ARTICLE II.     LETTER OF CREDIT FACILITY; PAYMENT

         SECTION 2.01.     The Letters of Credit...................... 10

ARTICLE III.     FEES; PAYMENTS; COMPUTATIONS

         SECTION 3.01.     Fees....................................... 17

ARTICLE IV.     REPRESENTATIONS AND WARRANTIES

         SECTION 4.01.     Corporate Power; Authorization; Enforceable
                           Obligations................................ 19
         SECTION 4.02.     Incorporation By Reference................. 20

ARTICLE V.      CONDITIONS PRECEDENT

         SECTION 5.01.     Conditions to Amendment and Restatement.... 20
         SECTION 5.02.     Conditions to Extensions of Letters of
                           Credit..................................... 23

ARTICLE VI.     COVENANTS

         SECTION 6.01.     Incorporation By Reference................. 24
         SECTION 6.02.     Use of Proceeds, Ineligible Securities..... 25

ARTICLE VII.    EVENTS OF DEFAULT

         SECTION 7.01.     Events of Default.......................... 25

                                        i

<PAGE>

                                                                     PAGE
ARTICLE VIII.              THE ISSUING BANK

         SECTION 8.01.     Appointment and Authorization.............. 27
         SECTION 8.02.     Issuing Bank and Affiliates................ 28
         SECTION 8.03.     Action by Issuing Bank..................... 28
         SECTION 8.04.     Consultation with Experts.................. 28
         SECTION 8.05.     Liability of Issuing Bank.................. 28
         SECTION 8.06.     Indemnification............................ 29
         SECTION 8.07.     Credit Decision............................ 29
         SECTION 8.08.     Issuing Bank's Fee......................... 29

ARTICLE IX.     THE COLLATERAL AGENT

         SECTION 9.01.     Appointment and Authorization.............. 30
         SECTION 9.02.     Collateral Agent and Affiliates............ 30
         SECTION 9.03.     Action by Collateral Agent................. 30
         SECTION 9.04.     Consultation with Experts.................. 30
         SECTION 9.05.     Liability of Collateral Agent.............. 30
     ................................................................. 31
         SECTION 9.06.     Successor Collateral Agent................. 31

ARTICLE X.      CHANGE IN CIRCUMSTANCES

         SECTION 10.01.    Illegality................................. 31
         SECTION 10.02.    Taxes...................................... 32
         SECTION 10.03.    Capital Adequacy........................... 34
         SECTION 10.04.    Issuing Bank as Bank....................... 35

ARTICLE XI.     MISCELLANEOUS

         SECTION 11.01.    Notices.................................... 35
         SECTION 11.02.    No Waivers................................. 35
         SECTION 11.03.    Expenses; Indemnification.................. 36
         SECTION 11.04.    Sharing of Set-Offs........................ 36
         SECTION 11.05.    Amendments and Waivers..................... 37
         SECTION 11.06.    Successors and Assigns..................... 38
         SECTION 11.07.    Collateral................................. 40
         SECTION 11.08.    Governing Law; Submission to Jurisdiction.. 40
         SECTION 11.09.    Counterparts; Integration.................. 40
         SECTION 11.10.    WAIVER OF JURY TRIAL....................... 41

                                       ii

<PAGE>

EXHIBIT A - FORM OF SERIES A LETTER OF CREDIT
EXHIBIT B - FORM OF SERIES B LETTER OF CREDIT
EXHIBIT C - AMENDMENT OF SERIES A LETTER OF CREDIT
EXHIBIT D - AMENDMENT OF SERIES B LETTER OF CREDIT
EXHIBIT E - SECURITIES PLEDGE AND SECURITY AGREEMENT
EXHIBIT F - OFFICER'S CERTIFICATE AS TO CONTINUED ACCURACY OF
              REPRESENTATIONS AND NO DEFAULT
EXHIBIT G - OPINION OF SPECIAL COUNSEL TO THE COMPANY
EXHIBIT H - OPINION OF INTERNAL COUNSEL TO THE COMPANY
EXHIBIT I - OPINION OF SPECIAL CAYMAN ISLANDS COUNSEL TO
              NME INTERNATIONAL (CAYMAN) LIMITED

                                       iii

<PAGE>

                           AMENDED AND RESTATED
               LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT

        AGREEMENT dated as of February 28, 1995 among NATIONAL MEDICAL
ENTERPRISES, INC., as account party (the "COMPANY"), BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, THE BANK OF NEW YORK, BANKERS TRUST COMPANY and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, as Banks, and THE BANK OF NEW YORK,
as the Issuing Bank.

                               BACKGROUND

        On December 21, 1989, the Company, by and through its wholly owned
subsidiary NME Hospitals, Inc. ("HOSPITALS"), requested Metrocrest Hospital
Authority ("MHA") to refinance certain existing bonds of MHA, dated as of
August 1, 1982 (the "PRIOR BONDS"), issued pursuant to that certain Indenture
of Mortgage and Deed of Trust, dated as of August 1, 1982, providing for the
issuance of up to $68,000,000 in Prior Bonds, to finance the cost of the premium
paid to redeem the Prior Bonds, and to finance a portion of the cost of
acquiring, constructing, improving, maintaining and equipping certain hospital
facilities known as the RHD Memorial Medical Center and the Trinity Medical
Center owned by MHA and constructing a parking garage and medical office
building at the RHD Memorial Medical Center (the "PROJECT").

        MHA elected to accomplish such financing and refinancing of the Prior
Bonds and financing of the Project through the issuance of the Bonds pursuant to
the terms of that certain Indenture of Mortgage and Deed of Trust, dated as of
December 1, 1989, as amended and restated pursuant to the Amended and Restated
Indenture of Mortgage and Deed of Trust, dated as of November 1, 1994 (as the
same may be further amended, modified or supplemented from time to time, the
"INDENTURE").  Hospitals and MHA entered into that certain Fourth Amendment
and Restatement of Lease Agreement, dated as of December 21, 1989, as amended
and restated pursuant to the Fifth Amendment and Restatement of Lease Agreement,
dated as of November 1, 1994 (as the same may be further amended, modified or
supplemented from time to time, the "LEASE AGREEMENT"), providing for the
lease by Hospitals of the RHD Memorial Medical Center and the Trinity Medical
Center, as described in the Lease Agreement.  The interest of Hospitals in and
to the Lease Agreement has been assigned by Hospitals to NME Hospitals Dallas,
Inc. (a Delaware corporation wholly owned by Hospitals (the "LESSEE")).  The
obligations of the Lessee under the Lease Agreement were

<PAGE>

unconditionally guaranteed by the Company and Hospitals pursuant to the terms of
that certain Second Amendment and Restatement of Lease Guaranty, dated as of
December 21, 1989, as amended and restated pursuant to the Third Amendment and
Restatement of Lease Guaranty, dated as of November 1, 1994 (as the same may be
further amended, and the Guaranty of Lease Obligations of even date therewith as
each may be modified or supplemented from time to time, collectively the "LEASE
GUARANTY") executed by the Company and Hospitals.  In connection with the
foregoing, the Company and The Sanwa Bank Limited, acting through its Dallas
agency ("Sanwa"), entered into that certain Letter of Credit and Reimbursement
Agreement, dated as of December 21, 1989 wherein Sanwa agreed to issue, upon the
terms and conditions set forth therein, its direct pay letters of credit (the
"SANWA LETTERS OF CREDIT") to provide for the payment of the Bonds.

        MHA and Texas Commerce Bank National Association (as trustee under the
Indenture, the "TRUSTEE") have entered into the amendment and restatement of
the Indenture referred to above.  Contemporaneously therewith, the Company
requested, and MHA consented to, the substitution of the Sanwa Letters of Credit
with the Letters of Credit (as hereinafter defined), which were issued by the
Issuing Bank under the $91,350,000 Letter of Credit and Reimbursement Agreement
dated as of November 1, 1994 among the Company as Account Party, the Banks and
the Issuing Bank (as amended prior to the Closing Date (as hereinafter defined),
the "ORIGINAL AGREEMENT") and the Company and Hospitals entered into the Third
Amendment and Restatement of Lease Guaranty to guarantee payment of the "Lease
Obligations" as defined therein.

        Prior to the Closing Date, the Company will enter into a $2,300,000,000
Credit Agreement dated as of February 28, 1995 among the Company, the lenders
party thereto, Morgan Guaranty Trust Company of New York, Bank of America
National Trust and Savings Association, The Bank of New York and Bankers Trust
Company, as Arranging Agents, and Morgan Guaranty Trust Company of New York, as
Administrative Agent (the "Morgan Credit Agreement").  The Company has requested
that the Original Agreement be amended and restated in its entirety as provided
herein and that the Letters of Credit be amended to refer to this Agreement as
so amended and restated, and the Issuing Bank and the other Banks are willing to
do so, on the terms and conditions set forth herein;

                                      - 2 -

<PAGE>

        NOW, THEREFORE, the parties hereto agree as follows:

ARTICLE I.    DEFINITIONS

  SECTION 1.01.  DEFINITIONS.

        The following terms, as used herein, have the following meanings:

        "ACCURATE AND COMPLETE" means, when referring to any representation
and warranty, that such representation and warranty is true in all material
respects and that the Company, or MHA, as the case may be, has not failed to
disclose to the Banks in writing any fact which if not disclosed to the Banks
would make the facts actually stated materially misleading.

        "ADMINISTRATIVE QUESTIONNAIRE" means, with respect to each Bank, an
administrative questionnaire in the form prepared by the Issuing Bank and
submitted to the Issuing Bank, with a copy to the Company, duly completed by
such Bank.

        "AFFILIATE" means, as to any Person, any Person directly or indirectly
controlling, controlled by or under common control with such Person, whether
through the ownership of voting securities, by contract or otherwise.

        "AGREEMENT" means the Original Agreement as originally executed, as
amended and restated as set forth herein and as the same may be further amended,
restated, supplemented or otherwise modified from time to time.

        "ALTERNATE BASE RATE" means, on any date, a rate of interest per annum
equal to the higher of (i) the BNY Rate in effect on such date or (ii)  1/2 of
1% plus the Federal Funds Rate in effect on such date.

        "APPLICABLE CREDIT OFFICE" means, with respect to any Bank, its office
located at its address set forth in its Administrative Questionnaire or such
other office as such Bank may hereafter designate as its Applicable Credit
Office by notice to the Company and the Issuing Bank.

        "ASSIGNEE" has the meaning set forth in Section 11.06(c).

        "BANK" means each bank listed on the signature pages

                                      - 3 -

<PAGE>

hereof, each Assignee which becomes a Bank pursuant to Section 11.06(c), and
their respective successors.

        "BNY RATE" means a rate of interest per annum equal to the rate of
interest publicly announced from time to time in New York City by the Issuing
Bank as its prime commercial lending rate, such rate to be adjusted
automatically (without notice) on the effective date of any change in such
publicly announced rate.

        "BOND DOCUMENT" has the meaning set forth in Section 7.01(g) hereof.

        "BONDS" mean the Series A Bonds and the Series B Bonds (as hereinafter
described) authenticated and delivered under the Indenture and the Remarketing
Agreement and any additional bonds authenticated and issued under the Indenture
after the date hereof.  The "SERIES A BONDS" shall mean the Bonds in the
aggregate principal amount on the date hereof of $68,600,000, maturing on August
1, 2007, the proceeds of which were used to redeem the Prior Bonds, to finance
the cost of the premium paid to redeem the Prior Bonds, and, to the extent of
any remaining Series A Bond proceeds, to pay the costs and expenses associated
with the issuance of the Bonds.  The "SERIES B BONDS" shall mean the Bonds in
the maximum aggregate principal amount on the date hereof of $22,750,000,
maturing on August 1, 2008, the proceeds of which were used to finance a portion
of the Project and to pay any remaining costs and expenses associated with the
issuance of the Bonds that were not paid out of the Series A Bond proceeds.

        "BUSINESS DAY" means any day other than (1) a Saturday or a Sunday or
(2) a legal holiday or the equivalent on which banking institutions generally
are authorized or required to close in New York, New York or in the city in
which is located (a) the principal corporate trust office of the Trustee, the
Tender Agent or the Remarketing Agent or (b) the office of the Issuing Bank or
of its agent at which drafts or claims for payment under the Letters of Credit
are to be presented, or (3) a day on which the New York Stock Exchange is
closed.

        "CLOSING DATE" means the date this Agreement is amended and restated
in accordance with Section 5.01.

                                      - 4 -

<PAGE>

        "COLLATERAL AGENT" means Morgan Guaranty Trust Company of New York, in
its capacity as Collateral Agent under the Security Agreement, and its
successors in such capacity.

        "COMMITMENT" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on Schedule I hereto as its Commitment, as such
Commitment may be reduced from time to time.

        "COMPANY" means National Medical Enterprises, Inc., a Nevada
corporation, and its successors.

        "DEFAULT" means any of the events specified in Article VII, whether or
not any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.

        "EVENT OF DEFAULT" means any of the events specified in Article VII,
PROVIDED that any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.

        "EXTENDED AMOUNT"  has the meaning set forth in Section 2.01(c)
hereof.

        "EXTENSION DATE" has the meaning set forth in Section 2.01(l) hereof.

        "FEDERAL FUNDS RATE" means, for any day, the rate per annum (rounded
upward, if necessary, to the nearest 1/100th of 1%) 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 (i) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (ii) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate quoted to The Bank
of New York on such day on such transactions as determined by the Issuing Bank.

        "INDEMNITEE" has the meaning set forth in Section 11.03(b).

                                      - 5 -

<PAGE>

        "INDENTURE" has the meaning set forth in the Background section
hereof.

        "INELIGIBLE SECURITIES" means securities which may not be underwritten
or dealt in by member banks of the Federal Reserve System under Section 16 of
the Banking Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.

        "ISSUING BANK" means The Bank of New York in its capacity as issuer of
the Letters of Credit and as agent for the Banks, and its successors in such
capacity.

        "L/C BANK ACCOUNT" means GL Account 111115, Funds Transfer Area,
Attention: Standby Letter of Credit Department, Trefik A. Antonio, Ref: L/C Nos.
S00013638, S00013639, at The Bank of New York, ABA No. 021000018.

        "L/C PAYMENT"  means any payment by the Issuing Bank under any of the
Letters of Credit.

        "LEASE AGREEMENT" has the meaning set forth in the Background section
hereof.

        "LEASE GUARANTY" has the meaning set forth in the Background section
hereof.

        "LESSEE" has the meaning set forth in the Background section hereof.

        "LETTER OF CREDIT FEE" means the LC Fee Rate (as defined in the Morgan
Credit Agreement).

        "LETTER OF CREDIT FRONTING FEE" means 25 basis points per annum.

        "LETTERS OF CREDIT" means (i) prior to the closing on the Closing
Date, those two certain irrevocable direct pay letters of credit originally
issued by the Issuing Bank in favor of the Trustee for the account of the
Company under the Original Agreement, in the form of Exhibits A and B,
respectively, and (ii) after the closing on the Closing Date, said two letters
of credit as amended on the Closing Date by amendments substantially in the form
of Exhibit C and Exhibit D, respectively.  Said letters of credit, as
originally issued and as amended from time to time, are herein referred to as
the "Series A L/C" and "Series B L/C", respectively.

        "MARGIN STOCK" has the meaning assigned to the term

                                      - 6 -

<PAGE>

"margin stock" in subsection 221.2(h) of Regulation U of the Board of Governors
of the Federal Reserve System, as the same may be amended, supplemented or
modified from time to time.

        "MORGAN CREDIT AGREEMENT" has the meaning set forth in the Background
section hereof.

        "OBLIGATIONS" mean any and all of the debts, obligations and
liabilities of the Company provided for or arising under this Agreement
(including, without limitation the Reimbursement Obligations and the obligation
to pay interest thereon), whether now existing or hereafter arising, voluntary
or involuntary, direct or indirect, absolute or contingent, liquidated or
unliquidated, and whether or not from time to time decreased, extinguished and
later increased, created or incurred.

        "ORIGINAL AGREEMENT" has the meaning set forth in the Background
section hereof.

        "PARENT" means, with respect to any Bank, any Person controlling such
Bank.

        "PARTICIPANT" has the meaning set forth in Section 11.06(b).

        "PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture or
other entity or a government or any agency or political subdivision thereof.

        "PRINCIPAL DRAWING"  means a drawing (other than a Tender Drawing)
under either Letter of Credit in respect of the payment of the principal of the
Bonds.

        "PRIOR BONDS" has the meaning set forth in the Background section
hereof.

        "PROJECT" has the meaning set forth in the Background section hereof.

        "PURCHASE DATE" has the meaning set forth in the Indenture.

        "REIMBURSEMENT OBLIGATION" means any obligation of the Company to
reimburse the Issuing Bank for a drawing under a Letter of Credit or any portion
of any such obligation to which a Bank has become subrogated pursuant to Section

                                      - 7 -

<PAGE>

2.01(e).

        "REMARKETING AGENT" means the Remarketing Agent named as such under
the Indenture, until a substitute Remarketing Agent becomes such pursuant to and
in accordance with the terms of the Indenture, and thereafter "REMARKETING
AGENT" shall mean such successor or any further successor thereto.

        "REMARKETING AGREEMENT" means the Remarketing Agreement dated as of
November 1, 1994, among the Remarketing Agent and the Company, as the same may
be amended, modified or supplemented from time to time.

        "REQUIRED BANKS" means at any time (i) Banks having at least 51% of
the aggregate amount of the Commitments or (ii) if the Commitments shall have
been terminated, Banks holding unpaid Reimbursement Obligations that comprise at
least 51% of the aggregate unpaid principal amount of all the Reimbursement
Obligations outstanding at such time.

        "SECTION 20 SUBSIDIARY" means a subsidiary of the bank holding company
controlling any Bank, which subsidiary has been granted authority by the Federal
Reserve Board to underwrite and deal in certain Ineligible Securities.

        "SECURED PARTIES" has the meaning set forth in the Security Agreement.

        "SECURED OBLIGATIONS" has the meaning set forth in the Security
Agreement.

        "SECURITIES PLEDGE AND SECURITY AGREEMENT" means the Securities Pledge
and Security Agreement dated as of November 1, 1994, among the Company, the
Trustee and the Issuing Bank, as originally executed in the form of Exhibit E
and as the same may be amended, restated, modified or supplemented from time to
time.

        "SECURITY AGREEMENT" means a Security Agreement among the Company,
N.M.E. International (Cayman) Limited and the Collateral Agent, substantially in
the form of Exhibit B to the Morgan Credit Agreement, as such agreement may be
amended from time to time in accordance with the terms thereof.

        "SERIES A L/C" has the meaning set forth in the definition of "Letters
of Credit".

        "SERIES B L/C" has the meaning set forth in the

                                      - 8 -

<PAGE>

definition of "Letters of Credit".

        "SUBSIDIARY" means any corporation of which more than 50% of the
outstanding shares of stock of each class having ordinary voting power (other
than stock having such power only by reason of the happening of a contingency)
is at the time owned by the Company or by one or more Subsidiaries or by the
Company and one or more Subsidiaries.

        "TEMPORARY CASH INVESTMENTS" means any investment in (i) direct
obligations of the United States or any agency thereof, or obligations
guaranteed by the United States or any agency thereof, (ii) commercial paper
rated at least A-1 by Standard & Poor's Ratings Group and at least P-1 by
Moody's Investors Service, Inc. or (iii) time deposits with, including
certificates of deposit issued by, any office located in the United States of
any bank or trust company which is organized under the laws of the United States
or any state thereof and has capital, surplus and undivided profits aggregating
at least $1,000,000,000, PROVIDED in each case that such investment matures
within 30 days from the date of acquisition thereof by the Issuing Bank.

        "TENDER DRAWING"  means a drawing under either Letter of Credit in
respect of the payment of the purchase price of Bonds purchased by the Tender
Agent (as defined in the Indenture) for the account of the Company pursuant to
the Indenture.

        "TERMINATION DATE" means the date which is five Business Days prior to
the "Final Maturity Date" under and as defined in the Morgan Credit Agreement.

        "TRUSTEE" has the meaning set forth in the Background section hereof.

        "UNITES STATES" means the United States of America, including the
states thereof and the District of Columbia, but excluding its territories and
possessions.

  SECTION 1.02.      CERTAIN USAGES.

        The words "HEREOF", "HEREIN", and "HEREUNDER" and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole,
including all Exhibits and Schedules hereto and not to any particular provision
of this Agreement.

                                      - 9 -

<PAGE>

  SECTION 1.03.      INTERPRETATION.

        All references in this Agreement to any other agreement or instrument
shall mean such other agreement or instrument as the same may be amended,
restated, extended, supplemented or otherwise modified from time to time.

ARTICLE II.        LETTER OF CREDIT FACILITY; PAYMENT

  SECTION 2.01.      THE LETTERS OF CREDIT.

  (a)   LETTERS OF CREDIT ISSUED.

        Prior to the date hereof, pursuant to the Original Agreement, the
Issuing Bank issued the Letters of Credit in favor of the Trustee for the
benefit of the holders of the Bonds and for the account of the Company, to
provide a source of funds for the payment of the principal or the purchase price
of the Bonds.  On the Closing Date, the Letters of Credit shall be amended by
amendments in the forms of Exhibits C and D hereto, respectively.   The Series A
L/C was issued in the original face amount of $68,600,000 (Sixty Eight Million
Six Hundred Thousand Dollars) as such amount may be decreased pursuant to
Section IV of the Series A L/C, and, except in connection with reinstatement as
hereinafter provided, will not be increased.  The Series B L/C was issued in the
original face amount of $22,750,000 (Twenty Two Million Seven Hundred Fifty
Thousand Dollars), as such amount may be decreased pursuant to Section D of
the Series B L/C, and, except in connection with reinstatement as hereinafter
provided, will not be increased. All amounts disbursed by the Issuing Bank
pursuant to draws under the Letters of Credit shall be from the Issuing Bank's
own funds.

  (b)   REIMBURSEMENT OF L/C PAYMENTS; INTEREST ON PAST DUE AMOUNTS.

        Except as provided in Section 2.01(c) hereof, the Company agrees that
following each L/C Payment it will immediately reimburse the Issuing Bank for
the full amount of such L/C Payment, such reimbursement to be made on the date
such L/C Payment is made.  The Company agrees that it will pay to the Issuing
Bank on demand interest on the amount of any L/C Payment which is not paid when
due from and including the date such L/C Payment is due to but excluding the
date of payment thereof at a rate per annum equal to the lesser of (a) the
Alternate Base Rate plus 2%, and (b) the highest

                                     - 10 -

<PAGE>

lawful rate in effect from time to time under applicable law.  The obligation of
the Company to reimburse the Issuing Bank for any L/C Payment, and to pay
interest thereon, is and shall be absolute, irrevocable and unconditional under
any and all circumstances whatsoever and shall not be subject to any set-off,
counterclaim or defense to payment which the Company may have against the
Trustee, the holder of any Bond, the Banks or any other Person.

  (c)   DEFERRAL OF PAYMENTS.

        If any Bond is purchased with the proceeds of a Tender Drawing and such
Bond is not remarketed on the same day such Tender Drawing is made, the Company
will reimburse the Issuing Bank the amount of such Tender Drawing (the
"EXTENDED AMOUNT") on or before 2:00 p.m., New York City time, on the earlier
to occur of (i) the day such Bond is remarketed and (ii) the earlier of (a) the
thirtieth (30th) day following the day such Tender Drawing is made or (b) the
Termination Date, in either case notwithstanding the provisions of Section
2.01(b) hereof, but subject to the provisions of Article VII hereof.  The
Extended Amount will bear interest from the date of such Tender Drawing at a per
annum rate equal to, subject to Section 2.01(b), the Alternate Base Rate, such
interest to be payable monthly in arrears on the last Business Day of each
calendar month.

  (d)   REMARKETING OF BONDS.

        Subject to the terms hereof, the Issuing Bank hereby consents to the
remarketing of the Bonds and, provided that no Default or Event of Default shall
have occurred and be continuing, the periodic repurchase and remarketing thereof
pursuant to the terms of the Indenture and the Remarketing Agreement.

  (e)   PAYMENTS BY BANKS WITH RESPECT TO LETTERS OF CREDIT.

        (i)  Each Bank shall make available an amount equal to its ratable share
of any drawing under a Letter of Credit, which is not repaid to the Issuing Bank
by the Company as required by this Agreement in Federal or other funds
immediately available in New York City, to the Issuing Bank by 3:00 p.m (New
York City time) on the Business Day following the required date for payment of
such drawing by the Company, together with interest on such drawing to but
excluding the day such payment is due from such Bank at the Federal Funds Rate
for such day, at the Issuing Bank's

                                     - 11 -

<PAGE>

address specified in or pursuant to Section 11.01; PROVIDED each Bank's
obligation shall be reduced by its pro rata share of any reimbursement
theretofore paid by the Company in respect of such drawing pursuant to Section
2.01(b) or (c).  The Issuing Bank shall notify each Bank of the amount of such
Bank's obligation in respect of any drawing under a Letter of Credit not later
than 1:00 p.m. (New York City time) on the day such payment by such Bank is due.
Upon payment in full thereof, each Bank shall be subrogated to the rights of the
Issuing Bank against the Company to the extent of such Bank's pro rata share of
the related Reimbursement Obligation (including interest accrued thereon).

        (ii)  If any Bank fails to pay any amount required pursuant to subclause
(i) of this clause (a) on the date on which such payment is due, interest shall
accrue on such Bank's obligation to make such payment, for each day from and
including the date such payment becomes due to but excluding the date such Bank
makes such payment, whether before or after judgment, at a rate per annum equal
to (A) in the case of each day from and including the day such payment is due
through and including the first succeeding Business Day (and any intervening
days), the Federal Funds Rate for each such day as determined by the Issuing
Bank and (B) for each day thereafter, the sum of 2% plus the Base Rate for such
day.  Any payment made by any Bank after 3:00 p.m., New York City time, on any
Business Day shall be deemed for purposes of the preceding sentence to have been
made on the next succeeding Business Day.

        (iii)  If the Company shall reimburse the Issuing Bank for any drawing
under a Letter of Credit after any Bank shall have made funds available to the
Issuing Bank with respect to such drawing in accordance with subclause (i) of
this clause (e), the Issuing Bank shall promptly upon receipt of such
reimbursement distribute to such Bank its pro rata share thereof, including
interest, to the extent received by the Issuing Bank.

        (iv)  The obligations of each Bank under this Section 2.01(e) shall be
absolute and unconditional under any and all circumstances, irrespective of any
set-off, counterclaim, or defense to payment which such Bank may have or have
had against the Issuing Bank, the beneficiary of any Letter of Credit, the
Company or any other Person and irrespective of any Default or Event of Default.

        (f)   PAYMENT UPON ACCELERATION.  If the Issuing Bank

                                     - 12 -

<PAGE>

directs the Company pursuant to Section 7.02(a) to make the payment required by
this clause (f), the Company shall pay to the Issuing Bank for application to
drawings under any then outstanding Letters of Credit an amount equal to the
aggregate amount which is then, or may thereafter (under any contingency)
become, available for drawing under such Letters of Credit.  The Issuing Bank
shall invest any amount paid to it pursuant to the first sentence of this clause
(f) in Temporary Cash Investments.  Any amount paid by the Company to the
Issuing Bank pursuant to the first sentence of this clause (f) with respect to a
Letter of Credit and not applied to a drawing thereunder (together with interest
or other income, to the extent received by the Issuing Bank on the related
Temporary Cash Investments) shall, as promptly as practicable after such Letter
of Credit expires or is fully drawn and all related Obligations (together with
all interest accrued thereon, whether or not allowed or allowable as a claim in
a proceeding referred to in clause (g) or (h) of Section 7.01) are paid, be
applied by the Issuing Bank to pay any other amounts then due and payable by the
Company hereunder.  When all such amounts shall have been paid in full, the
Issuing Bank shall repay the remaining balance, if any, to the Company.

        (g)   INCREASED COST AND REDUCED RETURN.  If, on or after the date
hereof, the adoption of any applicable law, rule or regulation, or any change in
any applicable law, rule or regulation, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by any Bank or the Issuing Bank with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency, shall impose, modify or deem applicable any tax, reserve, special
deposit or similar requirement against or with respect to or measured by
reference to letters of credit or participations therein, and the result of any
of the foregoing is to increase the cost to such Bank or the Issuing Bank of
issuing or maintaining any Letter of Credit or any participation therein, or to
reduce any amount receivable by any Bank or the Issuing Bank under this Section
2.01 in respect of any Letter of Credit or any participation therein (which
increase in cost, or reduction in amount receivable, shall be the result of such
Bank's or the Issuing Bank's reasonable allocation of the aggregate of such
increases or reductions resulting from such event), then, within 15 days after
demand by such Bank or the Issuing Bank, the Company agrees to pay to such Bank
or the Issuing Bank,

                                     - 13 -

<PAGE>

from time to time as specified by such Bank or the Issuing Bank, such additional
amounts as shall be sufficient to compensate such Bank or the Issuing Bank for
such increased cost or reduction.  A certificate of such Bank or the Issuing
Bank submitted to the Company pursuant to this Section 2.01(g) and setting forth
the additional amount or amounts to be paid to it hereunder shall be conclusive
in the absence of manifest error.

        (h)   EXCULPATORY PROVISIONS.  The Company's obligations under this
Section 2.01 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Company may have or have had against the Issuing Bank, any Bank, the beneficiary
of any Letter of Credit or any other Person.  The Company assumes all risks of
the acts or omissions of any beneficiary of any Letter of Credit with respect to
its use of such Letter of Credit.  The Company agrees that the Issuing Bank and
the Banks and their respective officers, directors, employees and agents shall
not be responsible for, and the obligations of each Bank to make payments (other
than obligations of such Bank resulting solely from the gross negligence or
willful misconduct of the Issuing Bank), and of the Company to reimburse the
Issuing Bank for drawings, pursuant to this Section shall not be excused or
affected by, among other things, (i) the use which may be made of any Letter of
Credit or any acts or omissions of either beneficiary or any transferee in
connection therewith; (ii) the validity, sufficiency or genuineness of documents
presented under any Letter of Credit or of any endorsements thereon, even if
such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; (iii) payment by the Issuing Bank against
presentation of documents to the Issuing Bank which do not comply with the terms
of any Letter of Credit or (iv) any dispute between or among the Company, any of
its Subsidiaries, the beneficiary of any Letter of Credit or any other Person or
any claims or defenses whatsoever of the Company, any of its Subsidiaries or any
other Person against the beneficiary of any Letter of Credit.  The Issuing Bank
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit.  The Company agrees that
any action taken or omitted by the Issuing Bank or any Bank under or in
connection with any Letter of Credit and the related drafts and documents, if
done without willful misconduct or gross negligence, shall be binding upon the
Company and shall not place the Issuing Bank

                                     - 14 -

<PAGE>

or any Bank under any liability to the Company.

        (i)    RELIANCE, ETC.  To the extent not inconsistent with Section
2.01(h), the Issuing Bank shall be entitled to rely, and shall be fully
protected in relying upon advice and statements of legal counsel, independent
accountants and other experts selected by the Issuing Bank and upon any Letter
of Credit, draft, writing, resolution, notice, consent, certificate, affidavit,
letter, cablegram, telegram, telecopy, telex or teletype message, statement,
order or other document believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary
unless the beneficiary and the Company shall have notified the Issuing Bank that
such documents do not comply with the terms and conditions of such Letter of
Credit.  The Issuing Bank shall be fully justified in refusing to take any
action requested of it under this Section 2.01 in respect of any Letter of
Credit unless it shall first have received such advice or concurrence of the
Required Banks as it reasonably deems appropriate or it shall first be
indemnified to its reasonable satisfaction by the Banks against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take, or omitting or continuing to omit, any such action.
Notwithstanding any other provision of this Section 2.01, the Issuing Bank shall
in all cases be fully protected in acting, or in refraining from acting, under
this Section 2.01 in respect of any Letter of Credit in accordance with a
request of the Required Banks, and such request and any action taken or failure
to act pursuant thereto shall be binding upon the Banks and all future holders
of participations in such Letter of Credit.

        (j)   INDEMNIFICATION BY THE COMPANY.  The Company agrees to indemnify
and hold harmless each Bank and the Issuing Bank (the "LC INDEMNITEES") from
and against any and all claims and damages, losses, liabilities, costs or
expenses (including, without limitation, the reasonable fees and disbursements
of counsel) which any such LC Indemnitee may reasonably incur (or which may be
claimed against any such LC Indemnitee by any Person whatsoever) by reason of or
in connection with the execution and delivery or transfer of or payment or
failure to pay under any Letter of Credit or any actual or proposed use of any
Letter of Credit, including any claims, damages, losses, liabilities, costs or
expenses which the Issuing Bank may incur by reason of or in connection with

                                     - 15 -

<PAGE>

the failure of any Bank to fulfill or comply with its obligations to the Issuing
Bank hereunder (but nothing herein contained shall affect any rights the Company
may have against any defaulting Bank); PROVIDED that the Company shall not be
required to indemnify any LC Indemnitee for any claims, damages, losses,
liabilities, costs or expenses to the extent, but only to the extent, caused by
(i) the willful misconduct or gross negligence of the Issuing Bank in
determining whether a request presented under any Letter of Credit complied with
the terms of such Letter of Credit or (ii) the Issuing Bank's failure to pay
under any Letter of Credit after the presentation to it of a request strictly
complying with the terms and conditions of such Letter of Credit.  Nothing in
this Section 2.01(j) is intended to limit the obligations of the Company under
any other provision of this Section 2.01.

        (k)   INDEMNIFICATION BY THE BANKS.  Each Bank shall, ratably in
accordance with its Commitment, indemnify the Issuing Bank, its affiliates and
their respective directors, officers, agents and employees (to the extent not
promptly reimbursed by the Company) against any cost, expense (including
reasonable counsel fees and disbursements), claim, demand, action, loss or
liability (except such as result from such indemnitee's gross negligence or
willful misconduct or the Issuing Bank's failure to pay under any Letter of
Credit after the presentation to it of a request strictly complying with the
terms and conditions of such Letter of Credit) that any such indemnitee may
suffer or incur in connection with this Section 2.01 or any action taken or
omitted by such indemnitee under this Section 2.01.

        (l)   EXTENSIONS OF LETTERS OF CREDIT.  Subject to satisfaction of the
conditions set forth in Section 5.02, the Issuing Bank shall extend the expiry
date of the Letters of Credit for a period of one year from the then current
expiry date; PROVIDED that, the Issuing Bank shall have no obligation to
extend the expiry date of either Letter of Credit to a date after the
Termination Date, regardless of whether the conditions set forth in Section 5.02
have been satisfied.  Each date on which the expiry date of either Letter of
Credit is extended is herein referred to as an "Extension Date".

                                     - 16 -

<PAGE>

ARTICLE III.        FEES; PAYMENTS; COMPUTATIONS

  SECTION 3.01.    FEES.

        The Company agrees to pay to the Issuing Bank:

        (a)   LETTER OF CREDIT FEE.  For the account of the Banks, the Letter
of Credit Fee multiplied by the average daily outstanding face amount of the
Series A L/C and the Series B L/C during the period from and including January
1, 1995 to and including the Termination Date, payable quarterly in arrears on
the last Business Day of each March, June, September and December and on the
Termination Date.

        (b)   LETTER OF CREDIT FRONTING FEE.  For the account of the Issuing
Bank, the Letter of Credit Fronting Fee multiplied by the sum of the face
amounts of the Series A L/C and the Series B L/C for the period from April 6,
1995 through and including December 5, 1995, payable quarterly in arrears on the
last Business Day of each June, September and December during such period.

        (c)   DRAWING FEE.  For the account of the Issuing Bank, a drawing
fee of $250 on each L/C Payment, payable at the time of each such L/C Payment.

        (d)   EXTENSION FEE.  For the account of the Issuing Bank, an
extension fee of $500 per Letter of Credit, payable on each Extension Date
(other than the first Extension Date).

        (e)   AMENDMENT FEE.  For the account of the Issuing Bank, an
amendment fee of $500 per Letter of Credit, payable on the date of effectiveness
of each amendment to such Letter of Credit (other than the amendment to be
entered into on the Closing Date).

  Section 3.02.    MANNER OF PAYMENTS.

        (a)   Each payment by the Company of a Reimbursement Obligation under
this Agreement shall be made by transferring the amount thereof in immediately
available Dollars to the Trustee for credit (i) to the Purchase Reimbursement
Fund (as such term is defined in the Indenture), in the case of reimbursement of
the amount of any Tender Drawing, or (ii) to the Credit Reimbursement Fund (as
such term is defined in the Indenture), in the case of reimbursement of the
amount of any Principal Drawing.  All other payments payable by the Company
hereunder shall be paid to the Issuing Bank.  All payments

                                     - 17 -

<PAGE>

payable by the Company hereunder shall be made not later than 2:00 p.m. (New
York City time) on the date on which such payment shall become due, in each case
without set-off or counterclaim and shall be free and clear of, and without
deduction for, any taxes, duties, levies, imposts or other charges of a similar
nature.  Time is of the essence of this Agreement.  If any payment due hereunder
shall be paid on the date when due, but following the time of day required
above, the Company shall pay to the Issuing Bank, on demand, as an additional
fee hereunder, an amount equal to the Federal Funds Rate for such day plus 1%,
multiplied by the amount of such payment, divided by 360.

        (b)   The Issuing Bank shall have the right to determine the order in
which amounts paid by the Company are applied to the amounts then due and
payable hereunder, regardless of any application designated by the Company.  The
Company agrees to pay any interest or other amounts due under this Agreement to
the Issuing Bank at the L/C Bank Account or such other account as may be
designated by the Issuing Bank.

  Section 3.03.    EXTENSION OF PAYMENTS.

        If any payment under this Agreement shall become due on a day which is
not a Business Day, the due date thereof shall be extended to the next following
day which is a Business Day, and such extension shall be taken into account in
computing the amount of any interest or fees then due and payable hereunder.

  Section 3.04.    COMPUTING OF INTEREST AND FEES.

        All interest and fees payable under this Agreement shall be computed on
the basis of a year of 360 days for the actual number of days elapsed.

  Section 3.05.    GENERAL PROVISIONS AS TO PAYMENTS.

        (a)   The Issuing Bank will promptly distribute to each Bank its ratable
share of each payment received by the Issuing Bank for the account of the Banks.
Whenever any payment shall be due on a day which is not a Business Day, the
date for payment thereof, except as otherwise expressly provided herein, shall
be extended to the next succeeding Business Day.  If the date for any payment is
extended by operation of law or otherwise, interest thereon shall be payable for
such extended time.

                                     - 18 -

<PAGE>

        (b)   Unless the Issuing Bank shall have received notice from the
Company prior to the date on which any payment is due to the Banks hereunder
that the Company will not make such payment in full, the Issuing Bank may assume
that the Company has made such payment in full to the Issuing Bank on such date
and the Issuing Bank may, in reliance upon such assumption, cause to be
distributed to each Bank on such due date an amount equal to the amount then due
such Bank.  If and to the extent that the Company shall not have so made such
payment, each Bank shall repay to the Issuing Bank forthwith on demand such
amount distributed to such Bank together with interest thereon, for each day
from the date such amount is distributed to such Bank to but excluding the date
such Bank repays such amount to the Issuing Bank, at a rate per annum equal to
(A) in the case of each day from and including the day such payment is due
through and including the first succeeding Business Day (and any intervening
days), the Federal Funds Rate for each such day as determined by the Issuing
Bank and (B) for each day thereafter, the sum of 2% plus the Alternate Base Rate
for such day.  Any payment made by any Bank after 3:00 p.m., New York City time,
on any Business Day shall be deemed for purposes of the preceding sentence to
have been made on the next succeeding Business Day.

ARTICLE IV.        REPRESENTATIONS AND WARRANTIES

        In order to induce the Banks and the Issuing Bank to enter into this
Agreement and to extend the credit herein provided for, the Company hereby
represents and warrants to each Bank and the Issuing Bank that:

  SECTION 4.01.    CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.

        (a)   The Company has the corporate power, authority and legal right to
make, deliver and perform this Agreement, the Security Agreement and the
Securities Pledge and Security Agreement, to cause the Letters of Credit to be
issued under the Original Agreement and incur the related Reimbursement
Obligations and to enter into any amendments to the Letters of Credit and any
extensions of the expiry thereof, and has taken all necessary corporate action
to authorize the issuance of the Letters of Credit, the incurrence of the
related Reimbursement Obligations and the execution, delivery and performance of
this Agreement, the Security Agreement and the Securities Pledge and Security
Agreement.

                                     - 19 -

<PAGE>

        (b)   No consent of any other Person (including without limitation
stockholders and creditors of the Company), and no authorization of, notice to,
or other act by or in respect of the Company by any governmental authority,
agency or instrumentality is required in connection with the issuance, amendment
or extension of the Letters of Credit or the execution, delivery, performance,
validity or enforceability of this Agreement, the Security Agreement and the
Securities Pledge and Security Agreement.

        (c)   Each of this Agreement, the Security Agreement and the Securities
Pledge and Security Agreement has been duly executed and delivered on behalf of
the Company and constitutes a legal, valid and binding agreement or obligation
of the Company enforceable against the Company in accordance with its terms.

  SECTION 4.02.    INCORPORATION BY REFERENCE.

        Each of the representations made by the Company in Sections 4.04 through
4.17 of the Morgan Credit Agreement is true and correct.  Defined terms used in
Sections 4.04 through 4.17 of the Morgan Credit Agreement have the meanings
assigned to such terms in the Morgan Credit Agreement, except that, for purposes
of this Agreement, the term "Financing Documents" shall include this Agreement,
the Lease Guaranty and the Letters of Credit.

ARTICLE V.    CONDITIONS PRECEDENT

  SECTION 5.01.    CONDITIONS TO AMENDMENT AND RESTATEMENT.

        The Original Agreement shall not be amended and restated as provided
herein until the date (the "CLOSING DATE") on which all of the following
conditions have been satisfied (or waived, in accordance with Section 11.05):

        (a)   The Issuing Bank shall have received counterparts hereof signed by
each of the parties hereto (or, in the case of any party as to which an executed
counterpart shall not have been received, the Issuing Bank shall have received,
in form satisfactory to it, telegraphic, telex, facsimile or other written
confirmation from such party of execution of a counterpart hereof by such
party).

        (b)   The Issuing Bank shall have received a copy of the Security
Agreement and the Securities Pledge and Security

                                     - 20 -

<PAGE>

Agreement, in each case signed by all parties thereto.

        (c)   The Issuing Bank shall have received a copy of the Morgan Credit
Agreement in the form signed by all parties thereto.

        (d)   The Issuing Bank shall have received, with an original counterpart
for each Bank, a certificate dated the Closing Date, substantially in the form
of Exhibit F, executed by an Executive Vice President, a Senior Vice President
or the Treasurer of the Company.

        (e)   The Issuing Bank shall have received, with an original counterpart
for each Bank, a certificate executed by a duly authorized officer of the
Company and dated the Closing Date certifying that no material adverse change
has occurred in the financial condition, results of operations or business of
the Combined Companies (as such term is defined in the Morgan Credit Agreement),
taken as a whole, since November 30, 1994.

        (f)   The Issuing Bank shall have received, with an original counterpart
for each Bank, an opinion of special counsel for the Company, dated the Closing
Date and addressed to the Issuing Bank and the Banks, substantially in the form
of Exhibit G and covering such other matters incident to the transactions
contemplated by this Agreement as the Issuing Bank or any Bank shall reasonably
request.

        (g)   The Issuing Bank shall have received, with an original counterpart
for each Bank, an opinion of internal counsel for the Company, dated the Closing
Date and addressed to the Issuing Bank and the Banks, substantially in the form
of Exhibit H and covering such other matters incident to the transactions
contemplated by this Agreement as the Issuing Bank or any Bank shall reasonably
request.

        (h)   The Issuing Bank shall have received, with an original counterpart
for each Bank, an opinion from special Cayman Islands counsel to N.M.E.
International (Cayman) Limited, dated the Closing Date and addressed to the
Issuing Bank and the Banks, substantially in the form of Exhibit I and covering
such other matters incident to the transactions contemplated by this Agreement
as the Issuing Bank or any Bank shall reasonably request.

        (i)   The Issuing Bank shall have received, with an original counterpart
for each Bank, a certificate of the Sec-

                                     - 21 -

<PAGE>

retary of the Company, dated the Closing Date, as to the articles of
incorporation and bylaws of the Company, no amendments thereto, the adoption by
the board of directors of the Company of the resolutions with respect to the
transactions contemplated hereby and the incumbency and signature of each
officer of the Company authorized to sign this Agreement, the Security Agreement
and the Securities Pledge and Security Agreement and each certificate or other
document to be delivered pursuant to this Agreement, together with evidence of
the incumbency of such Secretary.

        (j)   The Issuing Bank shall have received, with a copy for each Bank, a
copy (in form and substance satisfactory to the Issuing Bank) of the resolutions
of the board of directors of the Company authorizing the execution, delivery and
performance of this Agreement and the Security Agreement and the incurrence of
the obligations hereunder and thereunder, certified to be in full force and
effect without modification by the Secretary of the Company on the Closing Date.

        (k)   The Issuing Bank shall have received, with an original counterpart
for each Bank, a true copy of any consent or approval of any Person which may be
required in connection with the transactions contemplated by this Agreement,
including, without limitation, any consent required under the Overdraft Facility
Agreement and the Advance Account Agreement (as such terms are defined in the
Morgan Credit Agreement).

        (l)   The Company shall have paid all expenses payable by the Company on
or before the Closing Date pursuant to Section 11.03 of this Agreement.

        (m)   The Issuing Bank shall have received a written acknowledgment of
the Lessee and the Company to the effect that (i) each such party consents to
the execution, delivery and performance of this Agreement and all documents,
instruments and agreements relating hereto or delivered herewith, (ii) the Lease
Agreement is and, immediately after the execution and delivery hereof shall be,
in full force and effect, enforceable against the Lessee in accordance with its
terms, (iii) all consents necessary to the enforceability of this Agreement and
exercise of the rights of the Issuing Bank and the Banks hereunder in connection
with the Lease Agreement have been obtained, (iv) the obligations of the Lessee
under the Lease Agreement are absolute and not subject to defenses, offsets or
counterclaims except as, and only to the extent,

                                     - 22 -

<PAGE>

provided for in the Lease Agreement, and (v) on and after the date hereof all
references to the "Reimbursement Agreement" in the Lease Agreement shall be to
this Agreement as the same may from time to time be amended, restated,
supplemented, extended or otherwise modified.

        (n)  The Closing Date (as defined in the Morgan Credit Agreement) shall
have occurred.

        (o)  The Issuing Bank shall have received an amendment to the Series A
L/C, substantially in the form of Exhibit C and an amendment to the Series B
L/C, substantially in the form of Exhibit D, in each case signed by the parties
thereto.

        (p)  The Issuing Bank shall have received a notice from the Company
requesting an extension of the current expiry date of the Letters of Credit.

        (q)   The Issuing Bank shall have received all documents the Issuing
Bank may reasonably request relating to the existence of the Company, the
corporate authority for and the validity of this Agreement, the Security
Agreement and the Securities Pledge and Security Agreement, and any other
matters relevant hereto, all in form and substance satisfactory to the Issuing
Bank.

        On the Closing Date the Original Agreement will be automatically amended
and restated in its entirety to read as set forth herein.  On and after the
Closing Date the rights and obligations of the parties hereto shall be governed
by this Agreement; PROVIDED that the rights and obligations of the parties
hereto with respect to the period prior to the Closing Date shall continue to be
governed by the provisions of the Original Agreement.  The Issuing Bank shall
promptly notify the Company and the Banks of the amendment and restatement of
this Agreement, and such notice shall be conclusive and binding on all parties
hereto.

  SECTION 5.02.    CONDITIONS TO EXTENSIONS OF LETTERS OF CREDIT.

        The obligation of the Issuing Bank to extend the Letters of Credit on
any Extension Date and of the Banks to participate in the Letters of Credit
thereafter is subject to the satisfaction of the following conditions:

                                     - 23 -

<PAGE>

        (a) the fact that the Issuing Bank shall have received a notice from the
Company requesting such extension not more than 90 or less than 30 days prior to
the then current expiry date of the Letters of Credit;

        (b)   the fact that the representations and warranties made by the
Company in this Agreement, the Security Agreement and the Securities Pledge and
Security Agreement or which are contained in any certificate, document or
financial or other statement furnished at any time hereunder or in connection
herewith, will be true and correct on and as of the date of extension of the
Letters of Credit as if made on and as of such date (except that representations
and warranties made with respect to specified dates or periods will be true and
correct as of such specified dates or for such specified periods, as the case
may be); and

        (c)   the fact that no Default or Event of Default will have occurred
and be continuing on the date of extension of such Letters of Credit before or
after giving effect thereto.

Each extension of the Letters of Credit hereunder shall constitute a
representation and warranty by the Company hereunder as of the date of such
extension that the conditions in clauses (a), (b) and (c) of this Section have
been satisfied.

ARTICLE VI.        COVENANTS

  SECTION 6.01.    INCORPORATION BY REFERENCE.

        The Company agrees that, so long as any Commitment remains in effect,
any amount remains available for drawing under any Letter of Credit or any
amount is owing to any Bank or the Issuing Bank hereunder, the Company shall
observe and perform each of its covenants and undertakings set forth in Article
V of the Morgan Credit Agreement and such covenants and undertakings are hereby
incorporated herein by reference.  Defined terms used in Article V of the Morgan
Credit Agreement have the meanings assigned such terms in the Morgan Credit
Agreement; PROVIDED that for purposes of this Section 6.01 (i) the term
"Lenders" shall mean the Banks, (ii) the term "Financing Documents" shall
include this Agreement, the Lease Guaranty and the Letters of Credit, (iii) the
term "Required Lenders" shall mean the Required Banks, (iv) the term "Default"
shall mean a Default as such term is defined herein, and (v) the term
"Administrative Agent" shall mean

                                     - 24 -

<PAGE>

the Issuing Bank.

  SECTION 6.02.    USE OF PROCEEDS, INELIGIBLE SECURITIES.

        The Company shall not, directly or indirectly, use any portion of the
proceeds of the Loans (i) knowingly to purchase Ineligible Securities from a
Section 20 Subsidiary during any period in which such Section 20 Subsidiary
makes a market in such Ineligible Securities, (ii) knowingly to purchase during
the underwriting or placement period Ineligible Securities being underwritten or
privately placed by a Section 20 Subsidiary, or (iii) to make payments of
principal or interest on Ineligible Securities underwritten or privately placed
by a Section 20 Subsidiary and issued by or for the benefit of the Company or
any Affiliate of the Company.

ARTICLE VII.       EVENTS OF DEFAULT

  SECTION 7.01.  EVENTS OF DEFAULT.

        Upon the occurrence of any of the following Events of Default:

        (a)   The Company shall fail to pay when due any Reimbursement
  Obligation, or shall fail to pay any interest on any Reimbursement Obligation,
  any fee payable hereunder or any other amount payable hereunder within three
  Business Days after such interest, fee or other amount becomes due; or

        (b)   Any representation or warranty made or deemed made by the Company
  in this Agreement, the Security Agreement and the Securities Pledge and
  Security Agreement or which is contained in any certificate, document or
  financial or other statement furnished at any time under or in connection with
  this Agreement shall prove to have been incorrect in any material respect on
  or as of the date made or deemed made; or

        (c)   The Company shall default in the observance or performance of any
  agreement or covenant contained in Article VI hereof, Section 4(b) or 5 of the
  Security Agreement or Section 8 of the Securities Pledge and Security
  Agreement; or

        (d)   The Company shall default in the observance or

                                     - 25 -

<PAGE>

  performance of any other agreement or covenant contained in this Agreement,
  the Security Agreement or the Securities Pledge and Security Agreement, and
  such default shall not have been remedied within 30 days; or

        (e)    An Event of Default under and as defined in the Morgan Credit
  Agreement shall have occurred and be continuing; or

        (f)   Any representation or warranty made or deemed made by the Company
  in this Agreement, the Remarketing Agreement, the Lease Guaranty, the
  Indenture or any certificate, financial statement or other document delivered
  pursuant hereto or thereto shall not be Accurate and Complete on any date as
  of which made or deemed made; or

        (g)   Any "Default" or "Event of Default" (as such terms are defined in
  the Bond Documents) shall occur and be continuing under the Bonds, the
  Indenture, the Lease Agreement, or the Lease Guaranty, or any material breach
  shall occur and be continuing under the Remarketing Agreement or any other
  document or instrument executed in connection herewith or therewith
  (collectively, the "BOND DOCUMENTS" and individually, a "BOND DOCUMENT");
  or any party to any Bond Document shall default in the payment when due of any
  principal, interest, rental or other amount due thereunder beyond the period
  of grace, if any, provided in the applicable Bond Document; or default in the
  observance or performance by any party thereto of any other agreement, term or
  condition contained in any Bond Document, if such event is continuing and the
  effect of such event is to cause, or to permit any other party thereto, or any
  holder of debt or obligations evidenced or secured by such Bond Document (or a
  trustee on its behalf) to cause, the principal, interest, rental or other
  amounts due under such Bond Document to become due prior to its stated
  maturity or date of payment; or

        (h)   The Lease Agreement, the Lease Guaranty, or the Indenture shall
  (i) be amended, modified, or otherwise changed, or any default or event of
  default thereunder shall be waived, without the prior written consent of the
  Required Banks, or (ii) shall terminate, either by its terms or by the act of
  any party thereto.

  Section 7.02.    DEFAULT REMEDIES.

        (a)   MANDATORY PAYMENT.  If an Event of Default has

                                     - 26 -

<PAGE>

occurred and is continuing, upon request of the Required Banks, the Issuing Bank
shall direct the Company to make the payment to the Issuing Bank provided for in
Section 2.01(f) hereof.

        (b)   REFUSE TO REINSTATE.  If, prior to 9:00 a.m., New York City
time, on any Purchase Date for any Bond, an Event of Default or Default has
occurred and is continuing, the Issuing Bank may give notice to the Trustee
that, as a consequence of such Event of Default or Default, the Issuing Bank
will not reinstate the Series A L/C or the Series B L/C in the amount of any
draw or draws made thereunder on such Purchase Date, and the Issuing Bank may
instruct the Remarketing Agent by notice, a copy of which shall be promptly
delivered to the Company, to cease remarketing and selling Bonds from and after
the date such notice is received by the Remarketing Agent and until the Issuing
Bank shall have rescinded such instruction in writing.  The Issuing Bank agrees
that if, after giving notice to the Trustee that it will not reinstate either
Letter of Credit in the amount of a draw or draws hereunder, or after giving
instruction pursuant hereto to cease remarketing the Bonds as the result of the
occurrence of an Event of Default or Default, such Event of Default or Default
is no longer in existence and no other Event of Default or Default shall have
occurred and be continuing, the Issuing Bank shall cause each Letter of Credit
to be reinstated in the amount of any such draws, and will give the Trustee and
the Remarketing Agent notice thereof and shall rescind its instructions to cease
remarketing the Bonds.

        (c)   REMEDIES IN GENERAL.  The foregoing rights and remedies are in
addition to all other rights and remedies which the Issuing Bank or the Banks
may have as a matter of law or otherwise.

ARTICLE VIII.      THE ISSUING BANK

  SECTION 8.01.    APPOINTMENT AND AUTHORIZATION.

        Each Bank irrevocably appoints and authorizes the Issuing Bank (i) to
take such action as agent on its behalf and to exercise such powers under this
Agreement, the Security Agreement and the Securities Pledge and Security
Agreement as are delegated to the Issuing Bank by the terms hereof or thereof,
together with all such powers as are reasonably incidental thereto, (ii) to
execute and deliver

                                     - 27 -

<PAGE>

the Securities Pledge and Security Agreement and (iii) to issue the Letters of
Credit, and to enter into any amendments thereto or extensions thereof in
accordance with the terms set forth in this Agreement.

  SECTION 8.02.    ISSUING BANK AND AFFILIATES.

        The Bank of New York shall have the same rights and powers under this
Agreement, the Security Agreement and the Securities Pledge and Security
Agreement as any other Bank and may exercise or refrain from exercising the same
as though it were not the Issuing Bank, and The Bank of New York and its
affiliates may accept deposits from, lend money to, and generally engage in any
kind of business with the Company or any Subsidiary or Affiliate of the Company
as if it were not the Issuing Bank hereunder.

  SECTION 8.03.    ACTION BY ISSUING BANK.

        The obligations of the Issuing Bank under this Agreement and the
Securities Pledge and Security Agreement are only those expressly set forth
herein and therein.  Without limiting the generality of the foregoing, the
Issuing Bank shall not be required to take any action with respect to any
Default, except as expressly provided in Section 7.02.

  SECTION 8.04.    CONSULTATION WITH EXPERTS.

        The Issuing Bank may consult with legal counsel (who may be counsel for
the Company), independent public accountants and other experts selected by it
and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.

  SECTION 8.05.    LIABILITY OF ISSUING BANK.

        Neither the Issuing Bank nor any of its Affiliates nor any of their
respective directors, officers, agents or employees shall be liable for any
action taken or not taken by it in connection herewith (i) with the consent or
at the request of the Required Banks or (ii) in the absence of its own gross
negligence or willful misconduct.  Neither the Issuing Bank nor any of its
Affiliates nor any of their respective directors, officers, agents or employees
shall be responsible for or have any duty to ascertain, inquire into or verify
(i) any statement, warranty or representation made in connection with this
Agreement; (ii) the performance or

                                     - 28 -

<PAGE>

observance of any of the covenants or agreements of the Company; (iii) the
satisfaction of any condition specified in Article V, except receipt of items
required to be delivered to the Issuing Bank; or (iv) the validity,
effectiveness or genuineness of this Agreement, the Security Agreement, the
Securities Pledge and Security Agreement, or any other instrument or writing
furnished in connection herewith.  The Issuing Bank shall not incur any
liability by acting in reliance upon any notice, consent, certificate,
statement, or other writing (which may be a bank wire, telex, facsimile
transmission or similar writing) believed by it to be genuine or to be signed by
the proper party or parties.

  SECTION 8.06.    INDEMNIFICATION.

        Each Bank shall, ratably in accordance with its  Commitment, indemnify
the Issuing Bank, its affiliates and their respective directors, officers,
agents and employees (to the extent not promptly reimbursed by the Company)
against any cost, expense (including counsel fees and disbursements), claim,
demand, action, loss or liability (except such as result from such indemnitees'
gross negligence or willful misconduct) that such indemnitees may suffer or
incur in connection with this Agreement, the Security Agreement or the
Securities Pledge and Security Agreement or any action taken or omitted by such
indemnitees hereunder or thereunder.

  SECTION 8.07.    CREDIT DECISION.

        Each Bank acknowledges that it has, independently and without reliance
upon the Issuing Bank or any other Bank, and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement.  Each Bank also acknowledges that it
will, independently and without reliance upon the Issuing Bank or any other
Bank, 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
any action under this Agreement.

  SECTION 8.08.    ISSUING BANK'S FEE.

        The Company shall pay to the Issuing Bank for its own account fees in
the amounts and at the times previously agreed upon between the Company and the
Issuing Bank.

                                     - 29 -

<PAGE>

ARTICLE IX.        THE COLLATERAL AGENT

  SECTION 9.01.    APPOINTMENT AND AUTHORIZATION.

        Each Bank irrevocably appoints and authorizes the Collateral Agent to
take such action as agent on its behalf and to exercise such powers under the
Security Agreement as are delegated to the Collateral Agent by the terms
thereof, together with all such powers as are reasonably incidental thereto.

  SECTION 9.02.    COLLATERAL AGENT AND AFFILIATES.

        Morgan Guaranty Trust Company of New York shall have the same rights and
powers under this Agreement, the Security Agreement and the Securities Pledge
and Security Agreement as any other Bank and may exercise or refrain from
exercising the same as though it were not the Collateral Agent, and Morgan
Guaranty Trust Company of New York and its affiliates may accept deposits from,
lend money to, and generally engage in any kind of business with the Company or
any Subsidiary or Affiliate of the Company as if it were not the Collateral
Agent under the Security Agreement.

  SECTION 9.03.    ACTION BY COLLATERAL AGENT.

        The obligations of the Collateral Agent under the Security Agreement are
only those expressly set forth therein.  Without limiting the generality of the
foregoing, the Collateral Agent shall not be required to take any action with
respect to any Default, except as expressly provided in Section 14(a) of the
Security Agreement.

  SECTION 9.04.    CONSULTATION WITH EXPERTS.

        The Collateral Agent may consult with legal counsel (who may be counsel
for the Company), independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken by it in
good faith in accordance with the advice of such counsel, accountants or
experts.

  SECTION 9.05.    LIABILITY OF COLLATERAL AGENT.

        Neither the Collateral Agent nor any of its affiliates nor any of their
respective directors, officers, agents or employees shall be liable for any
action taken or not taken by it in connection with the Security Agreement (i)
with the

                                     - 30 -

<PAGE>

consent or at the request of the Required Lenders or the Required Secured
Parties (as such terms are defined in the Security Agreement) or (ii) in the
absence of its own gross negligence or willful misconduct.  Neither the
Collateral Agent nor any of its affiliates nor any of their respective
directors, officers, agents or employees shall be responsible for or have any
duty to ascertain, inquire into or verify (i) any statement, warranty or
representation made in connection with this Agreement or any Letter of Credit
issued hereunder; (ii) the performance or observance of any of the covenants or
agreements of the Company; (iii) the satisfaction of any condition specified in
Article V; or (iv) the validity, effectiveness or genuineness of this Agreement,
the Securities Pledge and Security Agreement, the Security Agreement or any
other instrument or writing furnished in connection herewith.  The Collateral
Agent shall not incur any liability by acting in reliance upon any notice,
consent, certificate, statement, or other writing (which may be a bank wire,
telex, facsimile transmission or similar writing) believed by it to be genuine
or to be signed by the proper party or parties.

  SECTION 9.06.    SUCCESSOR COLLATERAL AGENT.

        The Collateral Agent may resign, and a successor Collateral Agent may be
appointed at any time as provided in Section 14 of the Security Agreement.
After any retiring Collateral Agent's resignation under the Security Agreement
as Collateral Agent, the provisions of this Article shall inure to the benefit
of the Collateral Agent as to any actions taken or omitted to be taken by it
while it was Collateral Agent.

ARTICLE X.    CHANGE IN CIRCUMSTANCES

  SECTION 10.01.     ILLEGALITY.

        If, on or after the date of this Agreement, the adoption of any
applicable law, rule or regulation, or any change in any applicable law, rule or
regulation, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Bank  with any
request or directive (whether or not having the force of law) of any such
authority, central bank or comparable agency, shall in the reasonable opinion of
counsel to the Issuing Bank, make it

                                     - 31 -

<PAGE>

unlawful or impossible for the Issuing Bank to issue or maintain any portion of
the Letters of Credit or to make L/C Payments, then the Issuing Bank may
instruct the Company and the Remarketing Agent to cease remarketing the Bonds.
If individual employees of the Issuing Bank with knowledge of this Section 10.01
become aware of pending legislation, or executive or administrative action,
which such employees know will cause the issuance or maintenance of any portion
of the Letters of Credit, or the making of L/C Payments, to become unlawful, the
Issuing Bank will promptly notify the Company of such pending matter;
PROVIDED, however, the Issuing Bank will have no liability, and is hereby
fully and completely released from any liability or damage, for failure to
comply with this sentence.

  SECTION 10.02.     TAXES.

        (a)   For purposes of this Section 10.02, the following terms have the
following meanings:

        "TAXES" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by the
Company pursuant to this Agreement and all liabilities with respect thereto,
EXCLUDING (i) in the case of each Bank, taxes imposed on its income, and
franchise or similar taxes imposed on it, by a jurisdiction under the laws of
which such Bank is organized or in which its principal executive office is
located or, in the case of each Bank, in which its Applicable Credit Office is
located and (ii) in the case of each Bank, any United States withholding tax
imposed on such payments but only to the extent that such Bank is subject to
United States withholding tax at the time such Bank first becomes a party to
this Agreement.

        "OTHER TAXES" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to this Agreement or from the execution or
delivery of, or otherwise with respect to, this Agreement.

        (b)   Any and all payments by the Company to or for the account of any
Bank or the Issuing Bank hereunder shall be made without deduction for any Taxes
or Other Taxes; PROVIDED that, if the Company shall be required by law to
deduct any Taxes or Other Taxes from any such payments, (i) the sum payable
shall be increased as necessary so that after making all required deductions
(including deductions applicable to ad-

                                     - 32 -

<PAGE>

ditional sums payable under this Section 10.02) such Bank or the Issuing Bank
(as the case may be) receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Company shall make such deductions,
(iii) the Company shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and (iv) the
Company shall furnish to the Issuing Bank, at its address referred to in Section
11.01, the original or a certified copy of a receipt evidencing payment thereof.

        (c)   The Company agrees to indemnify each Bank and the Issuing Bank for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable
under this Section 11.02) paid by such Bank or the Issuing Bank (as the case may
be) and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto.  This indemnification shall be paid within 15
days after such Bank or the Issuing Bank (as the case may be) makes demand
therefor.

        (d)    Each Bank organized under the laws of a jurisdiction outside the
United States, on or prior to the date on which it becomes a Bank, and from time
to time thereafter if requested in writing by the Company (but only so long as
such Bank remains lawfully able to do so), shall provide the Company and the
Issuing Bank with Internal Revenue Service form 1001 or 4224, as appropriate, or
any successor form prescribed by the Internal Revenue service, certifying that
such Bank is entitled to benefits under an income tax treaty to which the United
States is a party which exempts such Bank from United States withholding tax or
reduces the rate of withholding tax on payments of interest for the account of
such Bank or certifying that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or business in the United
States.

        (e)   For any period with respect to which a Bank has failed to provide
the Company and the Issuing Bank with the appropriate form pursuant to Section
10.02(d) (unless such failure is due to a change in treaty, law or regulation
occurring subsequent to the date on which such form originally was required to
be provided), such Bank shall not be entitled to indemnification under Section
10.02(b) or (c) with respect to Taxes imposed by the United States; PROVIDED
that if a Bank, which is otherwise exempt from or subject to a reduced rate of
withholding tax, becomes subject to Taxes

                                     - 33 -

<PAGE>

because of its failure to deliver a form required hereunder, the Company shall
take such steps as such Bank shall reasonably request to assist such Bank to
recover such Taxes.

        (f)   If the Company is required to pay additional amounts to or for the
account of any Bank pursuant to this Section 10.02, then such Bank will change
the jurisdiction of its Applicable Credit Office if, in the judgment of such
Bank, such change (i) will eliminate or reduce any such additional payment which
may thereafter accrue and (ii) is not otherwise disadvantageous to such Bank.

  SECTION 10.03.     CAPITAL ADEQUACY.

        (a)   If any Bank shall have determined that, after the date hereof, the
adoption of any applicable law, rule or regulation regarding capital adequacy,
or any change in any such law, rule or regulation, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or any request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or comparable
agency, has or would have the effect of reducing the rate of return on capital
of such Bank (or its Parent) as a consequence of such Bank's obligations
hereunder to a level below that which such Bank (or its Parent) could have
achieved but for such adoption, change, request or directive (taking into
consideration its policies with respect to capital adequacy) by an amount deemed
by such Bank to be material, then from time to time, within 15 days after demand
by such Bank (with a copy to the Issuing Bank), the Company shall pay to such
Bank such additional amount or amounts as will compensate such Bank (or its
Parent) for such reduction.

        (b)   Each Bank will promptly notify the Company and the Issuing Bank of
any event of which it has knowledge, occurring after the date hereof, which will
entitle such Bank to compensation pursuant to this Section and will designate a
different Applicable Credit Office if such designation will avoid the need for,
or reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank.  A certificate of any Bank
claiming compensation under this Section and setting forth the additional amount
or amounts to be paid to it hereunder shall be conclusive in the absence of
manifest error.  In determining such amount, such Bank may use any reasonable
averaging and attribution methods.

                                     - 34 -

<PAGE>

  SECTION 10.04.     ISSUING BANK AS BANK.

        For all purposes of Article X, the term "Bank" shall include the Issuing
Bank.

ARTICLE XI.        MISCELLANEOUS

  SECTION 11.01.     NOTICES.

        All notices, requests and other communications to any party hereunder
shall be in writing (including bank wire, telex, facsimile transmission or
similar writing) and shall be given to such party: (x) in the case of the
Company or the Issuing Bank, at its address, facsimile number or telex number
set forth on the signature pages hereof, (y) in the case of any Bank, at its
address, facsimile number or telex number set forth in its Administrative
Questionnaire or (z) in the case of any party, such other address, facsimile
number or telex number as such party may hereafter specify for the purpose by
notice to the Issuing Bank and the Company.  Each such notice, request or other
communication shall be effective (i) if given by telex, when such telex is
transmitted to the telex number specified in this Section and the appropriate
answerback is received, (ii) if given by facsimile transmission, when
transmitted to the facsimile number specified in this Section and confirmation
of receipt is received, (iii) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid or (iv) if given by any other means, when delivered at
the address specified in this Section; PROVIDED that notices to the Issuing
Bank under Article II or Article VII shall not be effective until received.

  SECTION 11.02.     NO WAIVERS.

        No failure or delay by the Issuing Bank or any Bank in exercising any
right, power or privilege hereunder or under the Securities Pledge and Security
Agreement or any other document or agreement delivered in connection herewith or
therewith shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.  The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.

                                     - 35 -

<PAGE>

  SECTION 11.03.     EXPENSES; INDEMNIFICATION.

        (a)   The Company shall pay (i) all out-of-pocket expenses of the
Issuing Bank, including fees and disbursements of counsel, in connection with
the preparation and administration of this Agreement, any waiver or consent
hereunder or any amendment hereof or any Default or alleged Default hereunder
and  (ii) if an Event of Default occurs, all out-of-pocket expenses incurred by
the Issuing Bank and each Bank, including (without duplication) the fees and
disbursements of counsel and the allocated cost of internal counsel, in
connection with such Event of Default and collection, bankruptcy, insolvency and
other enforcement proceedings resulting therefrom.

        (b)   The Company agrees to indemnify the Issuing Bank, each Bank, their
respective affiliates and the respective directors, officers, agents and
employees of the foregoing (each an "INDEMNITEE") and hold each Indemnitee
harmless from and against any and all liabilities, claims, losses, damages,
costs and expenses of any kind, including, without limitation, the reasonable
fees and disbursements of counsel, which may be incurred by such Indemnitee in
connection with any investigative, administrative or judicial proceeding
(whether or not such Indemnitee shall be designated a party thereto) brought or
threatened relating to or arising out of this Agreement or the Letters of Credit
or any actual or proposed use of the proceeds of drawings under the Letters of
Credit; PROVIDED that no Indemnitee shall have the right to be indemnified
hereunder for such Indemnitee's own gross negligence or willful misconduct as
determined by a court of competent jurisdiction.

  SECTION 11.04.     SHARING OF SET-OFFS.

        Each Bank agrees that if it shall, by exercising any right of set-off or
counterclaim or otherwise, receive payment of a proportion of the aggregate
amount of principal and interest due with respect to any Reimbursement
Obligation held by it which is greater than the proportion received by any other
Bank in respect of the aggregate amount of principal and interest due with
respect to any  Reimbursement Obligation held by such other Bank, the Bank
receiving such proportionately greater payment shall purchase such
participations in the Reimbursement Obligations held by the other Banks, and
such other adjustments shall be made, as may be required so that all such
payments of principal and interest with respect to the Reimbursement Obligations
held

                                     - 36 -

<PAGE>

by the Banks shall be shared by the Banks pro rata; PROVIDED that nothing in
this Section shall impair the right of any Bank to exercise any right of set-off
or counterclaim it may have and to apply the amount subject to such exercise to
the payment of indebtedness of the Company other than its indebtedness
hereunder.  The Company agrees, to the fullest extent it may effectively do so
under applicable law, that any holder of a participation in a Reimbursement
Obligation, whether or not acquired pursuant to the foregoing arrangements, may
exercise rights of set-off or counterclaim and other rights with respect to such
participation as fully as if such holder of a participation were a direct
creditor of the Company in the amount of such participation.

  SECTION 11.05.     AMENDMENTS AND WAIVERS.

        (a)  Any provision of this Agreement may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the Company,
the Required Banks and the Issuing Bank; PROVIDED that no such amendment or
waiver shall, unless signed by all the Banks, (i) increase or decrease any
Commitment of any Bank (except for a ratable decrease in the corresponding
Commitments of all Banks) or subject any Bank to any additional obligation, (ii)
reduce the principal of or rate of interest on any Reimbursement Obligation, any
interest thereon or any fees hereunder, (iii) postpone the date fixed for any
payment of any Reimbursement Obligation or any fees hereunder or for the
expiration of any Letter of Credit or the termination of any Commitment, (iv)
release any Bonds from the lien of the Securities Pledge and Security Agreement,
(v) waive any condition specified in Section 5.01, (vi) waive any provision
hereof requiring payments to the Banks to be made ratably or (vii) change the
percentage of the Commitments or of the aggregate unpaid principal amount of
Reimbursement Obligations, or the number of Banks, which shall be required for
the Banks or any of them to take any action under this Section or any other
provision of this Agreement; PROVIDED that (x) no amendment or waiver which
would change any of the material obligations of the Issuing Bank (solely in its
capacity as issuer of the Letters of Credit) to the Trustee or would change the
obligations of the Issuing Bank under the last sentence of Section 11.06(c)
shall be effective unless (1) at least 30 days prior written notice of such
amendment or waiver shall have been provided to Moody's Investors Service, Inc.
and Standard and Poor's Ratings Group or (2) the Issuing Bank shall have
received the written confirmation from Moody's Investors Service, Inc. and
Standard and Poor's Ratings Group

                                     - 37 -

<PAGE>

that such amendment or waiver will not result in a withdrawal or reduction in
the rating of the Bonds and (y) no amendment or waiver (including without
limitation any such amendment or waiver described in clause (b) below) shall be
effective unless a copy of such amendment or waiver substantially in the form to
be entered into by the parties hereto shall have been provided to the Trustee at
least five Business Days prior to the effectiveness of such amendment or waiver
(unless the Trustee shall have expressly waived such requirement).

        (b) Any amendment or waiver of any provision of Articles IV and V (or
any related definition) of the Morgan Credit Agreement shall be effective for
purposes of Articles IV and VI of this Agreement if signed by the Company and
the Required Banks hereunder in their respective capacities as "Lenders" under
the Morgan Credit Agreement.

  SECTION 11.06.     SUCCESSORS AND ASSIGNS.

        (a)   The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Company may not assign or otherwise transfer any of its
rights under this Agreement without the prior written consent of all Banks.

        (b)   Any Bank may at any time grant to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in its Commitment
or any or all of its Reimbursement Obligations.  In the event of any such grant
by a Bank of a participating interest to a Participant, whether or not upon
notice to the Company and the Issuing Bank, such Bank shall remain responsible
for the performance of its obligations hereunder, and the Company and the
Issuing Bank shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under this Agreement, the
Security Agreement and the Securities Pledge and Security Agreement.  Any
agreement pursuant to which any Bank may grant such a participating interest
shall provide that such Bank shall retain the sole right and responsibility to
enforce the obligations of the Company under this Agreement, the Security
Agreement and the Securities Pledge and Security Agreement including, without
limitation, the right to approve any amendment, modification or waiver of any
provision of this Agreement, the Security Agreement or the Securities Pledge and
Security Agreement; PROVIDED that such participation agreement may provide
that

                                     - 38 -

<PAGE>

such Bank will not agree to any modification, amendment or waiver of this
Agreement described in clause (i), (ii), (iii) or (iv) of Section 11.05(a)
without the consent of the Participant.  The Company agrees that each
Participant shall, to the extent provided in its participation agreement, be
entitled to the benefits of Article X with respect to its participating
interest.  An assignment or other transfer which is not permitted by subsection
(c) or (d) below shall be given effect for purposes of this Agreement only to
the extent of a participating interest granted in accordance with this
subsection (b).

        (c)   Any Bank may at any time assign to one or more banks or other
institutions (each an "ASSIGNEE") all, or a proportionate part (equivalent to
an initial Commitment of not less than $10,000,000) of all of its rights and
obligations under this Agreement and such Assignee shall assume such rights and
obligations, pursuant to an Assignment and Assumption Agreement in substantially
the form of Exhibit J hereto executed by such Assignee and such transferor Bank,
with (and subject to) the subscribed consent of the Issuing Bank (but without
the Company's consent); PROVIDED that no such consent shall be required if (i)
the Assignee is an Affiliate of the transferor Bank and is of a credit quality
equal to or better than the credit quality of the transferor Bank or (ii) the
Assignee was a Bank immediately prior to such assignment.  Upon execution and
delivery of such instrument and payment by such Assignee to such transferor Bank
of an amount equal to the purchase price agreed between such transferor Bank and
such Assignee, such Assignee shall be a Bank party to this Agreement and shall
have all the rights and obligations of a Bank with a Commitment as set forth in
such instrument of assumption, and the transferor Bank shall be released from
its obligations hereunder to a corresponding extent, and no further consent or
action by any party shall be required.  In connection with any such assignment,
the transferor Bank shall pay to the Issuing Bank an administrative fee for
processing such assignment in the amount of $2,500.  If the Assignee is not
incorporated under the laws of the United States or a state thereof, it shall
deliver to the Company and the Issuing Bank certification as to exemption from
deduction or withholding of any United States federal income taxes in accordance
with Section 10.02.  Notwithstanding the foregoing, the Issuing Bank shall not
assign any of its rights or obligations hereunder unless (i) it shall have
provided at least 30 days prior written notice to Moody's Investors Service,
Inc. and Standard and Poor's Ratings Group or (ii) it shall have received
written

                                     - 39 -

<PAGE>

confirmation from Moody's Investors Service, Inc. and Standard and Poor's
Ratings Group that the credit rating assigned to the Bonds by Moody's Investors
Service, Inc. and Standard and Poor's Ratings Group, respectively, will not be
reduced or withdrawn as a result of such assignment.

        (d)   Any Bank may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank.  No such assignment shall
release the transferor Bank from its obligations hereunder.

        (e)   No Assignee, Participant or other transferee of any Bank's rights
shall be entitled to receive any greater payment under Section 10.02 than such
Bank would have been entitled to receive with respect to the rights transferred,
unless such transfer is made with the Company's prior written consent or by
reason of the provisions of Section 10.02 requiring such Bank to designate a
different Applicable Credit Office under certain circumstances or at a time when
the circumstances giving rise to such greater payment did not exist.

  SECTION 11.07.     COLLATERAL.

        Each of the Banks represents to the Issuing Bank and each of the other
Banks that it in good faith is not relying upon any Margin Stock as collateral
in the extension or maintenance of the credit provided for in this Agreement.

  SECTION 11.08.     GOVERNING LAW; SUBMISSION TO JURISDICTION.

        THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.  THE COMPANY HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
SECURITY AGREEMENT, THE SECURITIES PLEDGE AND SECURITY AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.  THE COMPANY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.

  SECTION 11.09.     COUNTERPARTS; INTEGRATION.

        This Agreement may be signed in any number of coun-

                                     - 40 -

<PAGE>

terparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.  This Agreement
constitutes the entire agreement and understanding among the parties hereto and
supersedes any and all prior agreements and understandings, oral or written,
relating to the subject matter hereof.

  SECTION 11.10.     WAIVER OF JURY TRIAL.

        EACH OF THE COMPANY, THE ISSUING BANK AND THE BANKS HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

                                     - 41 -

<PAGE>

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

                     NATIONAL MEDICAL ENTERPRISES, INC.

                     By: /S/ TERENCE P. MCMULLEN
                         ----------------------------
                     Title:  Senior Vice President

                     2700 Colorado Avenue
                     Santa Monica, California 90404
                     Attn: Treasurer
                     Telecopy: (310) 998-6507

                     with a copy to:

                     Attn:  General Counsel
                     Telecopy: (310) 998-6688

                     BANK OF AMERICA NATIONAL TRUST
                      AND SAVINGS ASSOCIATION

                     By: /S/ WYATT R. RITCHIE
                         ----------------------------
                     Title:  Vice President

                     MORGAN GUARANTY TRUST COMPANY
                      OF NEW  YORK

                     By: /S/ ROBERT M. OSIESKI
                         ----------------------------
                     Title: Vice President

                                     - 42 -

<PAGE>

                     BANKERS TRUST COMPANY

                     By: /S/ MARY JO JOLLY
                         ----------------------------
                     Title: Assistant Vice President

                     THE BANK OF NEW YORK, as a Bank

                     By: /S/ LISA BROWN
                         ----------------------------
                     Title: Vice President

                     THE BANK OF NEW YORK, as Issuing Bank

                     By: /S/ LISA BROWN
                         ----------------------------
                     Title: Vice President

                     101 Barclay Street
                     New York, New York  10286
                     Attn: SBLC Department
                     Telecopy: (212) 815-2829

                                     - 43 -

<PAGE>

                                                                EXHIBIT A

                     FORM OF SERIES A LETTER OF CREDIT

OUR REFERENCE NO.:              DATE:
S00031638            December 6, 1994

Texas Commerce Bank National
 Association, Trustee
600 Travis, Suite 1150
Houston, TX  77002
Attention:  Corporate Trust
        Administration
      Account No. 60730-00

Ladies and Gentlemen:

I.    At the request and for the account of National Medical Enterprises, Inc.
(the "COMPANY"), The Bank of New York (the "BANK") hereby irrevocably
establishes in favor of Texas Commerce Bank National Association (the
"TRUSTEE") for the benefit of the holders of the Series A Bonds referred to
below, this direct pay Series A Letter of Credit in an aggregate amount of US
$68,600,000 (SIXTY EIGHT MILLION SIX HUNDRED THOUSAND) AND 00/100 U.S. DOLLARS)
(as adjusted pursuant to paragraphs 4 and 5 hereof, the "STATED AMOUNT"),
available from time to time in respect of the face amount of Series A 1989 Bonds
in the aggregate principal amount of $68,600,000 (the "SERIES A BONDS") issued
by the Metrocrest Hospital Authority ("MHA") pursuant to and in accordance
with the Amended and Restated Indenture of Mortgage and Deed of Trust dated as
of November 1, 1994 (the "INDENTURE") executed by MHA in favor of the Trustee.

II.   Funds under this Letter of Credit are available to

         (i)   the Trustee, with respect to a drawing made for the payment of
the principal, at maturity, by redemption, upon acceleration under Section 10.02
of the Indenture or otherwise, of the Series A Bonds (a "PRINCIPAL DRAWING"),
against the sight draft(s) of the Trustee, accompanied by a written certificate
purportedly signed by an authorized officer of the Trustee in the form of Annex
I attached hereto, appropriately completed; and

         (ii)  the Trustee, with respect to the payment of the

<PAGE>

purchase price of the Series A Bonds purchased by the Tender Agent (as such term
is defined in the Indenture) for the account of the Company pursuant to Section
7.01 of the Indenture (a "TENDER DRAWING"), against the sight draft(s) of the
Trustee, accompanied by a written certificate purportedly signed by an
authorized officer of the Trustee in the form of Annex II attached hereto,
appropriately completed.  In connection with any Tender Drawing, Series A Bonds
in aggregate principal amount equal to the amount of the sight draft presented
by the Trustee in respect of any such drawing shall be delivered by the Trustee
to the Bank or its agent or designee as promptly as practicable, and in any
event within three (3) days, after any such Tender Drawing if, prior to such
delivery, such Series A Bonds have not been resold by the Remarketing Agent (as
such term is defined in the Indenture).

      Drafts drawn under this Letter of Credit shall state on their face "Drawn
under The Bank of New York Irrevocable Letter of Credit No. S00031638 dated
December 6, 1994".  Presentation of each draft and certificate required
hereunder must be made at the Bank's office located at 101 Barclay Street, New
York, New York 10286, Attention:  Manager, Standby Letter of Credit Dept., Floor
8 East, not later than April 5, 1995 (the "FINAL EXPIRATION DATE").

      All drawings under this Letter of Credit shall be paid only with funds of
the Bank and not from any payments made by the Company to the Bank.

III.  The Bank hereby agrees that all drafts drawn under and in compliance with
the terms of this Letter of Credit will be duly honored by the Bank upon
delivery of the documents, as specified, if presented at such office on or
before the Final Expiration Date, unless this Letter of Credit is terminated
earlier as provided in paragraph 9 hereof.  If a drawing in respect of payment
is made hereunder at or prior to 10:00 a.m., New York City time, on a Business
Day, and provided that such drawing and the documents presented in connection
therewith conform to the terms and conditions hereof, payment shall be made of
the amount specified, in immediately available funds, not later than the close
of business on such Business Day.  If a drawing is made after 10:00 a.m., New
York City time, on a Business Day, and provided that such drawing and the
documents presented in connection therewith conform to the terms and conditions
hereof, payment shall be made of the amount specified not later than 12:00 noon,
New York City time, on the next succeeding Business Day.  Payment under this
Letter of Credit to the Trustee shall be transferred by fed wire transfer to
Account No. 7001109635800, at

                                      - 2 -

<PAGE>

Texas Commerce Bank - Houston, ABA #1130-00609, Attention:  Ms. Donna Edmundson.
For purposes of this Letter of Credit, "BUSINESS DAY" shall mean any day other
than (i) a Saturday or Sunday or (ii) a legal holiday or the equivalent on which
banking institutions are generally authorized or required to close in New York,
New York or in the city in which is located (a) the principal corporate trust
office of the Trustee, the Tender Agent (as defined in the Indenture) or the
principal office of the Remarketing Agent (as defined in the Indenture) or (b)
the office of the Issuing Bank or of its agent at which drafts or claims for
payment under the Letter of Credit are to be presented, or (iii) a day on which
the New York Stock Exchange is closed.

IV.   Multiple drawings may be made hereunder, provided that, subject to
paragraph 5 hereof, each drawing honored by the Bank hereunder shall PRO
TANTO reduce the amount available under this Letter of Credit.  Payments made
in respect of any drawing (whether or not complying with the terms of this
Letter of Credit) which have been deposited in any account specified in
paragraph 3 hereof (or which have been received by the Trustee in another
account specified by the recipient for such payment) shall automatically reduce
the amount which the Trustee may draw hereunder, notwithstanding any acts or
omissions, whether authorized or unauthorized, of the Trustee, or any officer,
director, employee or agent of the Trustee in connection with any drawing
hereunder or the proceeds thereof or otherwise in connection with this Letter of
Credit.

V.    Upon payment by the Bank of a Tender Drawing on any Purchase Date (as
defined in the Indenture) for the purchase by the Company of any Series A Bond
or Bonds, the amount available under this Letter of Credit shall be
automatically reinstated, in the amount of such payment and as to such Series A
Bond or Bonds, unless (i) prior to 9:00 a.m., New York City time, on such
Purchase Date, the Trustee and the Remarketing Agent receive telephonic notice
from the Bank, confirmed in writing at any time on the same day, that a Default
or Event of Default (as such terms are defined in the Reimbursement Agreement)
has occurred and is continuing under the  Letter of Credit and Reimbursement
Agreement, dated as of November 1, 1994, among the Company, the banks party
thereto and the Bank, as issuing bank and agent (the "REIMBURSEMENT
AGREEMENT"), that the Remarketing Agent is to cease remarketing the Bonds and
that the Letter of Credit will not be reinstated except as provided in Section
7.04B of the Indenture; or (ii) on any such date, there is in effect one or more
letters of credit, or similar facilities providing credit and liquidity support,
accepted by the Trustee before such date in substitution for this Letter of
Credit.

                                      - 3 -

<PAGE>

VI.   Only the Trustee may make a drawing under this Letter of Credit.  Upon
payment to the Trustee, as provided in paragraph 3 hereof, of the amount
specified in any sight draft(s) drawn hereunder, the Bank shall be fully
discharged of the Bank's obligation under this Letter of Credit with respect to
such sight draft(s), and the Bank shall not thereafter be obligated to make any
further payments under this Letter of Credit in respect of such sight draft(s)
to the Trustee or any other person who makes or who may have made to the Trustee
a demand for payment of principal of, redemption price of, or Purchase Price (as
such term is defined in the Indenture) of, any Series A Bond.

VII.  This Letter of Credit may not be drawn against for payment of principal
of, redemption price of, or Purchase Price of any Series A Bond which is owned
by MHA, the Company, NME Hospitals, the Corporation or any Guarantor (as such
terms are defined in the Indenture).

VIII.    This Letter of Credit is effective immediately and shall expire at 5:00
p.m., New York City time, on the Final Expiration Date, unless terminated
earlier pursuant to Section 9 or unless the Final Expiration Date is extended by
the Bank by delivering to the Trustee a Notice of Extension in the form of Annex
IV hereto.  The Bank may deliver to the Trustee a new Letter of Credit in
exchange herefor, or an amendment hereto, to reflect any such extension.

IX.   This Letter of Credit shall automatically terminate, and shall be
delivered to the Bank for cancellation, upon the earliest to occur of the
following events:

      (i)      the payment by the Bank of the final drawing available to be made
               hereunder which is not subject to reinstatement;

      (ii)     the Bank's receipt of a certificate purportedly signed by a duly
               authorized officer of the Trustee and a duly authorized officer
               of the Company stating that:

                     "The undersigned, ______________________, a duly authorized
                     officer of Texas Commerce Bank National Association, and
                     _______________, a duly authorized officer of National
                     Medical Enterprises, Inc., state that no Series A Bonds
                     remain Outstanding under the Indenture and (ii) upon
                     receipt by The Bank of New York of this Certificate, The
                     Bank of New York Irrevocable

                                      - 4 -

<PAGE>

                     Letter of Credit No. S00031638 shall terminate.";

       (iii)   5:00 p.m., New York City time, on the Final Expiration Date, as
               the same may be extended from time to time.

X.    This Letter of Credit, unless otherwise expressly stated, is subject to
the terms and provisions of the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication 500 (the
"UNIFORM CUSTOMS"), including the provisions thereof providing that parties
may expressly agree to terms and provisions other than as provided in the
Uniform Customs, and, to the extent not inconsistent with the Uniform Customs,
shall be governed by the laws of the State of New York, including without
limitation, Article 5 of the Uniform Commercial Code as in effect in the State
of New York.  Communications with respect to this Letter of Credit shall be in
writing and shall be addressed to the Bank at 101 Barclay Street, New York, New
York 10286, Telecopier:  (212) 349-3955, Telephone:  (212) 815-3429, Attention:
Manager, Standby Letter of Credit Dept., Floor 8 East, specifically referring
thereon to "The Bank of New York Irrevocable Letter of Credit No. S00031638".

XI.   This Letter of Credit is transferable in its entirety (but not in part) to
any transferee who has succeeded to the Trustee under the Indenture.  Transfer
of the available drawing(s) under this Letter of Credit to any such transferee
shall be effected by the presentation to the Bank of this original Letter of
Credit and any amendments for endorsement thereof on such transfer accompanied
by a transfer letter in the form attached hereto as Annex III purportedly signed
by an authorized officer of the Trustee and an authorized officer of such
transferee.

XII.  This Letter of Credit sets forth in full the Bank's undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited by
reference to any document, instrument or agreement referred to herein
(including, without limitation, the Series A Bonds), except only the
certificate(s), sight draft(s), Notice(s) of Extension and transfer letter(s)
referred to herein; and any such reference shall not be deemed to incorporate
herein by reference any document, instrument or agreement except for such
certificate(s), sight draft(s), Notice(s) of Extension and transfer letter(s).

XIII.    The Bank has no responsibility for determining (a) the genuineness of
any documents or certificates presented in accordance herewith or (b) the
authority of any officers or

                                      - 5 -

<PAGE>

purported officers who execute and deliver such documents or certificates.

                                        Very truly yours,

                                        Authorized Signature

                                      - 6 -

<PAGE>

                                  ANNEX I TO
                           SERIES A LETTER OF CREDIT

                       CERTIFICATE FOR PRINCIPAL DRAWING

      The undersigned, Texas Commerce Bank National Association (the
"TRUSTEE"), hereby certifies to The Bank of New York (the "BANK"), with
reference to Irrevocable Letter of Credit No. S00031638 (the "LETTER OF
CREDIT") issued by the Bank in favor of the Trustee, that:

      (1)      The Trustee is the Trustee under the Amended and Restated
Indenture of Mortgage and Deed of Trust dated as of November 1, 1994 (the
"INDENTURE"), executed by the Metrocrest Hospital Authority in favor of the
Trustee.

      (2)      The Trustee is making a drawing under the Letter of Credit with
respect to the payment of the principal of certain Series A Bonds pursuant to
Section 4.01 of the Indenture.

      (3)      The principal amount of the Series A Bonds in respect of which
this draw is made is $_______________, and the amount of the sight draft
accompanying this Certificate does not exceed such amount.

      (4)      The amount of the sight draft accompanying this Certificate,
together with the aggregate of all prior payments made pursuant to Principal
Drawings under the Letter of Credit does not exceed $68,600,000.00.

      (5)      The amount of the sight draft accompanying this Certificate was
computed in accordance with the terms and conditions of the Series A Bonds and
the Indenture and does not exceed the amount available on the date hereof to be
drawn under the Letter of Credit in respect of the Series A Bonds.

      Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.

<PAGE>

      IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ___ day of ___________, 19__.

                                        TEXAS COMMERCE BANK
                                        NATIONAL ASSOCIATION, TRUSTEE

                                        By:____________________________
                                        Title: ________________________

                                        2

<PAGE>

                                  ANNEX II TO
                           SERIES A LETTER OF CREDIT

                        CERTIFICATE FOR TENDER DRAWING

      The undersigned, Texas Commerce Bank National Association (the
"TRUSTEE"), hereby certifies to The Bank of New York (the "BANK"), with
reference to Irrevocable Letter of Credit No. S00031638 (the "LETTER OF
CREDIT") issued by the Bank in favor of the Trustee, as trustee under the
Amended and Restated Indenture of Mortgage and Deed of Trust dated as of
November 1, 1994 (the "INDENTURE") executed by the Metrocrest Hospital
Authority in favor of the Trustee, that:

      (1)      The Trustee is the Trustee under the Indenture.

      (2)      The Trustee is making a drawing in the amount of $_______________
under the Letter of Credit to pay the Purchase Price of Series A Bonds purchased
for the account of the Company pursuant to Section 4.04 of the Indenture and
will cause to be delivered to the Bank, pursuant to that certain Securities
Pledge and Security Agreement, dated as of November 1, 1994, within three (3)
days after the date of this Certificate, Series A Bonds having an aggregate face
amount equal to $_____________ if such Bonds are not resold by the Remarketing
Agent prior to that time.

      (3)      The amount of the sight draft accompanying this Certificate does
not exceed the amount of the Purchase Price that is due and payable on the date
the draft accompanying this Certificate is payable with respect to such Series A
Bonds to holders thereof other than MHA or the Company.

      (4)      The amount of the sight draft accompanying this Certificate was
computed in accordance with the terms and conditions of the Series A Bonds and
the Indenture and does not exceed the amount available on the date hereof to be
drawn under the Letter of Credit in respect of the Purchase Price of Series A
Bonds purchased by the Tender Agent pursuant to Section 7.01 of the Indenture.

      Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.

                                      - 1 -

<PAGE>

      IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ___ day of ___________, 19___.

                                        TEXAS COMMERCE BANK
                                        NATIONAL ASSOCIATION, TRUSTEE

                                        By:____________________________
                                        Title: ________________________

                                      - 2 -

<PAGE>

                                 ANNEX III TO
                           SERIES A LETTER OF CREDIT

                          ______________, 19__

The Bank of New York
101 Barclay Street
New York, New York  10286

Attention:     Manager,
               Standby Letter of Credit Dept.
               Floor 8 East

      Re:      The Bank of New York
               Irrevocable Letter of Credit
               No. S00031638 (the "LETTER OF CREDIT")

Gentlemen:

      For value received, the undersigned beneficiary hereby irrevocably
transfers to the following institution (the "TRANSFEREE"), which has succeeded
to us as Trustee under the Amended and Restated Indenture of Mortgage and Deed
of Trust dated as of November 1, 1994, from the Metrocrest Hospital Authority in
favor of the undersigned, all rights of the beneficiary to draw under the Letter
of Credit in its entirety.

      (Name of Transferee)

      (Address)

      By this transfer, all rights of the undersigned beneficiary in the Letter
of Credit are transferred to the Transferee, and the Transferee shall have the
sole rights as beneficiary of the Letter of Credit, including sole rights
relating to any amendments, whether increases or extensions or other amendments
and whether now existing or hereafter made.  All amendments are to be advised
direct to the Transferee without necessity of any consent of or notice to us.

      The Transferee hereby directs the Bank to make all payments of drafts
drawn by the Transferee under the Letter of Credit to account number ________ at
___________________________.

                                      - 1 -

<PAGE>

      The advice of such Letter of Credit is returned herewith, and the Trustee
asks the Bank to endorse the transfer on the reverse thereof, and forward the
Letter of Credit to the Transferee with the Bank's customary notice of transfer.

                                        Very truly yours,

SIGNATURE AUTHENTICATED                 _____________________, Trustee
_________________________
(Bank)                                  By: __________________________
                                        Title: _______________________
_________________________
(Authorized Signature)

SIGNATURE AUTHENTICATED                 _______________________________
                                        By: ____________________________
                                        Title: _________________________
_________________________                       Transferee
(Bank)

_________________________
(Authorized Signature)

<PAGE>

                                  ANNEX IV TO
                           SERIES A LETTER OF CREDIT

                              NOTICE OF EXTENSION
                       OF LETTER OF CREDIT NO. S00031638

                                 ________________, 19__

_____________________________, Trustee
_____________________________
_____________________________
_____________________________

National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California  90404

      Re:      The Bank of New York
               Irrevocable Letter of Credit
               No. S00031638 (the "LETTER OF CREDIT")

Ladies and Gentlemen:

      The Final Expiration Date of the above-captioned Letter of Credit has been
extended from ____________, 19__, to ____________, 19__.

                                        Very truly yours,

                                        THE BANK OF NEW YORK

                                        By: _______________________
                                        Name: _____________________
                                        Title: ____________________

<PAGE>

                                                                     EXHIBIT B

                       FORM OF SERIES B LETTER OF CREDIT

OUR REFERENCE NO.:               DATE:
S00031639                 December 6, 1994

Texas Commerce Bank National
 Association, Trustee
600 Travis, Suite 1150
Houston, TX  77002
Attention:  Corporate Trust
         Administration
          Account No. 60730-00

Ladies and Gentlemen:

      A. At the request and for the account of National Medical Enterprises,
Inc. (the "COMPANY"), The Bank of New York (the "BANK") hereby irrevocably
establishes in favor of Texas Commerce Bank National Association (the
"TRUSTEE") for the benefit of the holders of the Series B Bonds referred to
below, this direct pay Series B Letter of Credit in an aggregate amount of US
$22,750,000 (TWENTY TWO MILLION SEVEN HUNDRED FIFTY THOUSAND) AND 00/100 U.S.
DOLLARS (as adjusted pursuant to paragraphs 4 and 5 hereof, the "STATED
AMOUNT"), available from time to time in respect of the face amount of Series B
1989 Bonds in the aggregate principal amount of $22,750,000 (the "SERIES B
BONDS") issued by the Metrocrest Hospital Authority ("MHA") pursuant to and
in accordance with the Amended and Restated Indenture of Mortgage and Deed of
Trust dated as of November 1, 1994 (the "INDENTURE") executed by MHA in favor
of the Trustee.

      B. Funds under this Letter of Credit are available to:

         1.    the Trustee, with respect to a drawing made for the payment of
the principal, at maturity, by redemption, upon acceleration under Section 10.02
of the Indenture or otherwise, of the Series B Bonds (a "PRINCIPAL DRAWING"),
against the sight draft(s) of the Trustee, accompanied by a written certificate
purportedly signed by an authorized officer of the Trustee in the form of Annex
I attached hereto, appropriately completed; and the Trustee, with respect to the
payment of the purchase price of the Series B Bonds purchased by the Tender
Agent (as such term is

<PAGE>

defined in the Indenture) for the account of the Company pursuant to Section
7.01 of the Indenture (a "TENDER DRAWING"), against the sight draft(s) of the
Trustee, accompanied by a written certificate purportedly signed by an
authorized officer of the Trustee in the form of Annex II attached hereto,
appropriately completed.  In connection with any Tender Drawing, Series B Bonds
in aggregate principal amount equal to the amount of the sight draft presented
by the Trustee in respect of any such drawing shall be delivered by the Trustee
to the Bank or its agent or designee as promptly as practicable, and in any
event within three (3) days, after any such Tender Drawing if, prior to such
delivery, such Series B Bonds have not been resold by the Remarketing Agent (as
such term is defined in the Indenture).

      Drafts drawn under this Letter of Credit shall state on their face "Drawn
under The Bank of New York Irrevocable Letter of Credit No. S00031639 dated
December 6, 1994".  Presentation of each draft and certificate required
hereunder must be made at the Bank's office located at 101 Barclay Street, New
York, New York  10286, Attention:  Manager, Standby Letter of Credit Dept.,
Floor 8 East, not later than April 5, 1995 (the "FINAL EXPIRATION DATE").

      All drawings under this Letter of Credit shall be paid only with funds of
the Bank and not from any payments made by the Company to the Bank.

      C. The Bank hereby agrees that all drafts drawn under and in compliance
with the terms of this Letter of Credit will be duly honored by the Bank upon
delivery of the documents, as specified, if presented at such office on or
before the Final Expiration Date, unless this Letter of Credit is terminated
earlier as provided in paragraph 9 hereof.  If a drawing in respect of payment
is made hereunder at or prior to 10:00 a.m., New York City time, on a Business
Day, and provided that such drawing and the documents presented in connection
therewith conform to the terms and conditions hereof, payment shall be made of
the amount specified, in immediately available funds, not later than the close
of business on such Business Day.  If a drawing is made after 10:00 a.m., New
York City time, on a Business Day, and provided that such drawing and the
documents presented in connection therewith conform to the terms and conditions
hereof, payment shall be made of the amount specified not later than 12:00 noon,
New York City time, on the next succeeding Business Day.  Payment under this
Letter of Credit to the Trustee shall be transferred by fed wire transfer to
Account No. 7001109635800, at Texas Commerce Bank - Houston, ABA #1130-00609,
Attention: Ms. Donna Edmundson.  For purposes of this Letter of Credit,

                                        2

<PAGE>

"BUSINESS DAY" shall mean any day other than (i) a Saturday or Sunday or (ii)
a legal holiday or the equivalent on which banking institutions are generally
authorized or required to close in New York, New York or in the city in which is
located (a) the principal corporate trust office of the Trustee, the Tender
Agent (as defined in the Indenture) or the principal offices of the Remarketing
Agent (as defined in the Indenture) or (b) the office of the Issuing Bank or of
its agent at which drafts or claims for payment under the Letter of Credit are
to be presented, or (iii) a day on which the New York Stock Exchange is closed.

      D. Multiple drawings may be made hereunder, provided that, subject to
paragraph 5 hereof, each drawing honored by the Bank hereunder shall PRO TANTO
reduce the amount available under this Letter of Credit.  Payments made in
respect of any drawing (whether or not complying with the terms of this Letter
of Credit) which have been deposited in any account specified in paragraph 3
hereof (or which have been received by the Trustee in another account specified
by the recipient for such payment) shall automatically reduce the amount which
the Trustee may draw hereunder, notwithstanding any acts or omissions, whether
authorized or unauthorized, of the Trustee, or any officer, director, employee
or agent of the Trustee in connection with any drawing hereunder or the proceeds
thereof or otherwise in connection with this Letter of Credit.

      E. Upon payment by the Bank of a Tender Drawing on any Purchase Date (as
defined in the Indenture) for the purchase by the Company of any Series B Bond
or Bonds, the amount available under this Letter of Credit shall be
automatically reinstated, in the amount of such payment and as to such Series B
Bond or Bonds, unless (i) prior to 9:00 a.m., New York City time, on such
Purchase Date, the Trustee and the Remarketing Agent receive telephonic notice
from the Bank, confirmed in writing at any time on the same day, that a Default
or Event of Default (as such terms are defined in the Reimbursement Agreement)
has occurred and is continuing under the Letter of Credit and Reimbursement
Agreement dated as of November 1, 1994, among the Company, the banks party
thereto and the Bank, as issuing bank and agent (the "REIMBURSEMENT
AGREEMENT"), that the Remarketing Agent is to cease remarketing the bonds and
that the Letter of Credit will not be reinstated except as provided in Section
7.04 B. of the Indenture; or (ii) on any such date, there is in effect one or
more letters of credit, or similar facilities providing credit and liquidity
support, accepted by the Trustee before such date in substitution for this
Letter of Credit.

      F. Only the Trustee may make a drawing under this Letter of

                                        3

<PAGE>

Credit.  Upon payment to the Trustee, as provided in paragraph 3 hereof, of the
amount specified in any sight draft(s) drawn hereunder, the Bank shall be fully
discharged of the Bank's obligation under this Letter of Credit with respect to
such sight draft(s), and the Bank shall not thereafter be obligated to make any
further payments under this Letter of Credit in respect of such sight draft(s)
to the Trustee or any other person who makes or who may have made to the Trustee
a demand for payment of principal of, redemption price of, or Purchase Price (as
such term is defined in the Remarketing Agreement) of, any Series B Bond.

      G. This Letter of Credit may not be drawn against for payment of principal
of, redemption price of, or Purchase Price of any Series B Bond which is owned
by MHA, the Company, NME Hospitals, the Corporation or any Guarantor (as such
terms are defined in the Indenture).

      H. This Letter of Credit is effective immediately and shall expire at 5:00
p.m., New York City time, on the Final Expiration Date, unless terminated
earlier pursuant to Section 9 or unless the Final Expiration Date is extended by
the Bank by delivering to the Trustee a Notice of Extension in the form of Annex
IV hereto.  The Bank may deliver to the Trustee a new Letter of Credit in
exchange herefor, or an amendment hereto, to reflect any such extension.

      I. This Letter of Credit shall automatically terminate, and shall be
delivered to the Bank for cancellation, upon the earliest to occur of the
following events:

      J. the payment by the Bank of the final drawing available to be made
         hereunder which is not subject to reinstatement;

      (ii)     the Bank's receipt of a certificate purportedly signed by a duly
               authorized officer of the Trustee and a duly authorized officer
               of the Company stating that:

               "The undersigned, _________________, a duly authorized officer of
         Texas Commerce Bank National Association, and __________, a duly
         authorized officer of National Medical Enterprises, Inc., state that no
         Series B Bonds remain Outstanding under the Indenture and (ii) upon
         receipt by The Bank of New York of this Certificate, The Bank of New
         York Irrevocable Letter of Credit No. S00031639 shall terminate.";

                                        4

<PAGE>

       (iii)   5:00 p.m., New York City time, on the Final Expiration Date, as
      the same may be extended from time to time.

      K. This Letter of Credit, unless otherwise expressly stated, is subject to
the terms and provisions of the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication 500 (the
"UNIFORM CUSTOMS"), including the provisions thereof providing that parties
may expressly agree to terms and provisions other than as provided in the
Uniform Customs, and, to the extent not inconsistent with the Uniform Customs,
shall be governed by the laws of the State of New York, including without
limitation, Article 5 of the Uniform Commercial Code as in effect in the State
of New York.  Communications with respect to this Letter of Credit shall be in
writing and shall be addressed to the Bank at 101 Barclay Street, New York, New
York  10286, Telecopier: (212) 349-3955, Telephone:  (212) 815-3429, Attention:
Manager, Standby Letter of Credit Dept., Floor 8 East, specifically referring
thereon to "The Bank of New York Irrevocable Letter of Credit No. S00031639".

      L. This Letter of Credit is transferable in its entirety (but not in part)
to any transferee who has succeeded to the Trustee under the Indenture.
Transfer of the available drawing(s) under this Letter of Credit to any such
transferee shall be effected by the presentation to the Bank of this original
Letter of Credit and any amendments for endorsement thereof on such transfer
accompanied by a transfer letter in the form attached hereto as Annex III
purportedly signed by an authorized officer of the Trustee and an authorized
officer of such transferee.

      M. This Letter of Credit sets forth in full the Bank's undertaking, and
such undertaking shall not in any way be modified, amended, amplified or limited
by reference to any document, instrument or agreement referred to herein
(including, without limitation, the Series B Bonds), except only the
certificate(s), sight draft(s), Notice(s) of Extension and transfer letter(s)
referred to herein; and any such reference shall not be deemed to incorporate
herein by reference any document, instrument or agreement except for such
certificate(s), sight draft(s), Notice(s) of Extension and transfer letter(s).

      N. The Bank has no responsibility for determining (a) the genuineness of
any documents or certificates presented in accordance herewith or (b) the
authority of any officers or purported officers who execute and deliver such
documents or certificates.

                                        5

<PAGE>

                     Very truly yours,

                     __________________________
                         Authorized Signature

                                        6

<PAGE>

                                  ANNEX I TO
                           SERIES B LETTER OF CREDIT

                       CERTIFICATE FOR PRINCIPAL DRAWING

      The undersigned, Texas Commerce Bank National Association (the
"TRUSTEE"), hereby certifies to The Bank of New York (the "BANK"), with
reference to Irrevocable Letter of Credit No. S00031639 (the "LETTER OF
CREDIT") issued by the Bank in favor of the Trustee, that:

      O. The Trustee is the Trustee under the Amended and Restated Indenture of
Mortgage and Deed of Trust dated as of November 1, 1994 (the "INDENTURE"),
executed by the Metrocrest Hospital Authority in favor of the Trustee.

      P. The Trustee is making a drawing under the Letter of Credit with respect
to the payment of the principal of certain Series B Bonds pursuant to Section
4.01 of the Indenture.

      Q. The principal amount of the Series B Bonds in respect of which this
draw is made is $___________, and the amount of the sight draft accompanying
this Certificate does not exceed such amount.

      R. The amount of the sight draft accompanying this Certificate, together
with the aggregate of all prior payments made pursuant to Principal Drawings
under the Letter of Credit does not exceed $22,750,000.

      S. The amount of the sight draft accompanying this Certificate was
computed in accordance with the terms and conditions of the Series B Bonds and
the Indenture and does not exceed the amount available on the date hereof to be
drawn under the Letter of Credit in respect of the Series B Bonds.

      Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.

<PAGE>

      IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ____ day of _____________, 199_.

                     TEXAS COMMERCE BANK
                     NATIONAL ASSOCIATION, TRUSTEE

                     By:_____________________________
                     Title:__________________________

                                        2

<PAGE>

                                 ANNEX II TO
                           SERIES B LETTER OF CREDIT

                        CERTIFICATE FOR TENDER DRAWING

      The undersigned, Texas Commerce Bank National Association (the
"TRUSTEE"), hereby certifies to The Bank of New York (the "BANK"), with
reference to Irrevocable Letter of Credit No. S00031639 (the "LETTER OF
CREDIT") issued by the Bank in favor of the Trustee, as trustee under the
Amended and Restated Indenture of Mortgage and Deed of Trust dated as of
November 1, 1994 (the "INDENTURE") executed by the Metrocrest Hospital
Authority in favor of the Trustee, that:

      T. The Trustee is the Trustee under the Indenture.

      U. The Trustee is making a drawing in the amount of $____________ under
the Letter of Credit to pay the Purchase Price of Series B Bonds purchased for
the account of the Company pursuant to Section 4.04 of the Indenture and will
cause to be delivered to the Bank, pursuant to that certain Securities Pledge
and Security Agreement, dated as of November 1, 1994, within three (3) days
after the date of this Certificate, Series B Bonds having an aggregate face
amount equal to $____________ if such Bonds are not resold by the Remarketing
Agent prior to that time.

      V. The amount of the sight draft accompanying this Certificate does not
exceed the amount of the Purchase Price that is due and payable on the date the
draft accompanying this Certificate is payable with respect to such Series B
Bonds to holders thereof other than MHA or the Company.

      W. The amount of the sight draft accompanying this Certificate was
computed in accordance with the terms and conditions of the Series B Bonds and
the Indenture and does not exceed the amount available on the date hereof to be
drawn under the Letter of Credit in respect of the Purchase Price of Series B
Bonds purchased by the Tender Agent pursuant to Section 7.01 of the Indenture.

      Any capitalized term used herein and not defined shall have its respective
meaning as set forth in the Letter of Credit.

<PAGE>

      IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ____ day of _____________, 19__.

                     TEXAS COMMERCE BANK
                     NATIONAL ASSOCIATION, TRUSTEE

                     By:____________________________
                     Title:_________________________

                                        2

<PAGE>

                                 ANNEX III TO
                           SERIES B LETTER OF CREDIT

                     _______________________, 19__

The Bank of New York
101 Barclay Street
New York, New York  10286

Attention:     Manager,
         Standby Letter of Credit Dept.
         Floor 8 East

      Re:  The Bank of New York
           Irrevocable Letter of Credit
           No. S00031639 (the "LETTER OF CREDIT")

Gentlemen:

      For value received, the undersigned beneficiary hereby irrevocably
transfers to the following institution (the "TRANSFEREE"), which has succeeded
to us as Trustee under the Amended and Restated Indenture of Mortgage and Deed
of Trust dated as of November 1, 1994, from the Metrocrest Hospital Authority in
favor of the undersigned, all rights of the beneficiary to draw under the Letter
of Credit in its entirety.

      (Name of Transferee)

      (Address)

      By this transfer, all rights of the undersigned beneficiary in the Letter
of Credit are transferred to the Transferee, and the Transferee shall have the
sole rights as beneficiary of the Letter of Credit, including sole rights
relating to any amendments, whether increases or extensions or other amendments
and whether now existing or hereafter made.  All amendments are to be advised
direct to the Transferee without necessity of any consent of or notice to us.

      The Transferee hereby directs the Bank to make all payments of drafts
drawn by the Transferee under the Letter of Credit to account number
_____________ at ____________________.

      The advice of such Letter of Credit is returned herewith,

<PAGE>

and the Trustee asks the Bank to endorse the transfer on the reverse thereof,
and forward the Letter of Credit to the Transferee with the Bank's customary
notice of transfer.

                     Very truly yours,

SIGNATURE AUTHENTICATED          ____________________, Trustee

________________________         By:__________________________
(Bank)                    Title:_______________________

________________________
(Authorized Signature)

SIGNATURE AUTHENTICATED          _____________________________
                     By:__________________________
                     Title:_______________________
                            Transferee
________________________
(Bank)

________________________
(Authorized Signature)

                                        2

<PAGE>

                                  ANNEX IV TO
                           SERIES B LETTER OF CREDIT

                              NOTICE OF EXTENSION
                       OF LETTER OF CREDIT NO. S00031639

                     ______________________, 19___

_______________________, Trustee
_______________________
_______________________
_______________________

National Medical Enterprises, Inc.
2700 Colorado Avenue
Santa Monica, California  90404

      Re:      The Bank of New York
         Irrevocable Letter of Credit
         No. S00031639 (the "LETTER OF CREDIT")

Gentlemen:

      The Final Expiration Date of the above-captioned Letter of Credit has been
extended from ___________________, 19___, to ______________________, 19__.

                     Very truly yours,

                     THE BANK OF NEW YORK

                     By:____________________________
                     Name:__________________________
                     Title:_________________________

<PAGE>

                                                                     EXHIBIT C

                    AMENDMENT OF SERIES A LETTER OF CREDIT

         Reference is made to Irrevocable Letter of Credit No. S00031638 (the
"Series A L/C") issued by The Bank of New York in favor of Texas Commerce Bank
National Association, Trustee.

         1.  The definition of "Reimbursement Agreement" in paragraph V of the
Series A L/C is amended by deleting the following words:

      Letter of Credit and Reimbursement Agreement, dated as of November 1,
      1994, among the Company, the banks party thereto and the Bank, as issuing
      bank and agent (the "Reimbursement Agreement")

and substituting the following words:

      Amended and Restated Letter of Credit and Reimbursement Agreement, dated
      as of February 28, 1995, among the Company, the banks party thereto and
      the Bank, as issuing bank and agent (as amended from time to time, the
      "Reimbursement Agreement")

         IN WITNESS WHEREOF the undersigned have signed this Amendment as of
March 1, 1995.

                                 THE BANK OF NEW YORK

                                 By: ______________________
                                     Title:

                                 TEXAS COMMERCE BANK
                                   NATIONAL ASSOCIATION, Trustee

                                 By: ______________________
                                     Title:

<PAGE>

                                                                     EXHIBIT D

                    AMENDMENT OF SERIES B LETTER OF CREDIT

         Reference is made to Irrevocable Letter of Credit No. S00031639 (the
"Series B L/C") issued by The Bank of New York in favor of Texas Commerce Bank
National Association, Trustee.

         1.  The definition of "Reimbursement Agreement" in paragraph V of the
Series B L/C is amended by deleting the following words:

      Letter of Credit and Reimbursement Agreement, dated as of November 1,
      1994, among the Company, the banks party thereto and the Bank, as issuing
      bank and agent (the "Reimbursement Agreement")

and substituting the following words:

      Amended and Restated Letter of Credit and Reimbursement Agreement, dated
      as of February 28, 1995, among the Company, the banks party thereto and
      the Bank, as issuing bank and agent (as amended from time to time, the
      "Reimbursement Agreement")

         IN WITNESS WHEREOF the undersigned have signed this Amendment as of
March 1, 1995.

                                 THE BANK OF NEW YORK

                                 By: ______________________
                                     Title:

                                 TEXAS COMMERCE BANK
                                    NATIONAL ASSOCIATION, Trustee

                                 By: ______________________

<PAGE>

                                     Title:

                                        2

<PAGE>

                                                                     EXHIBIT E

                   SECURITIES PLEDGE AND SECURITY AGREEMENT

      This SECURITIES PLEDGE AND SECURITY AGREEMENT, dated as of November 1,
1994 ("AGREEMENT"), is made by and among National Medical Enterprises, Inc., a
Nevada corporation (the "PLEDGOR"), Texas Commerce Bank National Association,
as Trustee and as Bond Registrar ("REGISTRAR") under the Indenture
(hereinafter defined) and The Bank of New York, as Issuing Bank under and as
defined in the Reimbursement Agreement (hereinafter defined), on behalf of
itself and the Banks.

      PRELIMINARY STATEMENTS:

      WHEREAS, the Metrocrest Hospital Authority (the "ISSUER") has agreed
with the Pledgor to issue its first-mortgage hospital revenue bonds, Series
1989A and Series 1989B (the "BONDS"), under the Indenture of Mortgage and Deed
of Trust, dated as of December 1, 1989, as amended and restated pursuant to the
Amended and Restated Indenture of Mortgage and Deed of Trust, dated as of
November 1, 1994 (as amended, modified or supplemented from time to time, the
"INDENTURE"), between the Issuer and Texas Commerce Bank National Association,
as Trustee (the "TRUSTEE"); and

      WHEREAS, in connection with the issuance of the Bonds the Pledgor has
entered into a Letter of Credit and Reimbursement Agreement dated as of November
1, 1994 (as amended, modified or supplemented from time to time, the
"REIMBURSEMENT AGREEMENT") with certain banks and The Bank of New York, as
Issuing Bank and Agent, pursuant to which the Issuing Bank has agreed to issue
its letters of credit (the "LETTERS OF CREDIT") which may be used, among other
things, to pay the Purchase Price (as such term is defined in the Indenture) of
Bonds that are purchased by the Pledgor pursuant to certain provisions of the
Indenture and the Remarketing Agreement, dated November 1, 1994 (as amended,
modified or supplemented from time to time, the "REMARKETING AGREEMENT") among
the Pledgor, NME Hospitals, Inc., the Trustee, Texas Commerce Bank National
Association, as Tender Agent (the "TENDER AGENT") and Merrill, Lynch,
Pierce, Fenner & Smith, Incorporated, as Remarketing Agent (the "REMARKETING
Agent");

      WHEREAS, it is a condition precedent to the obligation of the Issuing Bank
to issue the Letters of Credit under the Reimbursement Agreement that the
Pledgor shall have entered into this Agreement, and it is a condition precedent
to the

<PAGE>

effectiveness of the Reimbursement Agreement that the Pledgor shall have entered
into this Agreement;

      NOW, THEREFORE, in consideration of the premises set forth herein and in
order to induce the Issuing Bank to issue the Letters of Credit, the Pledgor,
the Trustee, the Registrar and the Issuing Bank hereby agree as follows:

      SECTION 1.  DEFINITIONS.  Terms defined in the Reimbursement Agreement
and not otherwise defined herein shall have the respective meanings provided for
in the Reimbursement Agreement.

      SECTION 2.  PLEDGE.  The Pledgor hereby pledges and grants to the
Issuing Bank for the benefit of the Issuing Bank and the Banks a security
interest in the following (the "PLEDGED COLLATERAL"):

         (a)   all of the right, interest and title of the Pledgor in and to the
      Bonds and the certificates representing the Bonds, whether now owned or
      hereafter acquired;

         (b)   all proceeds of any and all of the foregoing Pledged Collateral;
      and

         (c)   all dividends, cash, instruments and other property from time to
      time received, receivable or otherwise distributed in respect of or in
      exchange for any or all of the foregoing.

      SECTION 3.  SECURITY FOR OBLIGATIONS.  The security interest and lien
granted by this Agreement secures the payment and performance of all debt,
liabilities and obligations of the Pledgor to the Issuing Bank and the Banks,
fixed or contingent, joint or several, now existing or hereafter arising,
including but not limited to all obligations under and debt evidenced by the
Reimbursement Agreement, and all obligations of the Pledgor to the Issuing Bank
and the Banks now or hereafter existing under this Agreement and any other
agreement or document executed in connection herewith or in connection with the
Reimbursement Agreement (all such obligations and liabilities of the Pledgor
being the "OBLIGATIONS").

      SECTION 4.  DELIVERY OF PLEDGED COLLATERAL.  All certificates or
instruments representing or evidencing any Pledged Collateral which is not
remarketed pursuant to the Remarketing Agreement within three (3) days following
the day on which such Pledged Collateral is acquired by the Tender Agent for the
account of the Company under the Indenture, shall be

                                        2

<PAGE>

delivered by the Trustee to and held by or on behalf of the Issuing Bank
pursuant hereto and shall be in suitable form for transfer by delivery, or shall
be accompanied by instruments of transfer or assignment duly executed in blank,
all in form and substance satisfactory to the Issuing Bank.  The Issuing Bank
shall have the right at any time after an Event of Default or any event that,
with or without the passage of time or giving of notice (or both), would
constitute an Event of Default (as hereinafter defined) shall have occurred and
be continuing, (i) to transfer to or register in the name of the Issuing Bank or
any of its nominees any or all of the Pledged Collateral, and (ii) to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations, and the
Registrar under the Indenture, agrees to so register the Pledged Collateral on
written demand by the Issuing Bank.

      SECTION 5.  REPRESENTATIONS AND WARRANTIES.  The Pledgor represents and
warrants as follows:

         a.    To the best of its knowledge, the Bonds have been duly authorized
and validly issued.

         b.    The Pledgor has not granted a security interest or lien in or on
any of the Pledged Collateral, except for the security interest created by this
Agreement.

         c.    The pledge of the Pledged Collateral pursuant to this Agreement
creates a valid first priority security interest in the Pledged Collateral,
securing the payment of the Obligations, which will be perfected by the delivery
of possession of the Pledged Collateral (either actual or constructive
possession) to the Issuing Bank or its bailee.

         d.    No consent by any other Person and no authorization, approval, or
other action by, and no notice to or filing with, any governmental authority or
regulatory body is, to the best knowledge of Pledgor, required either (i) for
the pledge hereunder by the Pledgor of the Pledged Collateral or for the
execution, delivery or performance of this Agreement by the Pledgor, (ii) for
the perfection or maintenance of the security interest created hereby (including
the first priority nature of such security interest), or (iii) for the exercise
of the voting or other rights provided for in this Agreement or the remedies
hereunder in respect of the Pledged Collateral (except as may be required in
connection with such disposition by laws affecting the offering and sale of
securities generally).

                                        3

<PAGE>

         e.    The Pledgor has, independently and without reliance upon the
Issuing Agent or the Banks and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement.

      SECTION 6.  FURTHER ASSURANCES.  The Pledgor agrees that at any time and
from time to time, at its own expense, the Pledgor will promptly execute and
deliver all further instruments and documents, and take all further action, that
may be necessary, or that the Issuing Bank may reasonably request in good faith,
in order to perfect and protect any security interest granted or purported to be
granted hereby or to enable the Issuing Bank to exercise and enforce its rights
and remedies hereunder with respect to any Pledged Collateral.

      SECTION 7.  VOTING RIGHTS; DIVIDEND; ETC.

         a.    So long as no Event of Default (as such term is defined in the
Reimbursement Agreement) shall have occurred and be continuing:

               (i)  The Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement or the
Reimbursement Agreement; provided, however, that the Pledgor shall not exercise
or refrain from exercising any such right if, in the Issuing Bank's reasonable
judgment, such action would cause a material adverse change in the value of such
Pledged Collateral.

               (ii)  The Pledgor shall be entitled to receive and retain any and
all payments paid in respect of the Pledged Collateral owned by it, provided,
however, that any and all

               (A)  payments paid or payable other than in cash in respect of,
         and instruments and other property received, receivable or otherwise
         distributed in respect of, or in exchange for, any such Pledged
         Collateral, and

               (B)  cash paid, payable or otherwise distributed in respect of
         principal of, or in redemption of, or in exchange for, any such Pledged
         Collateral,

shall be, and shall be forthwith delivered to the Issuing Bank to hold as,
Pledged Collateral hereunder and shall, if received by the Pledgor, be received
in trust for the benefit of the Issuing Bank, be segregated from the other
property or funds of the

                                        4

<PAGE>

Pledgor, and be forthwith delivered to the Issuing Bank as Pledged Collateral
hereunder in the same form as so received (with any necessary endorsement or
assignment).

            (iii)  The Issuing Bank shall execute and deliver (or cause to be
executed and delivered) to the Pledgor all proxies and other instruments as the
Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights which it is entitled to exercise pursuant
to paragraph (i) above and to receive the interest payments which it is
authorized to receive and retain pursuant to paragraph (ii) above.

         (b)   Upon the occurrence and during the continuance of an Event of
Default (as such term is defined in the Reimbursement Agreement):

               (i)  All rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
Section 7(a)(i) hereof and to receive the payments which it would otherwise be
authorized to receive and retain pursuant to Section 7(a)(ii) hereof shall
cease, and all such rights shall thereupon become vested in the Issuing Bank who
shall thereupon have the sole right to exercise such voting and other consensual
rights and to receive and hold as Pledged Collateral hereunder such payments.

               (ii)  All payments which are received by the Pledgor contrary to
the provisions of paragraph (i) of this Section 7(b) shall be received in trust
for the benefit of the Issuing Bank, shall be segregated from other funds of the
Pledgor, and be forthwith paid over to the Issuing Bank as Pledged Collateral
hereunder in the same form as so received (with any necessary endorsement or
assignment).

      SECTION 8.  TRANSFERS AND OTHER LIENS.  The Pledgor agrees that it will
not (i) sell or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral, except pursuant to the Remarketing Agreement, or (ii)
create or permit to exist any lien upon or with respect to any such Pledged
Collateral, except for the security interest under this Agreement.

      SECTION 9.  ISSUING BANK APPOINTED ATTORNEY-IN-FACT.  The Pledgor hereby
appoints the Issuing Bank the Pledgor's attorney-in-fact, with full authority in
the place and stead of the Pledgor and in the name of the Pledgor or otherwise,
at any time upon the occurrence and during the continuance of any Event of

                                        5

<PAGE>

Default, to take any action and to execute any instrument which the Issuing Bank
reasonably may deem necessary to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all instruments
made payable to the Pledgor representing any interest payment or other
distribution in respect of the Pledged Collateral owned by it or any part
thereof and to give full discharge for the same.

      SECTION 10.  ISSUING BANK MAY PERFORM.  If the Pledgor fails to perform
any agreement contained herein, the Issuing Bank may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Issuing Bank
incurred in connection therewith shall be payable by the Pledgor under Section
14 hereof.

      SECTION 11.  ISSUING BANK'S DUTIES.  The powers conferred on the Issuing
Bank hereunder are solely to protect its interest in the Pledged Collateral and
shall not impose any duty upon it to exercise any such powers.  The Issuing Bank
shall be deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the Pledged
Collateral is accorded treatment substantially equal to that which the Issuing
Bank accords its own property, it being understood that except for the safe
custody of any Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Issuing Bank shall not have any
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, tenders or other matters relative to any Pledged
Collateral, whether or not the Issuing Bank has or is deemed to have knowledge
of such matters, or (ii) taking any necessary steps to preserve rights against
any parties with respect to any Pledged Collateral.

      SECTION 12.  REMEDIES UPON DEFAULT.  If any Event of Default (as such
term is defined in the Reimbursement Agreement) shall have occurred and be
continuing:

         (a)   The Issuing Bank may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a secured party on
default under the Uniform Commercial Code (the "Code") in effect in the State of
New York at that time, and the Issuing Bank may also, without notice except as
specified below, sell the Pledged Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's board or at any of
the Issuing Bank's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as shall be commercially reasonable.

                                        6

<PAGE>

The Pledgor agrees that, to the extent notice of sale shall be required by law,
at least ten days' written notice to the Pledgor of the time and place of any
public sale or the time after which any private sale is to be made shall
constitute reasonable notification.  The Issuing Bank shall not be obligated to
make any sale of Pledged Collateral regardless of notice of sale having been
given.  The Issuing Bank may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.

         (b)   Any cash held by the Issuing Bank as Pledged Collateral and all
cash proceeds received by the Issuing Bank in respect of any sale of, collection
from, or other realization upon, all or any part of the Pledged Collateral may,
in the discretion of the Issuing Bank, be held by the Issuing Bank as collateral
for, and/or then or at any time thereafter applied (after payment of any amounts
payable to the Issuing Bank pursuant to Section 14 hereof) in whole or in part
by the Issuing Bank against all or any part of the Obligations.  Any surplus of
such cash or cash proceeds held by the Issuing Bank and remaining after payment
in full of all the Obligations shall be paid over to the Pledgor or to
whomsoever may be lawfully entitled to receive such surplus.

      SECTION 13.  REGISTRATION RIGHTS.  If the Issuing Bank shall determine
to exercise its right to sell all or any of the Pledged Collateral pursuant to
Section 12 hereof, and shall determine in good faith that it is necessary or
advisable to register such Pledged Collateral under the provisions of the
Securities Act of 1933, as from time to time amended ("Securities Act") in order
to sell such Pledged Collateral in foreclosure of the security interest of the
Issuing Bank, the Pledgor agrees that, upon the reasonable request of the
Issuing Bank, the Pledgor will, at its own expense:

         (a)   execute and deliver, and cause each issuer of the Pledged
Collateral contemplated to be sold and the directors and officers thereof to
execute and deliver, all such instruments and documents, and do or cause to be
done all such other acts and things, as may be necessary or, in the opinion of
the Issuing Bank, advisable to register such Pledged Collateral under the
provisions of the Securities Act, and to cause the registration statement
relating thereto to become effective and to remain effective for such period as
prospectuses are required by law to be furnished, and to make all amendments and
supplements thereto and to the related prospectus which, in the opinion of the
Issuing Bank, are necessary or advisable, all in conformity with

                                        7

<PAGE>

the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto;

      (b)      use its best efforts to qualify the Pledged Collateral under the
state securities or "Blue Sky" laws of the required states and to obtain all
necessary governmental approvals for the sale of the Pledged Collateral, as
requested by the Issuing Bank;

      (c)      cause each such issuer to make available to its security holders,
as soon as practicable, an earning statement which will satisfy the provisions
of Section 11(a) of the Securities Act; and

      (d)      do or cause to be done all such other acts and things as may be
necessary to make such sale of the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable law.

The Pledgor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by the Issuing Bank by reason of the failure by
the Pledgor to perform any of the covenants contained in this Section and,
consequently, agrees that, if the Pledgor shall fail to perform any of such
covenants, it shall pay, as liquidated damages and not as a penalty, an amount
equal to the value of the Pledged Collateral on the date the Issuing Bank shall
demand compliance with this Section.

      SECTION 14.  INDEMNITY AND EXPENSES.  The Pledgor agrees to indemnify
each of the Issuing Bank, each Bank and the Trustee from and against any and all
claims, losses and liabilities growing out of or resulting from this Agreement
(including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting from the Issuing Bank's, such Bank's or the
Trustee's, as the case may be, gross negligence or willful misconduct.

      SECTION 15.  AMENDMENTS, ETC.  No amendment or waiver of any provision
of this Agreement nor consent to any departure by the Pledgor herefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Issuing Bank, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

      SECTION 16.  ADDRESSES FOR NOTICES.  Unless otherwise provided herein,
all notices, requests, consents, demands and

                                        8

<PAGE>

other communications to any party hereto shall be in writing and shall be
mailed, certified mail with return receipt requested, postage prepaid, or
telegraphed, cabled, telexed, telecopied or otherwise physically delivered to
its respective address as set forth in the Reimbursement Agreement, or the
Indenture or, as to any party, to such other address as may be designated by it
in written notice to all other parties.  All notices, requests, consents and
demands hereunder will be effective, if addressed to the Issuing Bank or the
Pledgor or the Trustee as aforesaid, when mailed by certified mail, postage
prepaid, return receipt requested, or upon delivery if telegraphed, cabled,
telexed, telecopied or otherwise physically delivered, addressed as aforesaid.

      SECTION 17.  CONTINUING SECURITY INTEREST; RELEASE.  This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(i) remain in full force and effect until payment in full of the Obligations,
(ii) be binding upon the Pledgor, its successors and assigns, and (iii) inure,
together with the rights and remedies hereunder, to the benefit of the Issuing
Bank and its respective successors, transferees and assigns; provided however,
notwithstanding the foregoing, the security interest granted herein in any Bond
now owned or hereafter acquired by the Pledgor shall be deemed released with
respect to such Bond if, after it is acquired by the Pledgor, it is sold by the
Remarketing Agent pursuant to the Remarketing Agreement.  Upon the payment in
full of the Obligations and the termination and expiration of the Letters of
Credit, the Pledgor shall be entitled to the return, upon its request and at its
expense, of such of the Pledged Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof.

      SECTION 18.  SECURITY INTEREST ABSOLUTE.  All rights of the Issuing Bank
and security interests hereunder, and all obligations of the Pledgor hereunder,
shall be absolute and unconditional irrespective, to the extent permitted by
applicable law, of:

         (a)   any lack of validity or enforceability of the Reimbursement
      Agreement, any other document or any other agreement or instrument
      relating thereto;

         (b)   any change in the time, manner or place of payment of, or any
      other term of, all or any of the Obligations, or any other amendment or
      waiver of or any consent to any departure from the Reimbursement
      Agreement, or any other document;

                                        9

<PAGE>

         (c)   any taking, exchange, release or non-perfection of any other
      collateral, or any release or amendment or waiver of or consent to
      departure from any guaranty, for all or any of the Obligations;

         (d)   any manner of application of collateral, or proceeds thereof, to
      all or any of the Obligations, or any manner of sale or other disposition
      of any collateral for all or any part of the Obligation or any other
      assets of the Pledgor or any Subsidiary of the Pledgor;

         (e)   any change, restructuring or termination of the corporate
      structure or existence of the Pledgor or any Subsidiary of the Pledgor; or

         (f)   any other circumstances which might otherwise constitute a
      defense available to, or a discharge of, the Pledgor or a third party
      pledgor (except for payment of the Obligations in full).

      SECTION 19.  ACTIONS BY ISSUING BANK.

      (a)      The Pledgor specifically waives any notice of the creation,
advancement, existence, extension or renewal of, or of any indulgence with
respect to, the Obligations or any part thereof, and of nonpayment thereof or
default thereon, and waives demand, protest, presentment and notice of demand,
protest and presentment with respect to the Obligations, and waives notice of
the amount of the Obligations outstanding at any time, and agrees that the
maturity of the Obligations, and any part thereof, may be accelerated, extended
or renewed by the Issuing Bank or other Persons entitled thereto in its or their
discretion or as may be agreed without notice to or consent by the Pledgor.

      (b)      The execution and delivery of this Agreement in no manner shall
impair or affect any other security (by endorsement or otherwise) for the
payment of the Obligations and no security taken hereafter as security for
payment of the Obligations shall impair in any manner or affect this Agreement,
all such present and further additional security to be considered as cumulative
security.  Any of the collateral for, or any obligor on, any of the Obligations
may be released without altering, varying or diminishing in any way the force,
effect, lien, security interest, or charge of this Agreement as to the Pledged
Collateral not expressly released, and this Agreement shall continue as a
security interest and charge on all of the Pledged Collateral not expressly
released until all the Obligations secured hereby have been paid in full.

                                       10

<PAGE>

      SECTION 20.  GOVERNING LAW.  This Agreement shall be governed by and
construed in accordance with the law of the State of New York.

      SECTION 21.  COUNTERPARTS.  This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same agreement.

      SECTION 22.  WAIVER OF JURY TRIAL.  EACH OF THE PLEDGOR, THE REGISTRAR
AND THE ISSUING BANK HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

                                       11

<PAGE>

      IN WITNESS WHEREOF, each of the Pledgor, the Trustee, and the Issuing Bank
have caused this Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.

                                   NATIONAL MEDICAL ENTERPRISES, INC.

                                   By:  ________________________
                                   Its: ________________________

                                       12

<PAGE>

      IN WITNESS WHEREOF, each of the Pledgor, the Trustee, and the Issuing Bank
have caused this Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.

                                   TEXAS COMMERCE BANK NATIONAL
                                    ASSOCIATION, AS TRUSTEE AND
                                    AS REGISTRAR

                                   By:  ________________________
                                   Its: ________________________

                                       13

<PAGE>

      IN WITNESS WHEREOF, each of the Pledgor, the Trustee, and the Issuing Bank
have caused this Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of the date first above written.

                                   THE BANK OF NEW YORK, AS ISSUING BANK

                                   By:  ________________________
                                   Its: ________________________

                                       14

<PAGE>

                                                                  EXHIBIT F

                           OFFICER'S CERTIFICATE
                        AS TO CONTINUED ACCURACY OF
                      REPRESENTATIONS AND NO DEFAULT

            Pursuant to Section 5.01(d) of the Amended and Restated Letter of
Credit and Reimbursement Agreement dated as of February 28, 1995 among National
Medical Enterprises, Inc. (the "Company"), the Banks party thereto and The Bank
of New York, as Issuing Bank and Agent (as the same may be amended from time to
time, the "Agreement"), the undersigned Executive Vice President, Senior Vice
President, Treasurer or Assistant Treasurer of the Company hereby certifies as
follows:

            1.    The representations and warranties of the Company set forth or
                  incorporated by reference in the Agreement or which are
                  contained in any certificate, document or financial or other
                  statement furnished in connection with the Agreement are true
                  and correct on and as of the date hereof with the same effect
                  as if made on the date hereof;

            2.    Immediately after the Agreement becomes effective, no Default
                  or Event of Default (both as defined in the Agreement) will
                  have occurred and be continuing under the Agreement.

Dated:  ____________, 1995

                                  NATIONAL MEDICAL ENTERPRISES, INC., a Nevada
                                  corporation

                                  By:_____________________________
                                      Title:

<PAGE>

                                                               EXHIBIT I

             [Closing Date]

To:   Bank of America NT&SA
      Bankers Trust Company
      Morgan Guaranty Trust
        Company of New York and
      The Bank of New York,

      Re:   Amended and Restated Credit and Reimbursement Agreement dated as of
            February 28, 1995 among National Medical Enterprises, Inc., the
            Banks and the Issuing Bank

Ladies and Gentlemen:

            We have acted as special counsel to N.M.E. International (Cayman)
Limited, a Cayman Islands company ("NME (Cayman)"). Reference is made to the
Security Agreement dated as of February 28, 1995 (the "Security Agreement")
among National Medical Enterprises, Inc. NME (Cayman) and Morgan Guaranty Trust
Company of New York, as Collateral Agent.  Terms defined in the Security
Agreement and not otherwise defined herein are used herein as therein defined.

            We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments and have conducted such
other investigations of fact and law as we have deemed necessary or advisable
for purposes of this opinion.

<PAGE>

                  Based upon the foregoing, we are of the opinion that:

            (1)  NME (Cayman) is a validly existing company in good standing
under the law of the Cayman Islands, with requisite corporate power and legal
right (i) to own and operate its properties and conduct its business as now
conducted and (ii) to execute and deliver, and perform its obligations under,
the Security Agreement as Collateral Agent pursuant to which NME (Cayman) will
pledge the Westminster stock to NME's Banks, including, without limitation, to
pledge the Westminster stock owned by it to secure the Secured Obligations (as
defined in the Security Agreement);

            (2)  The execution and delivery of the Security Agreement by NME
(Cayman), and performance of its obligations thereunder (including, without
limitation, the pledge of the Westminster stock owned by it to secure the
Secured Obligations), has been duly authorized by all necessary corporate action
on the part of NME (Cayman) and, upon execution of the Security Agreement by
officers of NME (Cayman) then incumbent, the Security Agreement will have been
duly executed by NME (Cayman);

            (3)  No consents, approvals or authorizations by, or filings or
recordings with, any governmental authority in the Cayman Islands is necessary
to be obtained or made in connection with the execution and delivery by NME
(Cayman) of the Security Agreement, or performance of its obligations
thereunder, including, without limitation, the pledge by NME (Cayman) of the
Westminster stock owned by it to secure the Secured Obligations;

            (4)  The execution and delivery by NME (Cayman) of the Security
Agreement, and performance of its obligations thereunder (including, without
limitation, the pledge by NME (Cayman) of the Westminster stock owned by it to
secure the Secured Obligations), does not violate any law, rule or regulation of
the Cayman Islands or any Cayman Islands governmental or judicial order or
decree of which we are aware to which NME (Cayman) is subject.

                                        2

<PAGE>

                                                  EXHIBIT J

                   ASSIGNMENT AND ASSUMPTION AGREEMENT

            AGREEMENT dated as of _________, 19__ among [ASSIGNOR] (the
"Assignor"), [ASSIGNEE] (the "Assignee") and THE BANK OF NEW YORK, as Issuing
Bank (the "Issuing Bank").

                 W I T N E S S E T H

            WHEREAS, this Assignment and Assumption Agreement relates to the
Amended and Restated Reimbursement Agreement dated as of February 28, 1995 among
National Medical Enterprises, Inc., as Account Party, Bank of America National
Trust and Savings Association, The Bank of New York, Bankers Trust Company and
Morgan Guaranty Trust Company of New York, as Banks, and The Bank of New York,
as Issuing Bank (as amended from time to time, the "Agreement");

            WHEREAS, as provided under the Agreement, the Assignor has a
Commitment in an aggregate amount not to exceed $__________ to participate in
the Letters of Credit issued thereunder;

            WHEREAS, as of the date hereof Reimbursement Obligations in an
amount equal to $_______________ are outstanding under the Agreement;

            WHEREAS, the Assignor proposes to assign to the Assignee all of the
rights of the Assignor under the Agreement in respect of a pro-rata portion of
its Commitment in an amount equal to $_______________ (the "Assigned Amount"),
and the Assignee proposes to accept such assignment of such rights and assume
the corresponding obligations from the Assignor;

            NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties

                                        3

<PAGE>

hereto agree as follows:

            SECTION 1.  DEFINITIONS. All capitalized terms not otherwise
defined herein have the respective meanings set forth in the Agreement.

            SECTION 2.  ASSIGNMENT.  The Assignor hereby assigns and sells to
the Assignee all of the rights of the Assignor under the Agreement with respect
to its Commitment to the extent of the Assigned Amount, and the Assignee hereby
accepts such assignment from the Assignor and assumes all of the obligations of
the Assignor under the Agreement to the extent of the Assigned Amount, including
the purchase from the Assignor of a pro-rata portion of the Reimbursement
Obligations outstanding at the date hereof.  Upon the execution and delivery
hereof by the Assignor, the Assignee, the Company and the Issuing Bank and the
payment of the amounts specified in Section 3 required to be paid on the date
hereof (i) the Assignee shall, as of the date hereof, succeed to the rights and
be obligated to perform the obligations of a Bank under the Agreement with a
Commitment  in an aggregate amount equal to the Assigned Amount and a
corresponding portion of Reimbursement Obligations, (ii) the Commitment of the
Assignor shall, as of the date hereof, be correspondingly reduced and the
Assignor released from its obligations under the Agreement to the extent such
obligations have been assumed by the Assignee.  The assignment provided for
herein shall be without recourse to the Assignor.

            SECTION 3.  PAYMENTS.  As consideration for the assignment and
sale contemplated in Section 2 hereof, the Assignee shall pay to the Assignor on
the date hereof in Federal funds the amount heretofore agreed between them. It
is understood that fees accrued to the date hereof are for the account of the
Assignor and such fees accruing from and including the date hereof are for the
account of the Assignee.  Each of the Assignor and the Assignee hereby agrees
that if it receives any amount under the Agreement which is for the account of
the other party hereto, it shall receive the same for the account of such other
party to the extent of such other party's interest therein and shall promptly
pay the same to such other party.

            SECTION 4.  CONSENT OF THE ISSUING BANK.  This Agreement is
conditioned upon the consent of the Issuing Banks pursuant to Section 11.06(c)
of the Agreement.

                                        4

<PAGE>

            SECTION 5.  NON-RELIANCE ON ASSIGNOR.  The Assignor makes no
representation or warranty in connection with, and shall have no responsibility
with respect to, the solvency, financial condition or statements of the Company,
the existence or value of the Collateral or the validity and enforceability of
the obligations of the Company in respect of any Financing Document.  The
Assignee acknowledges that it has, independently and without reliance on the
Assignor, and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement and will continue to be responsible for making its own independent
appraisal of the business, affairs and financial condition of the Company.

            SECTION 6.  GOVERNING LAW.  This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.

            SECTION 7.  COUNTERPARTS.  This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument.

                                        5

<PAGE>

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

                                        [ASSIGNOR]

                                        By___________________
                                          Title:

                                        [ASSIGNEE]

                                        By___________________
                                          Title:

The undersigned consents to the foregoing assignment:

                                        THE BANK OF NEW YORK,
                                            as Issuing Bank

                                        By____________________
                                          Title:

                                        6

<PAGE>

                                                              SCHEDULE I

                          LIST OF COMMITMENTS

BANK                            COMMITMENT
----                            ----------

The Bank of New York                   $22,837,500

Bank of America National
 Trust and Savings Association          22,837,500

Bankers Trust Company                   22,837,500

Morgan Guaranty Trust
  Company of New York                   22,837,500
                                       -----------
TOTAL                                  $91,350,000
                                       -----------
                                       -----------

                                        7

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