Document:

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                                  EXHIBIT 10.4

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                                CREDIT AGREEMENT

                                  BY AND AMONG

                         PRIMEDEX HEALTH SYSTEMS, INC.,

                                   AS PARENT,

              EACH OF ITS SUBSIDIARIES THAT ARE SIGNATORIES HERETO

                                  AS BORROWERS,

                                       AND

                     THE LENDERS THAT ARE SIGNATORIES HERETO

                                 AS THE LENDERS,

                                       AND

                           WELLS FARGO FOOTHILL, INC.

                    AS THE ARRANGER AND ADMINISTRATIVE AGENT

                           DATED AS OF JULY [ ], 2004

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                                TABLE OF CONTENTS
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1.       DEFINITIONS AND CONSTRUCTION..........................................1

         1.1      Definitions..................................................1

         1.2      Accounting Terms.............................................1

         1.3      Code.........................................................1

         1.4      Construction.................................................1

         1.5      Schedules and Exhibits.......................................2

2.       LOAN AND TERMS OF PAYMENT.............................................2

         2.1      Revolver Advances............................................2

         2.2      Term Loan....................................................3

         2.3      Borrowing Procedures and Settlements.........................3

         2.4      Payments.....................................................8

         2.5      Overadvances................................................11

         2.6      Interest Rates and Letter of Credit Fee:  Rates, Payments,
                  and Calculations............................................11

         2.7      Cash Management.............................................12

         2.8      Crediting Payments;.........................................14

         2.9      Designated Account..........................................14

         2.10     Maintenance of Loan Account; Statements of Obligations......14

         2.11     Fees........................................................15

         2.12     Letters of Credit...........................................15

         2.13     LIBOR Option................................................18

         2.14     Capital Requirements........................................20

         2.15     Joint and Several Liability of Borrowers....................20

3.       CONDITIONS; TERM OF AGREEMENT........................................23

         3.1      Conditions Precedent to the Initial Extension of Credit.....23

         3.2      Conditions Precedent to all Extensions of Credit............23

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         3.3      Term........................................................23

         3.4      Effect of Termination.......................................24

         3.5      Early Termination by Borrowers..............................24

4.       REPRESENTATIONS AND WARRANTIES.......................................25

         4.1      No Encumbrances.............................................25

         4.2      Eligible Accounts...........................................25

         4.3      [Intentionally Omitted].....................................25

         4.4      Equipment...................................................25

         4.5      Location of Equipment.......................................25

         4.7      State of Incorporation; Location of Chief Executive Office;
                  Organizational Identification Number; Commercial Tort
                  Claims......................................................26

         4.8      Due Organization and Qualification; Subsidiaries............26

         4.9      Due Authorization; No Conflict..............................26

         4.10     Litigation..................................................28

         4.11     No Material Adverse Change..................................28

         4.12     Fraudulent Transfer.........................................28

         4.13     Employee Benefits...........................................29

         4.14     Environmental Condition.....................................29

         4.15     Intellectual Property.......................................29

         4.16     Leases......................................................29

         4.17     Deposit Accounts and Securities Accounts....................29

         4.18     Complete Disclosure.........................................29

         4.19     Indebtedness................................................30

         4.20     Restructuring Documents.....................................30

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         4.21     Permits, Etc................................................30

         4.22     Material Contracts..........................................30

         4.23     Management Agreements.......................................31

         4.24     Third Party Payors..........................................31

         4.25     Indenture Documents.........................................32

         4.26     Compliance with Healthcare Laws and Regulations.............32

         4.27     Other Healthcare Regulatory Matters.........................34

         4.28     HIPAA Compliance............................................34

         4.29     Non-Material Subsidiaries...................................35

         4.30     DVI Revolver................................................35

5.       AFFIRMATIVE COVENANTS................................................35

         5.1      Accounting System...........................................35

         5.2      Collateral Reporting........................................35

         5.3      Financial Statements, Reports, Certificates.................36

         5.4      Guarantor Reports...........................................36

         5.5      Inspection..................................................36

         5.6      Maintenance of Properties...................................36

         5.7      Taxes.......................................................36

         5.8      Insurance...................................................36

         5.9      Location of Equipment.......................................37

         5.10     Compliance with Laws........................................37

         5.11     Leases......................................................37

         5.12     Existence...................................................38

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         5.13     Environmental...............................................38

         5.14     Disclosure Updates..........................................38

         5.16     Formation of Subsidiaries...................................38

         5.17     Material Documents..........................................39

         5.18     Obtaining of Permits, Etc...................................39

         5.19     Compliance with Management Agreements.......................39

         5.20     Accreditation and Licensing.................................39

6.       NEGATIVE COVENANTS...................................................40

         6.1      Indebtedness................................................40

         6.2      Liens.......................................................41

         6.3      Restrictions on Fundamental Changes.........................41

         6.4      Disposal of Assets..........................................41

         6.5      Change Name.................................................41

         6.6      Nature of Business..........................................41

         6.7      Prepayments and Amendments..................................41

         6.8      [Intentionally Omitted].....................................42

         6.9      Consignments................................................42

         6.10     Distributions...............................................42

         6.11     Accounting Methods..........................................42

         6.12     Investments.................................................43

         6.13     Transactions with Affiliates................................43

         6.14     Use of Proceeds.............................................43

         6.15     Inventory and Equipment with Bailees........................43

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                                TABLE OF CONTENTS
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         6.16     Financial Covenants.........................................43

         6.17     Non-Material Subsidiaries...................................47

         6.18     DVI Revolver Agreement......................................47

7.       EVENTS OF DEFAULT....................................................47

8.       THE LENDER GROUP'S RIGHTS AND REMEDIES...............................48

         8.1      Rights and Remedies.........................................48

         8.2      Remedies Cumulative.........................................49

         8.3      Court Order With Respect to Governmental Account Debtor.....49

9.       TAXES AND EXPENSES...................................................49

10.      WAIVERS; INDEMNIFICATION.............................................49

         10.1     Demand; Protest; etc........................................49

         10.2     The Lender Group's Liability for Borrower Collateral........50

         10.3     Indemnification.............................................50

11.      NOTICES..............................................................50

12.      CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER...........................52

13.      ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS...........................52

         13.1     Assignments and Participations..............................52

         13.2     Successors..................................................55

14.      AMENDMENTS; WAIVERS..................................................55

         14.1     Amendments and Waivers......................................55

         14.2     Replacement of Holdout Lender...............................56

         14.3     No Waivers; Cumulative Remedies.............................56

15.      AGENT; THE LENDER GROUP..............................................57

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                                TABLE OF CONTENTS
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         15.1     Appointment and Authorization of Agent......................57

         15.2     Delegation of Duties........................................57

         15.3     Liability of Agent..........................................58

         15.4     Reliance by Agent...........................................58

         15.5     Notice of Default or Event of Default.......................58

         15.6     Credit Decision.............................................59

         15.7     Costs and Expenses; Indemnification.........................59

         15.8     Agent in Individual Capacity................................60

         15.9     Successor Agent.............................................60

         15.10    Lender in Individual Capacity...............................60

         15.11    Withholding Taxes...........................................61

         15.12    Collateral Matters..........................................63

         15.13    Restrictions on Actions by Lenders; Sharing of Payments.....63

         15.14    Agency for Perfection.......................................64

         15.15    Payments by Agent to the Lenders............................64

         15.16    Concerning the Collateral and Related Loan Documents........64

         15.17    Field Audits and Examination Reports; Confidentiality;
                  Disclaimers by Lenders; Other Reports and Information.......64

         15.18    Several Obligations; No Liability...........................65

         15.19    Bank Product Providers......................................66

16.      GENERAL PROVISIONS...................................................66

         16.1     Effectiveness...............................................66

         16.2     Section Headings............................................66

         16.3     Interpretation..............................................66

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         16.4     Severability of Provisions..................................66

         16.5     Counterparts; Electronic Execution..........................66

         16.6     Revival and Reinstatement of Obligations....................66

         16.7     Confidentiality.............................................67

         16.8     Integration.................................................67

         16.9     Beverly Radiology Medical Group III as Agent for Borrowers..67

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                             EXHIBITS AND SCHEDULES

Exhibit A-1                         Form of Assignment and Acceptance
Exhibit B-1                         Form of Borrowing Base Certificate
Exhibit C-1                         Form of Compliance Certificate
Exhibit L-1                         Form of LIBOR Notice

Schedule A-1                        Agent's Account
Schedule C-1                        Commitments
Schedule D-1                        Designated Account
Schedule E-1                        Eligible Equipment
Schedule P-1                        Permitted Holders
Schedule P-2                        Permitted Liens
Schedule R-1                        Real Property Collateral
Schedule 1.1                        Definitions
Schedule 2.7(a)                     Cash Management Banks
Schedule 3.1                        Conditions Precedent
Schedule 4.5                        Locations of Equipment
Schedule 4.7(a)                     States of Organization
Schedule 4.7(b)                     Chief Executive Offices
Schedule 4.7(c)                     Organizational Identification Numbers
Schedule 4.7(d)                     Commercial Tort Claims
Schedule 4.8(b)                     Capitalization of Parent and Borrowers
Schedule 4.8(c)                     Capitalization of Parent's Subsidiaries
Schedule 4.10                       Litigation
Schedule 4.14                       Environmental Matters
Schedule 4.15                       Intellectual Property
Schedule 4.17                       Deposit Accounts and Securities Accounts
Schedule 4.19                       Permitted Indebtedness
Schedule 4.22.....                  Material Contracts
Schedule 4.26.....                  Compliance with Healthcare Regulations
Schedule 4.27 ....                  Other Healthcare Regulatory Matters
Schedule 5.2                        Collateral Reporting
Schedule 5.3                        Financial Statements, Reports, Certificates
Schedule 6.13.....                  Transactions with Affiliates

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                                CREDIT AGREEMENT

         THIS CREDIT AGREEMENT (this "AGREEMENT"), is entered into as of July [
], 2004, by and among the lenders identified on the signature pages hereof (such
lenders, together with their respective successors and permitted assigns, are
referred to hereinafter each individually as a "Lender" and collectively as the
"LENDERS"), and WELLS FARGO FOOTHILL, INC., a California corporation, as the
arranger and administrative agent for the Lenders (in such capacity, together
with its successors and assigns in such capacity, "AGENT"), and PRIMEDEX HEALTH
SYSTEMS, INC., a New York corporation ("PARENT"), and each of Parent's
Subsidiaries identified on the signature pages hereof (such Subsidiaries, are
referred to hereinafter each individually as a "BORROWER", and individually and
collectively, jointly and severally, as the "BORROWERS").

         The parties agree as follows:

1.       DEFINITIONS AND CONSTRUCTION.

         1.1      DEFINITIONS. Capitalized terms used in this Agreement shall
                  have the meanings specified therefor on SCHEDULE 1.1.

         1.2      ACCOUNTING TERMS. All accounting terms not specifically
                  defined herein shall be construed in accordance with GAAP.
                  When used herein, the term "financial statements" shall
                  include the notes and schedules thereto. Whenever the term
                  "Borrowers" or the term "Parent" is used in respect of a
                  financial covenant or a related definition, it shall be
                  understood to mean Parent and its Subsidiaries on a
                  consolidated basis unless the context clearly requires
                  otherwise.

         1.3      CODE. Any terms used in this Agreement that are defined in the
                  Code shall be construed and defined as set forth in the Code
                  unless otherwise defined herein, PROVIDED, HOWEVER, that to
                  the extent that the Code is used to define any term herein and
                  such term is defined differently in different Articles of the
                  Code, the definition of such term contained in Article 9 shall
                  govern.

         1.4      CONSTRUCTION. Unless the context of this Agreement or any
                  other Loan Document clearly requires otherwise, references to
                  the plural include the singular, references to the singular
                  include the plural, the terms "includes" and "including" are
                  not limiting, and the term "or" has, except where otherwise
                  indicated, the inclusive meaning represented by the phrase
                  "and/or." The words "hereof," "herein," "hereby," "hereunder,"
                  and similar terms in this Agreement or any other Loan Document
                  refer to this Agreement or such other Loan Document, as the
                  case may be, as a whole and not to any particular provision of
                  this Agreement or such other Loan Document, as the case may
                  be. Section, subsection, clause, schedule, and exhibit
                  references herein are to this Agreement unless otherwise
                  specified. Any reference in this Agreement or in the other
                  Loan Documents to any agreement, instrument, or document shall
                  include all alterations, amendments, changes, extensions,
                  modifications, renewals, replacements, substitutions,
                  joinders, and supplements, thereto and thereof, as applicable
                  (subject to any restrictions on such alterations, amendments,
                  changes, extensions, modifications, renewals, replacements,
                  substitutions, joinders, and supplements set forth herein).
                  Any reference herein to the satisfaction or repayment in full
                  of the Obligations shall mean the repayment in full in cash
                  (or cash collateralization in accordance with the terms
                  hereof) of all Obligations other than contingent
                  indemnification Obligations and other than any Bank Product
                  Obligations that, at such time, are allowed by the applicable

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                  Bank Product Provider to remain outstanding and are not
                  required to be repaid or cash collateralized pursuant to the
                  provisions of this Agreement. Any reference herein to any
                  Person shall be construed to include such Person's successors
                  and assigns. Any requirement of a writing contained herein or
                  in the other Loan Documents shall be satisfied by the
                  transmission of a Record and any Record transmitted shall
                  constitute a representation and warranty as to the accuracy
                  and completeness of the information contained therein.

         1.5      SCHEDULES AND EXHIBITS. All of the schedules and exhibits
                  attached to this Agreement shall be deemed incorporated herein
                  by reference.

2.       LOAN AND TERMS OF PAYMENT.

         2.1      REVOLVER ADVANCES.

         (a)      Subject to the terms and conditions of this Agreement, and
                  during the term of this Agreement, each Lender with a Revolver
                  Commitment agrees (severally, not jointly or jointly and
                  severally) to make advances ("ADVANCES") to Borrowers in an
                  amount at any one time outstanding not to exceed such Lender's
                  Pro Rata Share of an amount equal TO THE LESSER OF (i) the
                  Maximum Revolver Amount LESS the Letter of Credit Usage, or
                  (ii) the Borrowing Base LESS the Letter of Credit Usage.

         (b)      Notwithstanding anything to the contrary in this Agreement, in
                  addition to Advances made pursuant to SECTION 2.1(a), during
                  the term of this Agreement, each Lender with a Revolver
                  Commitment agrees (severally, not jointly or jointly and
                  severally) to make additional Advances ("OVERADVANCE SUBLINE
                  ADVANCES") to Borrowers so long as (A) after giving effect to
                  all such Advances, the Revolver Usage (inclusive of all extant
                  Advances made pursuant to this SECTION 2.1(b)) does not exceed
                  the Borrowing Base by more than (i) from and after the Closing
                  Date until (but excluding) the date that is the earlier of
                  October 1, 2005 and the Funding Date, if any, of the Term
                  Loan, the LESSER of (x) $2,000,000 and (y) one-month of the
                  average Capitation Receipts for the immediately preceding
                  six-month period, and (ii) from and after the date that is the
                  earlier of October 1, 2005 and the Funding Date, if any, of
                  the Term Loan, the LESSER of (x) $1,000,000 and (y) one-month
                  of the average Capitation Receipts for the immediately
                  preceding six-month period; and (B) after giving effect to all
                  such Advances, the Revolver Usage (inclusive of all extant
                  Advances made pursuant to this SECTION 2.1(b)) does not exceed
                  the Maximum Revolver Amount. Except as provided in this
                  SECTION 2.1(b) and in SECTION 2.6(a), Overadvance Subline
                  Advances shall be subject to the same terms and conditions as
                  any other Advance.

         (c)      Anything to the contrary in this SECTION 2.1 notwithstanding,
                  Agent shall have the right to establish reserves in such
                  amounts, and with respect to such matters, as Agent in its
                  Permitted Discretion shall deem necessary or appropriate,
                  against the Borrowing Base, including reserves (i) with
                  respect to (A) sums that Borrowers are required to pay by any
                  Section of this Agreement or any other Loan Document (such as
                  taxes, assessments, insurance premiums, or, in the case of
                  leased assets, rents or other amounts payable under such
                  leases) and have failed to pay, and (B) amounts owing by
                  Borrowers or their Subsidiaries to any Person to the extent
                  secured by a Lien on, or trust over, any of the Collateral
                  (other than a Permitted Lien), which Lien or trust, in the
                  Permitted Discretion of Agent likely would have a priority
                  superior to the Agent's Liens (such as Liens or trusts in
                  favor of landlords, warehousemen, carriers, mechanics,
                  materialmen, laborers, or suppliers, or Liens or trusts for AD
                  valorem, excise, sales, or other taxes where given priority
                  under applicable law) in and to such item of the Collateral,
                  and (ii) after the occurrence and during the continuance of an
                  Event of Default, with respect to such other matters as Agent
                  in its Permitted Discretion shall deem necessary or
                  appropriate.

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         (d)      Notwithstanding anything to the contrary contained herein, no
                  Lender shall make any Advance or Overadvance Subline Advance
                  to the extent that, after giving effect to any such Advance or
                  Overadvance Subline Advance, the sum of the outstanding
                  principal amount of Advances and Overadvance Subline Advances
                  exceeds an amount equal to Borrowers' Collections with respect
                  to Accounts for the immediately preceding two-month period.

         (e)      Amounts borrowed pursuant to this SECTION 2.1 may be repaid
                  and, subject to the terms and conditions of this Agreement,
                  reborrowed at any time during the term of this Agreement.

         2.2      TERM LOAN. Subject to the terms and conditions of this
                  Agreement, on or prior to December 31, 2004, at Administrative
                  Borrower's written request in accordance with SECTION 2.3,
                  each Lender with a Term Loan Commitment agrees (severally, not
                  jointly or jointly and severally) to make term loans
                  (collectively, the "TERM LOAN") to Borrowers in an amount
                  equal to such Lender's Pro Rata Share of the Term Loan Amount;
                  PROVIDED, however, that the obligations of the Lenders with
                  Term Loan Commitments to make the Term Loan shall be subject
                  to the following conditions (in addition to the other
                  conditions set forth in this Agreement, including SECTION
                  3.2): (a) Borrowers and Agent shall have mutually agreed on a
                  schedule of Equipment to be set forth on SCHEDULE E-1 upon
                  which the Term Loan will be based (such Equipment, "ELIGIBLE
                  EQUIPMENT"); (b) Agent shall be satisfied with the results of
                  an appraisal of the Eligible Equipment conducted by a
                  qualified appraisal company selected by Agent; (c) no Default
                  or Event of Default shall have occurred and be continuing; (d)
                  Agent shall be satisfied that all acts necessary to perfect
                  the Agent's Liens in the Eligible Equipment have been taken;
                  (e) Administrative Borrower shall have made the request for
                  the Term Loan on or prior to December 31, 2004; and (f)
                  Borrowers shall have paid the fee due in connection with the
                  funding of the Term Loan in accordance with the Fee Letter.
                  The Term Loan shall be repaid in quarterly installments, each
                  in an amount equal to 1/20th of the Term Loan Amount, plus
                  accrued and unpaid interest on such amounts, such installments
                  to be due and payable on the first day of each such quarter
                  (commencing on March 1, 2005) and continuing until and
                  including the date of termination of this Agreement, whether
                  by its terms, by prepayment, or by acceleration, on which date
                  the unpaid balance of the Term Loan would be due and payable
                  in full, together with all accrued and unpaid interest on such
                  amount. All amounts outstanding under the Term Loan shall
                  constitute Obligations. Any principal amount of the Term Loan
                  repaid or prepaid may not be reborrowed.

         2.3      BORROWING PROCEDURES AND SETTLEMENTS.

         (a)      PROCEDURE FOR BORROWING. Each Borrowing shall be made by an
                  irrevocable written request by an Authorized Person delivered
                  to Agent. Unless Swing Lender is not obligated to make a Swing
                  Loan pursuant to SECTION 2.3(b) below, such notice must be
                  received by Agent no later than 10:00 a.m. (California time)
                  on the Business Day that is the requested Funding Date
                  specifying (i) the amount of such Borrowing, and (ii) the
                  requested Funding Date, which shall be a Business Day;
                  PROVIDED, HOWEVER, that if Swing Lender is not obligated to
                  make a Swing Loan as to a requested Borrowing, such notice
                  must be received by Agent no later than 10:00 a.m. (California
                  time) on the Business Day prior to the date that is the

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                  requested Funding Date. At Agent's election, in lieu of
                  delivering the above-described written request, any Authorized
                  Person may give Agent telephonic notice of such request by the
                  required time. In such circumstances, Borrowers agree that any
                  such telephonic notice will be confirmed in writing within 24
                  hours of the giving of such telephonic notice, but the failure
                  to provide such written confirmation shall not affect the
                  validity of the request.

         (b)      MAKING OF SWING LOANS. In the case of a request for an Advance
                  and so long as either (i) the aggregate amount of Swing Loans
                  made since the last Settlement Date plus the amount of the
                  requested Advance does not exceed $4,000,000, or (ii) Swing
                  Lender, in its sole discretion, shall agree to make a Swing
                  Loan notwithstanding the foregoing limitation, Swing Lender,
                  as a Lender, shall make an Advance in the amount of such
                  Borrowing (any such Advance made solely by Swing Lender as a
                  Lender pursuant to this SECTION 2.3(b) being referred to as a
                  "SWING LOAN" and such Advances being referred to collectively
                  as "SWING LOANS") available to Borrowers on the Funding Date
                  applicable thereto by transferring immediately available funds
                  to Borrowers' Designated Account. Each Swing Loan shall be
                  deemed to be an Advance hereunder and shall be subject to all
                  the terms and conditions applicable to other Advances, except
                  that all payments on any Swing Loan shall be payable to Swing
                  Lender as a Lender solely for its own account. Subject to the
                  provisions of SECTION 2.3(d)(ii), Swing Lender as a Lender
                  shall not make and shall not be obligated to make any Swing
                  Loan if Swing Lender has actual knowledge that (i) one or more
                  of the applicable conditions precedent set forth in SECTION 3
                  will not be satisfied on the requested Funding Date for the
                  applicable Borrowing, or (ii) the requested Borrowing would
                  exceed the Availability on such Funding Date. Swing Lender as
                  a Lender shall not otherwise be required to determine whether
                  the applicable conditions precedent set forth in SECTION 3
                  have been satisfied on the Funding Date applicable thereto
                  prior to making any Swing Loan. The Swing Loans shall be
                  secured by the Agent's Liens, constitute Obligations
                  hereunder, and bear interest at the rate applicable from time
                  to time to Advances that are Base Rate Loans.

         (c)      MAKING OF LOANS.

         (i)      In the event that Swing Lender is not obligated to make a
                  Swing Loan, then promptly after receipt of a request for a
                  Borrowing pursuant to SECTION 2.3(a), Agent shall notify the
                  Lenders, not later than 1:00 p.m. (California time) on the
                  Business Day immediately preceding the Funding Date applicable
                  thereto, by telecopy, telephone, or other similar form of
                  transmission, of the requested Borrowing. Each Lender shall
                  make the amount of such Lender's Pro Rata Share of the
                  requested Borrowing available to Agent in immediately
                  available funds, to Agent's Account, not later than 10:00 a.m.
                  (California time) on the Funding Date applicable thereto.
                  After Agent's receipt of the proceeds of such Advances (or the
                  Term Loan, as applicable), Agent shall make the proceeds
                  thereof available to Administrative Borrower on the applicable
                  Funding Date by transferring immediately available funds equal
                  to such proceeds received by Agent to Administrative
                  Borrower's Designated Account; PROVIDED, HOWEVER, that,
                  subject to the provisions of SECTION 2.3(d)(ii), Agent shall
                  not request any Lender to make, and no Lender shall have the
                  obligation to make, any Advance (or its portion of the Term
                  Loan) if Agent shall have actual knowledge that (1) one or
                  more of the applicable conditions precedent set forth in
                  SECTION 3 will not be satisfied on the requested Funding Date
                  for the applicable Borrowing unless such condition has been
                  waived, or (2) the requested Borrowing would exceed the
                  Availability on such Funding Date.

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         (ii)     Unless Agent receives notice from a Lender prior to 9:00 a.m.
                  (California time) on the date of a Borrowing, that such Lender
                  will not make available as and when required hereunder to
                  Agent for the account of Borrowers the amount of that Lender's
                  Pro Rata Share of the Borrowing, Agent may assume that each
                  Lender has made or will make such amount available to Agent in
                  immediately available funds on the Funding Date and Agent may
                  (but shall not be so required), in reliance upon such
                  assumption, make available to Borrowers on such date a
                  corresponding amount. If and to the extent any Lender shall
                  not have made its full amount available to Agent in
                  immediately available funds and Agent in such circumstances
                  has made available to Borrowers such amount, that Lender shall
                  on the Business Day following such Funding Date make such
                  amount available to Agent, together with interest at the
                  Defaulting Lender Rate for each day during such period. A
                  notice submitted by Agent to any Lender with respect to
                  amounts owing under this subsection shall be conclusive,
                  absent manifest error. If such amount is so made available,
                  such payment to Agent shall constitute such Lender's Advance
                  (or portion of the Term Loan, as applicable) on the date of
                  Borrowing for all purposes of this Agreement. If such amount
                  is not made available to Agent on the Business Day following
                  the Funding Date, Agent will notify Administrative Borrower of
                  such failure to fund and, upon demand by Agent, Borrowers
                  shall pay such amount to Agent for Agent's account, together
                  with interest thereon for each day elapsed since the date of
                  such Borrowing, at a rate per annum equal to the interest rate
                  applicable at the time to the Advances (or portion of the Term
                  Loan, as applicable) composing such Borrowing. The failure of
                  any Lender to make any Advance (or portion of the Term Loan,
                  as applicable) on any Funding Date shall not relieve any other
                  Lender of any obligation hereunder to make an Advance (or
                  portion of the Term Loan, as applicable) on such Funding Date,
                  but no Lender shall be responsible for the failure of any
                  other Lender to make the Advance (or portion of the Term Loan,
                  as applicable) to be made by such other Lender on any Funding
                  Date.

         (iii)    Agent shall not be obligated to transfer to a Defaulting
                  Lender any payments made by Borrowers to Agent for the
                  Defaulting Lender's benefit, and, in the absence of such
                  transfer to the Defaulting Lender, Agent shall transfer any
                  such payments to each other non-Defaulting Lender member of
                  the Lender Group ratably in accordance with their Commitments
                  (but only to the extent that such Defaulting Lender's Advance
                  was funded by the other members of the Lender Group) or, if so
                  directed by Administrative Borrower and if no Default or Event
                  of Default had occurred and is continuing (and to the extent
                  such Defaulting Lender's Advance was not funded by the Lender
                  Group), retain same to be re-advanced to Borrowers as if such
                  Defaulting Lender had made Advances to Borrowers. Subject to
                  the foregoing, Agent may hold and, in its Permitted
                  Discretion, re-lend to Borrowers for the account of such
                  Defaulting Lender the amount of all such payments received and
                  retained by Agent for the account of such Defaulting Lender.
                  Solely for the purposes of voting or consenting to matters
                  with respect to the Loan Documents, such Defaulting Lender
                  shall be deemed not to be a "Lender" and such Lender's
                  Commitment shall be deemed to be zero. This Section shall
                  remain effective with respect to such Lender until (x) the
                  Obligations under this Agreement shall have been declared or
                  shall have become immediately due and payable, (y) the
                  non-Defaulting Lenders, Agent, and Administrative Borrower
                  shall have waived such Defaulting Lender's default in writing,
                  or (z) the Defaulting Lender makes its Pro Rata Share of the
                  applicable Advance and pays to Agent all amounts owing by
                  Defaulting Lender in respect thereof. The operation of this
                  Section shall not be construed to increase or otherwise affect
                  the Commitment of any Lender, to relieve or excuse the
                  performance by such Defaulting Lender or any other Lender of

                                       5
<PAGE>

                  its duties and obligations hereunder, or to relieve or excuse
                  the performance by Borrowers of their duties and obligations
                  hereunder to Agent or to the Lenders other than such
                  Defaulting Lender. Any such failure to fund by any Defaulting
                  Lender shall constitute a material breach by such Defaulting
                  Lender of this Agreement and shall entitle Administrative
                  Borrower at its option, upon written notice to Agent, to
                  arrange for a substitute Lender to assume the Commitment of
                  such Defaulting Lender, such substitute Lender to be
                  acceptable to Agent. In connection with the arrangement of
                  such a substitute Lender, the Defaulting Lender shall have no
                  right to refuse to be replaced hereunder, and agrees to
                  execute and deliver a completed form of Assignment and
                  Acceptance in favor of the substitute Lender (and agrees that
                  it shall be deemed to have executed and delivered such
                  document if it fails to do so) subject only to being repaid
                  its share of the outstanding Obligations (other than Bank
                  Product Obligations, but including an assumption of its Pro
                  Rata Share of the Risk Participation Liability) without any
                  premium or penalty of any kind whatsoever; provided however,
                  that any such assumption of the Commitment of such Defaulting
                  Lender shall not be deemed to constitute a waiver of any of
                  the Lender Groups' or Borrowers' rights or remedies against
                  any such Defaulting Lender arising out of or in relation to
                  such failure to fund.

         (d)      PROTECTIVE ADVANCES AND OPTIONAL OVERADVANCES.

         (i)      Agent hereby is authorized by Borrowers and the Lenders, from
                  time to time in Agent's sole discretion, (A) after the
                  occurrence and during the continuance of a Default or an Event
                  of Default, or (B) at any time that any of the other
                  applicable conditions precedent set forth in SECTION 3 are not
                  satisfied, to make Advances to Borrowers on behalf of the
                  Lenders that Agent, in its Permitted Discretion deems
                  necessary or desirable (1) to preserve or protect the
                  Collateral, or any portion thereof, (2) to enhance the
                  likelihood of repayment of the Obligations (other than the
                  Bank Product Obligations), or (3) to pay any other amount
                  chargeable to Borrowers pursuant to the terms of this
                  Agreement, including Lender Group Expenses and the costs,
                  fees, and expenses described in SECTION 10 (any of the
                  Advances described in this SECTION 2.3(d)(i) shall be referred
                  to as "PROTECTIVE ADVANCES").

         (ii)     Any contrary provision of this Agreement notwithstanding, the
                  Lenders hereby authorize Agent or Swing Lender, as applicable,
                  and either Agent or Swing Lender, as applicable, may, but is
                  not obligated to, knowingly and intentionally, continue to
                  make Advances (including Swing Loans) to Borrowers
                  notwithstanding that an Overadvance exists or thereby would be
                  created, so long as (A) after giving effect to such Advances,
                  the outstanding Revolver Usage does not exceed the Borrowing
                  Base by more than $2,000,000, and (B) after giving effect to
                  such Advances, the outstanding Revolver Usage (except for and
                  excluding amounts charged to the Loan Account for interest,
                  fees, or Lender Group Expenses) does not exceed the Maximum
                  Revolver Amount. In the event Agent obtains actual knowledge
                  that the Revolver Usage exceeds the amounts permitted by the
                  immediately foregoing provisions, regardless of the amount of,
                  or reason for, such excess, Agent shall notify the Lenders as
                  soon as practicable (and prior to making any (or any
                  additional) intentional Overadvances (except for and excluding
                  amounts charged to the Loan Account for interest, fees, or
                  Lender Group Expenses) unless Agent determines that prior
                  notice would result in imminent harm to the Collateral or its
                  value), and the Lenders with Revolver Commitments thereupon
                  shall, together with Agent, jointly determine the terms of
                  arrangements that shall be implemented with Borrowers intended
                  to reduce, within a reasonable time, the outstanding principal
                  amount of the Advances to Borrowers to an amount permitted by
                  the preceding paragraph. In such circumstances, if any Lender

                                       6
<PAGE>

                  with a Revolver Commitment disagrees over the proposed terms
                  of reduction or repayment of any Overadvance, the terms of
                  reduction or repayment thereof shall be implemented according
                  to the determination of the Required Lenders. Each Lender with
                  a Revolver Commitment shall be obligated to settle with Agent
                  as provided in SECTION 2.3(e) for the amount of such Lender's
                  Pro Rata Share of any unintentional Overadvances by Agent
                  reported to such Lender, any intentional Overadvances made as
                  permitted under this SECTION 2.3(d)(ii), and any Overadvances
                  resulting from the charging to the Loan Account of interest,
                  fees, or Lender Group Expenses.

         (iii)    Each Protective Advance and each Overadvance shall be deemed
                  to be an Advance hereunder, except that no Protective Advance
                  or Overadvance shall be eligible to be a LIBOR Rate Loan and
                  all payments on the Protective Advances shall be payable to
                  Agent solely for its own account. The Protective Advances and
                  Overadvances shall be repayable on demand, secured by the
                  Agent's Liens, constitute Obligations hereunder, and bear
                  interest at the rate applicable from time to time to Advances
                  that are Base Rate Loans. The provisions of this SECTION
                  2.3(D) are for the exclusive benefit of Agent, Swing Lender,
                  and the Lenders and are not intended to benefit any Borrower
                  in any way.

         (e)      SETTLEMENT. It is agreed that each Lender's funded portion of
                  the Advances is intended by the Lenders to equal, at all
                  times, such Lender's Pro Rata Share of the outstanding
                  Advances. Such agreement notwithstanding, Agent, Swing Lender,
                  and the other Lenders agree (which agreement shall not be for
                  the benefit of any Borrower) that in order to facilitate the
                  administration of this Agreement and the other Loan Documents,
                  settlement among the Lenders as to the Advances, the Swing
                  Loans, and the Protective Advances shall take place on a
                  periodic basis in accordance with the following provisions:

         (i)      Agent shall request settlement ("SETTLEMENT") with the Lenders
                  on a weekly basis, or on a more frequent basis if so
                  determined by Agent, (1) on behalf of Swing Lender, with
                  respect to each outstanding Swing Loan, (2) for itself, with
                  respect to the outstanding Protective Advances, and (3) with
                  respect to Borrowers' or their Subsidiaries' Collections
                  received, as to each by notifying the Lenders by telecopy,
                  telephone, or other similar form of transmission, of such
                  requested Settlement, no later than 2:00 p.m. (California
                  time) on the Business Day immediately prior to the date of
                  such requested Settlement (the date of such requested
                  Settlement being the "SETTLEMENT DATE"). Such notice of a
                  Settlement Date shall include a summary statement of the
                  amount of outstanding Advances, Swing Loans, and Protective
                  Advances for the period since the prior Settlement Date.
                  Subject to the terms and conditions contained herein
                  (including SECTION 2.3(b)(iii)): (y) if a Lender's balance of
                  the Advances (including Swing Loans and Protective Advances)
                  exceeds such Lender's Pro Rata Share of the Advances
                  (including Swing Loans and Protective Advances) as of a
                  Settlement Date, then Agent shall, by no later than 12:00 p.m.
                  (California time) on the Settlement Date, transfer in
                  immediately available funds to a Deposit Account of such
                  Lender (as such Lender may designate), an amount such that
                  each such Lender shall, upon receipt of such amount, have as
                  of the Settlement Date, its Pro Rata Share of the Advances
                  (including Swing Loans and Protective Advances), and (z) if a
                  Lender's balance of the Advances (including Swing Loans and
                  Protective Advances) is less than such Lender's Pro Rata Share
                  of the Advances (including Swing Loans and Protective
                  Advances) as of a Settlement Date, such Lender shall no later
                  than 12:00 p.m. (California time) on the Settlement Date
                  transfer in immediately available funds to the Agent's
                  Account, an amount such that each such Lender shall, upon
                  transfer of such amount, have as of the Settlement Date, its
                  Pro Rata Share of the Advances (including Swing Loans and
                  Protective Advances). Such amounts made available to Agent
                  under clause (z) of the immediately preceding sentence shall

                                       7
<PAGE>

                  be applied against the amounts of the applicable Swing Loans
                  or Protective Advances and, together with the portion of such
                  Swing Loans or Protective Advances representing Swing Lender's
                  Pro Rata Share thereof, shall constitute Advances of such
                  Lenders. If any such amount is not made available to Agent by
                  any Lender on the Settlement Date applicable thereto to the
                  extent required by the terms hereof, Agent shall be entitled
                  to recover for its account such amount on demand from such
                  Lender together with interest thereon at the Defaulting Lender
                  Rate.

         (ii)     In determining whether a Lender's balance of the Advances,
                  Swing Loans, and Protective Advances is less than, equal to,
                  or greater than such Lender's Pro Rata Share of the Advances,
                  Swing Loans, and Protective Advances as of a Settlement Date,
                  Agent shall, as part of the relevant Settlement, apply to such
                  balance the portion of payments actually received in good
                  funds by Agent with respect to principal, interest, fees
                  payable by Borrowers and allocable to the Lenders hereunder,
                  and proceeds of Collateral. To the extent that a net amount is
                  owed to any such Lender after such application, such net
                  amount shall be distributed by Agent to that Lender as part of
                  such next Settlement.

         (iii)    Between Settlement Dates, Agent, to the extent no Protective
                  Advances or Swing Loans are outstanding, may pay over to Swing
                  Lender any payments received by Agent, that in accordance with
                  the terms of this Agreement would be applied to the reduction
                  of the Advances, for application to Swing Lender's Pro Rata
                  Share of the Advances. If, as of any Settlement Date,
                  Collections of Borrowers or their Subsidiaries received since
                  the then immediately preceding Settlement Date have been
                  applied to Swing Lender's Pro Rata Share of the Advances other
                  than to Swing Loans, as provided for in the previous sentence,
                  Swing Lender shall pay to Agent for the accounts of the
                  Lenders, and Agent shall pay to the Lenders, to be applied to
                  the outstanding Advances of such Lenders, an amount such that
                  each Lender shall, upon receipt of such amount, have, as of
                  such Settlement Date, its Pro Rata Share of the Advances.
                  During the period between Settlement Dates, Swing Lender with
                  respect to Swing Loans, Agent with respect to Protective
                  Advances, and each Lender (subject to the effect of agreements
                  between Agent and individual Lenders) with respect to the
                  Advances other than Swing Loans and Protective Advances, shall
                  be entitled to interest at the applicable rate or rates
                  payable under this Agreement on the daily amount of funds
                  employed by Swing Lender, Agent, or the Lenders, as
                  applicable.

         (f)      NOTATION. Agent shall record on its books the principal amount
                  of the Advances (or portion of the Term Loan, as applicable)
                  owing to each Lender, including the Swing Loans owing to Swing
                  Lender, and Protective Advances owing to Agent, and the
                  interests therein of each Lender, from time to time and such
                  records shall, absent manifest error, conclusively be presumed
                  to be correct and accurate.

         (g)      LENDERS' FAILURE TO PERFORM. All Advances (other than Swing
                  Loans and Protective Advances) shall be made by the Lenders
                  contemporaneously and in accordance with their Pro Rata
                  Shares. It is understood that (i) no Lender shall be
                  responsible for any failure by any other Lender to perform its
                  obligation to make any Advance (or other extension of credit)
                  hereunder, nor shall any Commitment of any Lender be increased
                  or decreased as a result of any failure by any other Lender to
                  perform its obligations hereunder, and (ii) no failure by any
                  Lender to perform its obligations hereunder shall excuse any
                  other Lender from its obligations hereunder.

         2.4      PAYMENTS.

         (a)      PAYMENTS BY BORROWERS.

                                       8
<PAGE>

         (i)      Except as otherwise expressly provided herein, all payments by
                  Borrowers shall be made to Agent's Account for the account of
                  the Lender Group and shall be made in immediately available
                  funds, no later than 11:00 a.m. (California time) on the date
                  specified herein. Any payment received by Agent later than
                  11:00 a.m. (California time), shall be deemed to have been
                  received on the following Business Day and any applicable
                  interest or fee shall continue to accrue until such following
                  Business Day.

         (ii)     Unless Agent receives notice from Administrative Borrower
                  prior to the date on which any payment is due to the Lenders
                  that Borrowers will not make such payment in full as and when
                  required, Agent may assume that Borrowers have made (or will
                  make) such payment in full to Agent on such date in
                  immediately available funds and Agent may (but shall not be so
                  required), in reliance upon such assumption, distribute to
                  each Lender on such due date an amount equal to the amount
                  then due such Lender. If and to the extent Borrowers do not
                  make such payment in full to Agent on the date when due, each
                  Lender severally shall repay to Agent on demand such amount
                  distributed to such Lender, together with interest thereon at
                  the Defaulting Lender Rate for each day from the date such
                  amount is distributed to such Lender until the date repaid.

         (b)      APPORTIONMENT AND APPLICATION.

         (i)      Except as otherwise provided with respect to Defaulting
                  Lenders and except as otherwise provided in the Loan Documents
                  (including agreements between Agent and individual Lenders),
                  aggregate principal and interest payments shall be apportioned
                  ratably among the Lenders (according to the unpaid principal
                  balance of the Obligations to which such payments relate held
                  by each Lender) and payments of fees and expenses (other than
                  fees or expenses that are for Agent's separate account, after
                  giving effect to any agreements between Agent and individual
                  Lenders) shall be apportioned ratably among the Lenders having
                  a Pro Rata Share of the type of Commitment or Obligation to
                  which a particular fee relates. All payments shall be remitted
                  to Agent and all such payments, and all proceeds of Collateral
                  received by Agent, shall be applied as follows:

         (1)      FIRST, ratably to pay any Lender Group Expenses then due to
                  Agent or any of the Lenders under the Loan Documents, until
                  paid in full,

         (2)      SECOND, ratably to pay any fees or premiums then due to Agent
                  (for its separate account, after giving effect to any
                  agreements between Agent and individual Lenders) or any of the
                  Lenders under the Loan Documents until paid in full,

         (3)      THIRD, to pay interest due in respect of all Protective
                  Advances until paid in full,

         (4)      FOURTH, to pay the principal of all Protective Advances until
                  paid in full,

         (5)      FIFTH, ratably to pay interest due in respect of the Advances
                  (other than Protective Advances), the Swing Loans, and the
                  Term Loan until paid in full,

         (6)      SIXTH, ratably to pay all principal amounts then due and
                  payable (other than as a result of an acceleration thereof)
                  with respect to the Term Loan until paid in full,

         (7)      SEVENTH, to pay the principal of all Swing Loans until paid in
                  full,

         (8)      EIGHTH, so long as no Event of Default has occurred and is
                  continuing, and at Agent's election (which election Agent
                  agrees will not be made if an Overadvance would be created
                  thereby), to pay amounts then due and owing by Parent or its
                  Subsidiaries in respect of Bank Products, until paid in full,

                                       9
<PAGE>

         (9)      NINTH, so long as no Event of Default has occurred and is
                  continuing, to pay the principal of all Advances until paid in
                  full,

         (10)     TENTH, if an Event of Default has occurred and is continuing,
                  ratably (i) to pay the principal of all Advances until paid in
                  full, (ii) to Agent, to be held by Agent, for the ratable
                  benefit of Issuing Lender and those Lenders having a Revolver
                  Commitment, as cash collateral in an amount up to 105% of the
                  Letter of Credit Usage until paid in full, and (iii) to Agent,
                  to be held by Agent, for the benefit of the Bank Product
                  Providers, as cash collateral in an amount up to the amount of
                  the Bank Product Reserve established prior to the occurrence
                  of, and not in contemplation of, the subject Event of Default
                  until Parent's and its Subsidiaries' obligations in respect of
                  Bank Products have been paid in full or the cash collateral
                  amount has been exhausted,

         (11)     ELEVENTH, if an Event of Default has occurred and is
                  continuing, to pay the outstanding principal balance of the
                  Term Loan (in the inverse order of the maturity of the
                  installments due thereunder) until the Term Loan is paid in
                  full,

         (12)     TWELFTH, if an Event of Default has occurred and is
                  continuing, to pay any other Obligations (including the
                  provision of amounts to Agent, to be held by Agent, for the
                  benefit of the Bank Product Providers, as cash collateral in
                  an amount up to the amount determined by Agent in its
                  Permitted Discretion as the amount necessary to secure
                  Parent's and its Subsidiaries' obligations in respect of Bank
                  Products), and

         (13)     THIRTEENTH, to Borrowers (to be wired to the Designated
                  Account) or such other Person entitled thereto under
                  applicable law.

         (ii)     Agent promptly shall distribute to each Lender, pursuant to
                  the applicable wire instructions received from each Lender in
                  writing, such funds as it may be entitled to receive, subject
                  to a Settlement delay as provided in SECTION 2.3(e).

         (iii)    In each instance, so long as no Event of Default has occurred
                  and is continuing, this SECTION 2.4(b) shall not apply to any
                  payment made by Borrowers to Agent and specified by Borrowers
                  to be for the payment of specific Obligations then due and
                  payable (or prepayable) under any provision of this Agreement.

         (iv)     For purposes of the foregoing, "paid in full" means payment of
                  all amounts owing under the Loan Documents according to the
                  terms thereof, including loan fees, service fees, professional
                  fees, interest (and specifically including interest accrued
                  after the commencement of any Insolvency Proceeding), default
                  interest, interest on interest, and expense reimbursements,
                  whether or not any of the foregoing would be or is allowed or
                  disallowed in whole or in part in any Insolvency Proceeding.

         (v)      In the event of a direct conflict between the priority
                  provisions of this SECTION 2.4 and other provisions contained
                  in any other Loan Document, it is the intention of the parties
                  hereto that such priority provisions in such documents shall
                  be read together and construed, to the fullest extent
                  possible, to be in concert with each other. In the event of
                  any actual, irreconcilable conflict that cannot be resolved as
                  aforesaid, the terms and provisions of this SECTION 2.4 shall
                  control and govern.

                                       10
<PAGE>

         (c)      PREPAYMENTS.

         (i)      If at any time Agent determines that the outstanding principal
                  amount of the Term Loan is greater than the Term Loan Formula
                  Amount, Borrowers shall immediately prepay the outstanding
                  principal of the Term Loan in accordance with SECTION
                  2.4(d)(i) in an amount equal to such excess.

         (d)      APPLICATION OF PROCEEDS.

         (i)      Each prepayment pursuant to SUBCLAUSE (C)(I) above shall be
                  applied to the outstanding principal amount of the Term Loan,
                  until paid in full, in the inverse order of maturity.

         (e)      INTEREST AND FEES. Any prepayment made pursuant to SECTION
                  2.4(c) shall be accompanied by accrued interest on the
                  principal amount being prepaid to the date of prepayment.

         2.5      OVERADVANCES. If, at any time or for any reason, other than
                  pursuant to SECTION 2.1(b), the amount of Obligations owed by
                  Borrowers to the Lender Group pursuant to SECTION 2.1 or
                  SECTION 2.12 is greater than any of the limitations set forth
                  in SECTION 2.1 or SECTION 2.12, as applicable (an
                  "OVERADVANCE"), Borrowers immediately shall pay to Agent, in
                  cash, the amount of such excess, which amount shall be used by
                  Agent to reduce the Obligations in accordance with the
                  priorities set forth in SECTION 2.4(b). In addition, Borrowers
                  hereby promise to pay the Obligations (including principal,
                  interest, fees, costs, and expenses) in Dollars in full as and
                  when due and payable under the terms of this Agreement and the
                  other Loan Documents.

         2.6      INTEREST RATES AND LETTER OF CREDIT FEE: RATES, PAYMENTS, AND
                  CALCULATIONS.

         (a)      INTEREST RATES. Except as provided in clause (c) below, all
                  Obligations (except for undrawn Letters of Credit and except
                  for Bank Product Obligations) that have been charged to the
                  Loan Account pursuant to the terms hereof shall bear interest
                  on the Daily Balance thereof as follows (i) if the relevant
                  Obligation is an Advance that is a LIBOR Rate Loan, at a per
                  annum rate equal to the LIBOR Rate plus the LIBOR Rate Margin,
                  (ii) if the relevant Obligation is a portion of the Term Loan
                  that is a Base Rate Loan, at a per annum rate equal to the
                  Base Rate plus the Base Rate Term Loan Margin, (iii) if the
                  relevant Obligation is an Overadvance Subline Advance, at a
                  per annum rate equal to the Base Rate plus the Overadvance
                  Subline Advance Margin, and (iv) otherwise, at a per annum
                  rate equal to the Base Rate plus the Base Rate Margin.

         (b)      LETTER OF CREDIT FEE. Borrowers shall pay Agent (for the
                  ratable benefit of the Lenders with a Revolver Commitment,
                  subject to any agreements between Agent and individual
                  Lenders), a Letter of Credit fee (in addition to the charges,
                  commissions, fees, and costs set forth in SECTION 2.12(E))
                  which shall accrue at a rate equal to 3.00% per annum times
                  the Daily Balance of the undrawn amount of all outstanding
                  Letters of Credit.

         (c)      DEFAULT RATE. Upon the occurrence and during the continuation
                  of an Event of Default (and at the election of Agent or the
                  Required Lenders),

                                       11
<PAGE>

         (i)      all Obligations (except for undrawn Letters of Credit and
                  except for Bank Product Obligations) that have been charged to
                  the Loan Account pursuant to the terms hereof shall bear
                  interest on the Daily Balance thereof at a per annum rate
                  equal to 2 percentage points above the per annum rate
                  otherwise applicable hereunder, and

         (ii)     the Letter of Credit fee provided for above shall be increased
                  to 2 percentage points above the per annum rate otherwise
                  applicable hereunder.

         (d)      PAYMENT. Except as provided to the contrary in SECTION 2.11 or
                  SECTION 2.13(a), interest, Letter of Credit fees, and all
                  other fees payable hereunder shall be due and payable in cash,
                  in arrears, on the first day of each month at any time that
                  Obligations or Commitments are outstanding. Borrowers hereby
                  authorize Agent, from time to time, without prior notice to
                  Borrowers, to charge all interest and fees (when due and
                  payable), all Lender Group Expenses (as and when incurred),
                  all charges, commissions, fees, and costs provided for in
                  SECTION 2.12(e) (as and when accrued or incurred), all fees
                  and costs provided for in SECTION 2.11 (as and when accrued or
                  incurred), and all other payments as and when due and payable
                  under any Loan Document (including the amounts due and payable
                  with respect to the Term Loan and including any amounts due
                  and payable to the Bank Product Providers in respect of Bank
                  Products up to the amount of the Bank Product Reserve) to
                  Borrowers' Loan Account, which amounts thereafter shall
                  constitute Advances hereunder and shall accrue interest at the
                  rate then applicable to Advances hereunder. Any interest not
                  paid when due shall be compounded by being charged to
                  Borrowers' Loan Account and shall thereafter constitute
                  Advances hereunder and shall accrue interest at the rate then
                  applicable to Advances that are Base Rate Loans hereunder.

         (e)      COMPUTATION. All interest and fees chargeable under the Loan
                  Documents shall be computed on the basis of a 360-day year for
                  the actual number of days elapsed. In the event the Base Rate
                  is changed from time to time hereafter, the rates of interest
                  hereunder based upon the Base Rate automatically and
                  immediately shall be increased or decreased by an amount equal
                  to such change in the Base Rate.

         (f)      INTENT TO LIMIT CHARGES TO MAXIMUM LAWFUL RATE. In no event
                  shall the interest rate or rates payable under this Agreement,
                  plus any other amounts paid in connection herewith, exceed the
                  highest rate permissible under any law that a court of
                  competent jurisdiction shall, in a final determination, deem
                  applicable. Borrowers and the Lender Group, in executing and
                  delivering this Agreement, intend legally to agree upon the
                  rate or rates of interest and manner of payment stated within
                  it; PROVIDED, HOWEVER, that, anything contained herein to the
                  contrary notwithstanding, if said rate or rates of interest or
                  manner of payment exceeds the maximum allowable under
                  applicable law, then, IPSO FACTO, as of the date of this
                  Agreement, Borrowers are and shall be liable only for the
                  payment of such maximum as allowed by law, and payment
                  received from Borrowers in excess of such legal maximum,
                  whenever received, shall be applied to reduce the principal
                  balance of the Obligations to the extent of such excess.

         2.7      CASH MANAGEMENT.

         (a)      Borrowers shall and shall cause each of their Subsidiaries to
                  (i) establish and maintain cash management services of a type
                  and on terms satisfactory to Agent at one or more of the banks
                  set forth on SCHEDULE 2.7(a) (each a "CASH MANAGEMENT BANK"),
                  and shall request in writing and otherwise take such
                  reasonable steps to ensure that all of their and their
                  Subsidiaries' Account Debtors forward payment of the amounts
                  owed by them directly to such Cash Management Bank, and (ii)
                  deposit or cause to be deposited promptly, and in any event no
                  later than the first Business Day after the date of receipt
                  thereof, all of their Collections (including those sent
                  directly by their Account Debtors to Borrowers or their
                  Subsidiaries) into a bank account in Agent's name (a "CASH
                  MANAGEMENT ACCOUNT") at one of the Cash Management Banks.

                                       12
<PAGE>

         (b)      Each Cash Management Bank shall establish and maintain Cash
                  Management Agreements with Agent and Borrowers, in form and
                  substance acceptable to Agent. Each such Cash Management
                  Agreement shall provide, among other things, that (i) the Cash
                  Management Bank will comply with any instructions originated
                  by Agent directing the disposition of the funds in such Cash
                  Management Account without further consent by Borrowers or
                  their Subsidiaries, as applicable, (ii) the Cash Management
                  Bank has no rights of setoff or recoupment or any other claim
                  against the applicable Cash Management Account, other than for
                  payment of its service fees and other charges directly related
                  to the administration of such Cash Management Account and for
                  returned checks or other items of payment, and (iii) it will
                  forward by daily sweep all amounts in the applicable Cash
                  Management Account to the Agent's Account.

         (c)      So long as no Default or Event of Default has occurred and is
                  continuing, Administrative Borrower may amend SCHEDULE 2.7(a)
                  to add or replace a Cash Management Bank or Cash Management
                  Account; PROVIDED, HOWEVER, that (i) such prospective Cash
                  Management Bank shall be reasonably satisfactory to Agent, and
                  (ii) prior to the time of the opening of such Cash Management
                  Account, a Borrower or its Subsidiary, as applicable, and such
                  prospective Cash Management Bank shall have executed and
                  delivered to Agent a Cash Management Agreement. Borrowers (or
                  their Subsidiaries, as applicable) shall close any of their
                  Cash Management Accounts (and establish replacement cash
                  management accounts in accordance with the foregoing sentence)
                  promptly and in any event within 30 days of notice from Agent
                  that the creditworthiness of any Cash Management Bank is no
                  longer acceptable in Agent's reasonable judgment, or as
                  promptly as practicable and in any event within 60 days of
                  notice from Agent that the operating performance, funds
                  transfer, or availability procedures or performance of the
                  Cash Management Bank with respect to Cash Management Accounts
                  or Agent's liability under any Cash Management Agreement with
                  such Cash Management Bank is no longer acceptable in Agent's
                  reasonable judgment.

         (d)      The Cash Management Accounts shall be cash collateral accounts
                  subject to Control Agreements.

         (e)      Borrowers and their Subsidiaries hereby represent and warrant
                  that, as of the Closing Date, all Governmental Account Debtors
                  make payments on their Accounts in checks sent directly to the
                  applicable Borrower or Subsidiary and not to a Deposit Account
                  owned by or in the name of the applicable Borrower or
                  Subsidiary. Borrowers and their Subsidiaries hereby agree that
                  upon receipt of any payment from a Governmental Account
                  Debtor, such Borrower or Subsidiary shall, on a daily basis
                  (or such other periodic basis as Agent may otherwise agree to
                  in writing) immediately transfer all such Collections to a
                  Cash Management Account owned by Agent. Without limiting any
                  of the foregoing, if, after the Closing Date, Governmental
                  Account Debtors make payments (whether by wire transfer or
                  otherwise) on their Accounts to a Deposit Account owned by or
                  in the name of the applicable Borrower or Subsidiary, then
                  Borrowers and their Subsidiaries and the applicable depository
                  bank shall execute an agreement (the "GOVERNMENTAL ACCOUNT
                  DEBTOR SWEEP AGREEMENT"), reasonably satisfactory in form and
                  substance to Agent, pursuant to which the applicable
                  depository bank shall agree that it will, on a daily basis (or
                  such other periodic basis as Agent may otherwise agree to in
                  writing) immediately transfer, without further instruction
                  from Borrowers or their Subsidiaries, all funds that at such
                  time are on deposit in such Deposit Account to the Agent's
                  Account.

                                       13
<PAGE>

         (f)      In the event of any conflict or inconsistency between this
                  SECTION 2.7 and any Management Agreement, this SECTION 2.7
                  shall govern and control.

         2.8      CREDITING PAYMENTS;. The receipt of any payment item by Agent
                  (whether from transfers to Agent by the Cash Management Banks
                  pursuant to the Cash Management Agreements or otherwise) shall
                  not be considered a payment on account unless such payment
                  item is a wire transfer of immediately available federal funds
                  made to the Agent's Account or unless and until such payment
                  item is honored when presented for payment. Should any payment
                  item not be honored when presented for payment, then Borrowers
                  shall be deemed not to have made such payment and interest
                  shall be calculated accordingly. Anything to the contrary
                  contained herein notwithstanding, any payment item shall be
                  deemed received by Agent only if it is received into the
                  Agent's Account on a Business Day on or before 11:00 a.m.
                  (California time). If any payment item is received into the
                  Agent's Account on a non-Business Day or after 11:00 a.m.
                  (California time) on a Business Day, it shall be deemed to
                  have been received by Agent as of the opening of business on
                  the immediately following Business Day.

         2.9      DESIGNATED ACCOUNT. Agent is authorized to make the Advances
                  and the Term Loan, and Issuing Lender is authorized to issue
                  the Letters of Credit, under this Agreement based upon
                  telephonic or other instructions received from anyone
                  purporting to be an Authorized Person or, without
                  instructions, if pursuant to SECTION 2.6(D). Administrative
                  Borrower agrees to establish and maintain the Designated
                  Account with the Designated Account Bank for the purpose of
                  receiving the proceeds of the Advances requested by Borrowers
                  and made by Agent or the Lenders hereunder. Unless otherwise
                  agreed by Agent and Administrative Borrower, any Advance,
                  Protective Advance, or Swing Loan requested by Borrowers and
                  made by Agent or the Lenders hereunder shall be made to the
                  Designated Account.

         2.10     MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS. Agent
                  shall maintain an account on its books in the name of
                  Borrowers (the "LOAN ACCOUNT") on which Borrowers will be
                  charged with the Term Loan, all Advances (including Protective
                  Advances and Swing Loans) made by Agent, Swing Lender, or the
                  Lenders to Borrowers or for Borrowers' account, the Letters of
                  Credit issued by Issuing Lender for Borrowers' account, and
                  with all other payment Obligations hereunder or under the
                  other Loan Documents (except for Bank Product Obligations),
                  including, accrued interest, fees and expenses, and Lender
                  Group Expenses. In accordance with SECTION 2.8, the Loan
                  Account will be credited with all payments received by Agent
                  from Borrowers or for Borrowers' account, including all
                  amounts received in the Agent's Account from any Cash
                  Management Bank. Agent shall render statements regarding the
                  Loan Account to Administrative Borrower, including principal,
                  interest, fees, and including an itemization of all charges
                  and expenses constituting Lender Group Expenses owing, and
                  such statements, absent manifest error, shall be conclusively
                  presumed to be correct and accurate and constitute an account
                  stated between Borrowers and the Lender Group unless, within
                  30 days after receipt thereof by Administrative Borrower,
                  Administrative Borrower shall deliver to Agent written
                  objection thereto describing the error or errors contained in
                  any such statements.

                                       14
<PAGE>

         2.11     FEES. Borrowers shall pay to Agent, as and when due and
                  payable under the terms of the Fee Letter, the fees set forth
                  in the Fee Letter.

         2.12     LETTERS OF CREDIT.

         (a)      Subject to the terms and conditions of this Agreement, the
                  Issuing Lender agrees to issue letters of credit for the
                  account of Borrowers (each, an "L/C") or to purchase
                  participations or execute indemnities or reimbursement
                  obligations (each such undertaking, an "L/C UNDERTAKING") with
                  respect to letters of credit issued by an Underlying Issuer
                  (as of the Closing Date, the prospective Underlying Issuer is
                  to be Wells Fargo) for the account of Borrowers. Each request
                  for the issuance of a Letter of Credit or the amendment,
                  renewal, or extension of any outstanding Letter of Credit
                  shall be made in writing by an Authorized Person and delivered
                  to the Issuing Lender and Agent via hand delivery,
                  telefacsimile, or other electronic method of transmission
                  reasonably in advance of the requested date of issuance,
                  amendment, renewal, or extension. Each such request shall be
                  in form and substance satisfactory to the Issuing Lender in
                  its Permitted Discretion and shall specify (i) the amount of
                  such Letter of Credit, (ii) the date of issuance, amendment,
                  renewal, or extension of such Letter of Credit, (iii) the
                  expiration date of such Letter of Credit, (iv) the name and
                  address of the beneficiary thereof (or the beneficiary of the
                  Underlying Letter of Credit, as applicable), and (v) such
                  other information (including, in the case of an amendment,
                  renewal, or extension, identification of the outstanding
                  Letter of Credit to be so amended, renewed, or extended) as
                  shall be necessary to prepare, amend, renew, or extend such
                  Letter of Credit. If requested by the Issuing Lender,
                  Borrowers also shall be an applicant under the application
                  with respect to any Underlying Letter of Credit that is to be
                  the subject of an L/C Undertaking. The Issuing Lender shall
                  have no obligation to issue a Letter of Credit if any of the
                  following would result after giving effect to the issuance of
                  such requested Letter of Credit:

         (i)      the Letter of Credit Usage would exceed the Borrowing Base
                  LESS the outstanding amount of Advances, or

         (ii)     the Letter of Credit Usage would exceed $1,000,000, or

         (iii)    the Letter of Credit Usage would exceed the Maximum Revolver
                  Amount LESS the outstanding amount of Advances.

         Borrowers and the Lender Group acknowledge and agree that certain
Underlying Letters of Credit may be issued to support letters of credit that
already are outstanding as of the Closing Date. Each Letter of Credit (and
corresponding Underlying Letter of Credit) shall be in form and substance
acceptable to the Issuing Lender (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable in
Dollars. If Issuing Lender is obligated to advance funds under a Letter of
Credit, Borrowers immediately shall reimburse such L/C Disbursement to Issuing
Lender by paying to Agent an amount equal to such L/C Disbursement not later
than 11:00 a.m., California time, on the date that such L/C Disbursement is
made, if Administrative Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 10:00 a.m., California time, on such
date, or, if such notice has not been received by Administrative Borrower prior
to such time on such date, then not later than 11:00 a.m., California time, on
the Business Day that Administrative Borrower receives such notice, if such
notice is received prior to 10:00 a.m., California time, on the date of receipt,
and, in the absence of such reimbursement, the L/C Disbursement immediately and
automatically shall be deemed to be an Advance hereunder and, thereafter, shall

                                       15
<PAGE>

bear interest at the rate then applicable to Advances that are Base Rate Loans
under SECTION 2.6. To the extent an L/C Disbursement is deemed to be an Advance
hereunder, Borrowers' obligation to reimburse such L/C Disbursement shall be
discharged and replaced by the resulting Advance. Promptly following receipt by
Agent of any payment from Borrowers pursuant to this paragraph, Agent shall
distribute such payment to the Issuing Lender or, to the extent that Lenders
have made payments pursuant to SECTION 2.12(c) to reimburse the Issuing Lender,
then to such Lenders and the Issuing Lender as their interests may appear.

         (b)      Promptly following receipt of a notice of L/C Disbursement
                  pursuant to SECTION 2.12(a), each Lender with a Revolver
                  Commitment agrees to fund its Pro Rata Share of any Advance
                  deemed made pursuant to the foregoing subsection on the same
                  terms and conditions as if Borrowers had requested such
                  Advance and Agent shall promptly pay to Issuing Lender the
                  amounts so received by it from the Lenders. By the issuance of
                  a Letter of Credit (or an amendment to a Letter of Credit
                  increasing the amount thereof) and without any further action
                  on the part of the Issuing Lender or the Lenders with Revolver
                  Commitments, the Issuing Lender shall be deemed to have
                  granted to each Lender with a Revolver Commitment, and each
                  Lender with a Revolver Commitment shall be deemed to have
                  purchased, a participation in each Letter of Credit, in an
                  amount equal to its Pro Rata Share of the Risk Participation
                  Liability of such Letter of Credit, and each such Lender
                  agrees to pay to Agent, for the account of the Issuing Lender,
                  such Lender's Pro Rata Share of any payments made by the
                  Issuing Lender under such Letter of Credit. In consideration
                  and in furtherance of the foregoing, each Lender with a
                  Revolver Commitment hereby absolutely and unconditionally
                  agrees to pay to Agent, for the account of the Issuing Lender,
                  such Lender's Pro Rata Share of each L/C Disbursement made by
                  the Issuing Lender and not reimbursed by Borrowers on the date
                  due as provided in clause (a) of this Section, or of any
                  reimbursement payment required to be refunded to Borrowers for
                  any reason. Each Lender with a Revolver Commitment
                  acknowledges and agrees that its obligation to deliver to
                  Agent, for the account of the Issuing Lender, an amount equal
                  to its respective Pro Rata Share of each L/C Disbursement made
                  by the Issuing Lender pursuant to this SECTION 2.12(b) shall
                  be absolute and unconditional and such remittance shall be
                  made notwithstanding the occurrence or continuation of an
                  Event of Default or Default or the failure to satisfy any
                  condition set forth in SECTION 3 hereof. If any such Lender
                  fails to make available to Agent the amount of such Lender's
                  Pro Rata Share of each L/C Disbursement made by the Issuing
                  Lender in respect of such Letter of Credit as provided in this
                  Section, such Lender shall be deemed to be a Defaulting Lender
                  and Agent (for the account of the Issuing Lender) shall be
                  entitled to recover such amount on demand from such Lender
                  together with interest thereon at the Defaulting Lender Rate
                  until paid in full.

         (c)      Each Borrower hereby agrees to indemnify, save, defend, and
                  hold the Lender Group harmless from any loss, cost, expense,
                  or liability, and reasonable attorneys fees incurred by the
                  Lender Group arising out of or in connection with any Letter
                  of Credit; PROVIDED, HOWEVER, that no Borrower shall be
                  obligated hereunder to indemnify for any loss, cost, expense,
                  or liability to the extent that it is caused by the gross
                  negligence or willful misconduct of the Issuing Lender or any
                  other member of the Lender Group. Each Borrower agrees to be
                  bound by the Underlying Issuer's regulations and
                  interpretations of any Underlying Letter of Credit or by
                  Issuing Lender's interpretations of any L/C issued by Issuing
                  Lender to or for such Borrower's account, even though this
                  interpretation may be different from such Borrower's own, and
                  each Borrower understands and agrees that the Lender Group
                  shall not be liable for any error, negligence, or mistake,
                  whether of omission or commission, in following Borrowers'
                  instructions or those contained in the Letter of Credit or any
                  modifications, amendments, or supplements thereto. Each
                  Borrower understands that the L/C Undertakings may require
                  Issuing Lender to indemnify the Underlying Issuer for certain
                  costs or liabilities arising out of claims by Borrowers
                  against such Underlying Issuer. Each Borrower hereby agrees to

                                       16
<PAGE>

                  indemnify, save, defend, and hold the Lender Group harmless
                  with respect to any loss, cost, expense (including reasonable
                  attorneys fees), or liability incurred by the Lender Group
                  under any L/C Undertaking as a result of the Lender Group's
                  indemnification of any Underlying Issuer; PROVIDED, HOWEVER,
                  that no Borrower shall be obligated hereunder to indemnify for
                  any loss, cost, expense, or liability to the extent that it is
                  caused by the gross negligence or willful misconduct of the
                  Issuing Lender or any other member of the Lender Group. Each
                  Borrower hereby acknowledges and agrees that neither the
                  Lender Group nor the Issuing Lender shall be responsible for
                  delays, errors, or omissions resulting from the malfunction of
                  equipment in connection with any Letter of Credit.

         (d)      Each Borrower hereby authorizes and directs any Underlying
                  Issuer to deliver to the Issuing Lender all instruments,
                  documents, and other writings and property received by such
                  Underlying Issuer pursuant to such Underlying Letter of Credit
                  and to accept and rely upon the Issuing Lender's instructions
                  with respect to all matters arising in connection with such
                  Underlying Letter of Credit and the related application.

         (e)      Any and all issuance charges, commissions, fees, and costs
                  incurred by the Issuing Lender relating to Underlying Letters
                  of Credit shall be Lender Group Expenses for purposes of this
                  Agreement and immediately shall be reimbursable by Borrowers
                  to Agent for the account of the Issuing Lender; it being
                  acknowledged and agreed by each Borrower that, as of the
                  Closing Date, the issuance charge imposed by the prospective
                  Underlying Issuer is 0.825% per annum times the face amount of
                  each Underlying Letter of Credit, that such issuance charge
                  may be changed from time to time, and that the Underlying
                  Issuer also imposes a schedule of charges for amendments,
                  extensions, drawings, and renewals.

         (f)      If by reason of (i) any change after the Closing Date in any
                  applicable law, treaty, rule, or regulation or any change in
                  the interpretation or application thereof by any Governmental
                  Authority, or (ii) compliance by the Underlying Issuer or the
                  Lender Group with any direction, request, or requirement
                  (irrespective of whether having the force of law) of any
                  Governmental Authority or monetary authority including,
                  Regulation D of the Federal Reserve Board as from time to time
                  in effect (and any successor thereto):

         (i)      any reserve, deposit, or similar requirement is or shall be
                  imposed or modified in respect of any Letter of Credit issued
                  hereunder, or

         (ii)     there shall be imposed on the Underlying Issuer or the Lender
                  Group any other condition regarding any Underlying Letter of
                  Credit or any Letter of Credit issued pursuant hereto;

and the result of the foregoing is to increase, directly or indirectly, the cost
to the Lender Group of issuing, making, guaranteeing, or maintaining any Letter
of Credit or to reduce the amount receivable in respect thereof by the Lender
Group, then, and in any such case, Agent may, at any time within a reasonable
period after the additional cost is incurred or the amount received is reduced,
notify Administrative Borrower, and Borrowers shall pay on demand such amounts
as Agent may specify to be necessary to compensate the Lender Group for such
additional cost or reduced receipt, together with interest on such amount from
the date of such demand until payment in full thereof at the rate then
applicable to Base Rate Loans hereunder. The determination by Agent of any
amount due pursuant to this Section, as set forth in a certificate setting forth
the calculation thereof in reasonable detail, shall, in the absence of manifest
or demonstrable error, be final and conclusive and binding on all of the parties
hereto.

                                       17
<PAGE>

         2.13     LIBOR OPTION.

         (a)      INTEREST AND INTEREST PAYMENT DATES. In lieu of having
                  interest charged at the rate based upon the Base Rate,
                  Borrowers shall have the option (the "LIBOR OPTION") to have
                  interest on all or a portion of the Advances be charged at a
                  rate of interest based upon the LIBOR Rate. Interest on LIBOR
                  Rate Loans shall be payable on the earliest of (i) the last
                  day of the Interest Period applicable thereto, (ii) the
                  occurrence of an Event of Default in consequence of which the
                  Required Lenders or Agent on behalf thereof have elected to
                  accelerate the maturity of all or any portion of the
                  Obligations, or (iii) termination of this Agreement pursuant
                  to the terms hereof. On the last day of each applicable
                  Interest Period, unless Administrative Borrower properly has
                  exercised the LIBOR Option with respect thereto, the interest
                  rate applicable to such LIBOR Rate Loan automatically shall
                  convert to the rate of interest then applicable to Base Rate
                  Loans of the same type hereunder. At any time that an Event of
                  Default has occurred and is continuing, Borrowers no longer
                  shall have the option to request that Advances bear interest
                  at a rate based upon the LIBOR Rate and Agent shall have the
                  right to convert the interest rate on all outstanding LIBOR
                  Rate Loans to the rate then applicable to Base Rate Loans
                  hereunder.

         (b)      LIBOR ELECTION.

         (i)      Administrative Borrower may, at any time and from time to
                  time, so long as no Event of Default has occurred and is
                  continuing, elect to exercise the LIBOR Option by notifying
                  Agent prior to 11:00 a.m. (California time) at least 3
                  Business Days prior to the commencement of the proposed
                  Interest Period (the "LIBOR DEADLINE"). Notice of
                  Administrative Borrower's election of the LIBOR Option for a
                  permitted portion of the Advances and an Interest Period
                  pursuant to this Section shall be made by delivery to Agent of
                  a LIBOR Notice received by Agent before the LIBOR Deadline, or
                  by telephonic notice received by Agent before the LIBOR
                  Deadline (to be confirmed by delivery to Agent of a LIBOR
                  Notice received by Agent prior to 5:00 p.m. (California time)
                  on the same day). Promptly upon its receipt of each such LIBOR
                  Notice, Agent shall provide a copy thereof to each of the
                  Lenders having a Revolver Commitment.

         (ii)     Each LIBOR Notice shall be irrevocable and binding on
                  Borrowers. In connection with each LIBOR Rate Loan, each
                  Borrower shall indemnify, defend, and hold Agent and the
                  Lenders harmless against any loss, cost, or expense incurred
                  by Agent or any Lender as a result of (a) the payment of any
                  principal of any LIBOR Rate Loan other than on the last day of
                  an Interest Period applicable thereto (including as a result
                  of an Event of Default), (b) the conversion of any LIBOR Rate
                  Loan other than on the last day of the Interest Period
                  applicable thereto, or (c) the failure to borrow, convert,
                  continue or prepay any LIBOR Rate Loan on the date specified
                  in any LIBOR Notice delivered pursuant hereto (such losses,
                  costs, and expenses, collectively, "FUNDING LOSSES"). Funding
                  Losses shall, with respect to Agent or any Lender, be deemed
                  to equal the amount determined by Agent or such Lender to be
                  the excess, if any, of (i) the amount of interest that would
                  have accrued on the principal amount of such LIBOR Rate Loan
                  had such event not occurred, at the LIBOR Rate that would have
                  been applicable thereto, for the period from the date of such
                  event to the last day of the then current Interest Period
                  therefor (or, in the case of a failure to borrow, convert or
                  continue, for the period that would have been the Interest

                                       18
<PAGE>

                  Period therefor), MINUS (ii) the amount of interest that would
                  accrue on such principal amount for such period at the
                  interest rate which Agent or such Lender would be offered were
                  it to be offered, at the commencement of such period, Dollar
                  deposits of a comparable amount and period in the London
                  interbank market. A certificate of Agent or a Lender delivered
                  to Administrative Borrower setting forth any amount or amounts
                  that Agent or such Lender is entitled to receive pursuant to
                  this SECTION 2.13 shall be conclusive absent manifest error.

         (iii)    Borrowers shall have not more than 5 LIBOR Rate Loans in
                  effect at any given time. Borrowers only may exercise the
                  LIBOR Option for LIBOR Rate Loans of at least $1,000,000 and
                  integral multiples of $500,000 in excess thereof.

         (c)      PREPAYMENTS. Borrowers may prepay LIBOR Rate Loans at any
                  time; PROVIDED, HOWEVER, that in the event that LIBOR Rate
                  Loans are prepaid on any date that is not the last day of the
                  Interest Period applicable thereto, including as a result of
                  any automatic prepayment through the required application by
                  Agent of proceeds of Borrowers' and their Subsidiaries'
                  Collections in accordance with SECTION 2.4(B) or for any other
                  reason, including early termination of the term of this
                  Agreement or acceleration of all or any portion of the
                  Obligations pursuant to the terms hereof, each Borrower shall
                  indemnify, defend, and hold Agent and the Lenders and their
                  Participants harmless against any and all Funding Losses in
                  accordance with clause (b)(ii) above.

         (d)      SPECIAL PROVISIONS APPLICABLE TO LIBOR RATE.

         (i)      The LIBOR Rate may be adjusted by Agent with respect to any
                  Lender on a prospective basis to take into account any
                  additional or increased costs to such Lender of maintaining or
                  obtaining any eurodollar deposits or increased costs, in each
                  case, due to changes in applicable law occurring subsequent to
                  the commencement of the then applicable Interest Period,
                  including changes in tax laws (except changes of general
                  applicability in corporate income tax laws) and changes in the
                  reserve requirements imposed by the Board of Governors of the
                  Federal Reserve System (or any successor), excluding the
                  Reserve Percentage, which additional or increased costs would
                  increase the cost of funding loans bearing interest at the
                  LIBOR Rate. In any such event, the affected Lender shall give
                  Administrative Borrower and Agent notice of such a
                  determination and adjustment and Agent promptly shall transmit
                  the notice to each other Lender and, upon its receipt of the
                  notice from the affected Lender, Administrative Borrower may,
                  by notice to such affected Lender (y) require such Lender to
                  furnish to Administrative Borrower a statement setting forth
                  the basis for adjusting such LIBOR Rate and the method for
                  determining the amount of such adjustment, or (z) repay the
                  LIBOR Rate Loans with respect to which such adjustment is made
                  (together with any amounts due under clause (b)(ii) above).

         (ii)     In the event that any change in market conditions or any law,
                  regulation, treaty, or directive, or any change therein or in
                  the interpretation of application thereof, shall at any time
                  after the date hereof, in the reasonable opinion of any
                  Lender, make it unlawful or impractical for such Lender to
                  fund or maintain LIBOR Advances or to continue such funding or
                  maintaining, or to determine or charge interest rates at the
                  LIBOR Rate, such Lender shall give notice of such changed
                  circumstances to Agent and Administrative Borrower and Agent
                  promptly shall transmit the notice to each other Lender and
                  (y) in the case of any LIBOR Rate Loans of such Lender that
                  are outstanding, the date specified in such Lender's notice
                  shall be deemed to be the last day of the Interest Period of
                  such LIBOR Rate Loans, and interest upon the LIBOR Rate Loans
                  of such Lender thereafter shall accrue interest at the rate
                  then applicable to Base Rate Loans, and (z) Borrowers shall
                  not be entitled to elect the LIBOR Option until such Lender
                  determines that it would no longer be unlawful or impractical
                  to do so.

                                       19
<PAGE>

         (e)      NO REQUIREMENT OF MATCHED FUNDING. Anything to the contrary
                  contained herein notwithstanding, neither Agent, nor any
                  Lender, nor any of their Participants, is required actually to
                  acquire eurodollar deposits to fund or otherwise match fund
                  any Obligation as to which interest accrues at the LIBOR Rate.
                  The provisions of this Section shall apply as if each Lender
                  or its Participants had match funded any Obligation as to
                  which interest is accruing at the LIBOR Rate by acquiring
                  eurodollar deposits for each Interest Period in the amount of
                  the LIBOR Rate Loans.

         2.14     CAPITAL REQUIREMENTS. If, after the date hereof, any Lender
                  determines that (i) the adoption of or change in any law,
                  rule, regulation or guideline regarding capital requirements
                  for banks or bank holding companies, or any change in the
                  interpretation or application thereof by any Governmental
                  Authority charged with the administration thereof, or (ii)
                  compliance by such Lender or its parent bank holding company
                  with any guideline, request or directive of any such entity
                  regarding capital adequacy (whether or not having the force of
                  law), has the effect of reducing the return on such Lender's
                  or such holding company's capital as a consequence of such
                  Lender's Commitments hereunder to a level below that which
                  such Lender or such holding company could have achieved but
                  for such adoption, change, or compliance (taking into
                  consideration such Lender's or such holding company's then
                  existing policies with respect to capital adequacy and
                  assuming the full utilization of such entity's capital) by any
                  amount deemed by such Lender to be material, then such Lender
                  may notify Administrative Borrower and Agent thereof.
                  Following receipt of such notice, Borrowers agree to pay such
                  Lender on demand the amount of such reduction of return of
                  capital as and when such reduction is determined, payable
                  within 90 days after presentation by such Lender of a
                  statement in the amount and setting forth in reasonable detail
                  such Lender's calculation thereof and the assumptions upon
                  which such calculation was based (which statement shall be
                  deemed true and correct absent manifest error). In determining
                  such amount, such Lender may use any reasonable averaging and
                  attribution methods.

         2.15     JOINT AND SEVERAL LIABILITY OF BORROWERS.

         (a)      Each Borrower is accepting joint and several liability
                  hereunder and under the other Loan Documents in consideration
                  of the financial accommodations to be provided by the Lender
                  Group under this Agreement, for the mutual benefit, directly
                  and indirectly, of each Borrower and in consideration of the
                  undertakings of the other Borrowers to accept joint and
                  several liability for the Obligations.

         (b)      Each Borrower, jointly and severally, hereby irrevocably and
                  unconditionally accepts, not merely as a surety but also as a
                  co-debtor, joint and several liability with the other
                  Borrowers, with respect to the payment and performance of all
                  of the Obligations (including any Obligations arising under
                  this SECTION 2.15), it being the intention of the parties
                  hereto that all the Obligations shall be the joint and several
                  obligations of each Borrower without preferences or
                  distinction among them.

         (c)      If and to the extent that any Borrower shall fail to make any
                  payment with respect to any of the Obligations as and when due
                  or to perform any of the Obligations in accordance with the
                  terms thereof, then in each such event the other Borrowers
                  will make such payment with respect to, or perform, such
                  Obligation.

                                       20
<PAGE>

         (d)      The Obligations of each Borrower under the provisions of this
                  SECTION 2.15 constitute the absolute and unconditional, full
                  recourse Obligations of each Borrower enforceable against each
                  Borrower to the full extent of its properties and assets,
                  irrespective of the validity, regularity or enforceability of
                  this Agreement or any other circumstances whatsoever.

         (e)      Except as otherwise expressly provided in this Agreement, each
                  Borrower hereby waives notice of acceptance of its joint and
                  several liability, notice of any Advances or Letters of Credit
                  issued under or pursuant to this Agreement, notice of the
                  occurrence of any Default, Event of Default, or of any demand
                  for any payment under this Agreement, notice of any action at
                  any time taken or omitted by Agent or Lenders under or in
                  respect of any of the Obligations, any requirement of
                  diligence or to mitigate damages and, generally, to the extent
                  permitted by applicable law, all demands, notices and other
                  formalities of every kind in connection with this Agreement
                  (except as otherwise provided in this Agreement). Each
                  Borrower hereby assents to, and waives notice of, any
                  extension or postponement of the time for the payment of any
                  of the Obligations, the acceptance of any payment of any of
                  the Obligations, the acceptance of any partial payment
                  thereon, any waiver, consent or other action or acquiescence
                  by Agent or Lenders at any time or times in respect of any
                  default by any Borrower in the performance or satisfaction of
                  any term, covenant, condition or provision of this Agreement,
                  any and all other indulgences whatsoever by Agent or Lenders
                  in respect of any of the Obligations, and the taking,
                  addition, substitution or release, in whole or in part, at any
                  time or times, of any security for any of the Obligations or
                  the addition, substitution or release, in whole or in part, of
                  any Borrower. Without limiting the generality of the
                  foregoing, each Borrower assents to any other action or delay
                  in acting or failure to act on the part of any Agent or Lender
                  with respect to the failure by any Borrower to comply with any
                  of its respective Obligations, including any failure strictly
                  or diligently to assert any right or to pursue any remedy or
                  to comply fully with applicable laws or regulations
                  thereunder, which might, but for the provisions of this
                  SECTION 2.15 afford grounds for terminating, discharging or
                  relieving any Borrower, in whole or in part, from any of its
                  Obligations under this SECTION 2.15, it being the intention of
                  each Borrower that, so long as any of the Obligations
                  hereunder remain unsatisfied, the Obligations of each Borrower
                  under this SECTION 2.15 shall not be discharged except by
                  performance and then only to the extent of such performance.
                  The Obligations of each Borrower under this SECTION 2.15 shall
                  not be diminished or rendered unenforceable by any winding up,
                  reorganization, arrangement, liquidation, reconstruction or
                  similar proceeding with respect to any Borrower or any Agent
                  or Lender.

         (f)      Each Borrower represents and warrants to Agent and Lenders
                  that such Borrower is currently informed of the financial
                  condition of Borrowers and of all other circumstances which a
                  diligent inquiry would reveal and which bear upon the risk of
                  nonpayment of the Obligations. Each Borrower further
                  represents and warrants to Agent and Lenders that such
                  Borrower has read and understands the terms and conditions of
                  the Loan Documents. Each Borrower hereby covenants that such
                  Borrower will continue to keep informed of Borrowers'
                  financial condition, the financial condition of other
                  guarantors, if any, and of all other circumstances which bear
                  upon the risk of nonpayment or nonperformance of the
                  Obligations.

         (g)      Each Borrower waives all rights and defenses arising out of an
                  election of remedies by Agent or any Lender, even though that
                  election of remedies, such as a nonjudicial foreclosure with
                  respect to security for a guaranteed obligation, has destroyed
                  Agent's or such Lender's rights of subrogation and
                  reimbursement against such Borrower by the operation of
                  Section 580(d) of the California Code of Civil Procedure or
                  otherwise:

                                       21
<PAGE>

         (h)      Each Borrower waives all rights and defenses that such
                  Borrower may have because the Obligations are secured by Real
                  Property. This means, among other things:

         (i)      Agent and Lenders may collect from such Borrower without first
                  foreclosing on any Collateral pledged by Borrowers.

         (ii)     If Agent or any Lender forecloses on any Real Property
                  Collateral pledged by Borrowers:

         (1)      The amount of the Obligations may be reduced only by the price
                  for which that collateral is sold at the foreclosure sale,
                  even if the collateral is worth more than the sale price.

         (2)      Agent and Lenders may collect from such Borrower even if Agent
                  or Lenders, by foreclosing on the Real Property Collateral,
                  has destroyed any right such Borrower may have to collect from
                  the other Borrowers.

This is an unconditional and irrevocable waiver of any rights and defenses such
Borrower may have because the Obligations are secured by Real Property. These
rights and defenses include, but are not limited to, any rights or defenses
based upon Section 580a, 580b, 580d or 726 of the California Code of Civil
Procedure.

         (i)      The provisions of this SECTION 2.15 are made for the benefit
                  of Agent, Lenders and their respective successors and assigns,
                  and may be enforced by it or them from time to time against
                  any or all Borrowers as often as occasion therefor may arise
                  and without requirement on the part of any such Agent, Lender,
                  successor or assign first to marshal any of its or their
                  claims or to exercise any of its or their rights against any
                  Borrower or to exhaust any remedies available to it or them
                  against any Borrower or to resort to any other source or means
                  of obtaining payment of any of the Obligations hereunder or to
                  elect any other remedy. The provisions of this SECTION 2.15
                  shall remain in effect until all of the Obligations shall have
                  been paid in full or otherwise fully satisfied. If at any
                  time, any payment, or any part thereof, made in respect of any
                  of the Obligations, is rescinded or must otherwise be restored
                  or returned by any Agent or Lender upon the insolvency,
                  bankruptcy or reorganization of any Borrower, or otherwise,
                  the provisions of this SECTION 2.15 will forthwith be
                  reinstated in effect, as though such payment had not been
                  made.

         (j)      Each Borrower hereby agrees that it will not enforce any of
                  its rights of contribution or subrogation against any other
                  Borrower with respect to any liability incurred by it
                  hereunder or under any of the other Loan Documents, any
                  payments made by it to Agent or Lenders with respect to any of
                  the Obligations or any collateral security therefor until such
                  time as all of the Obligations have been paid in full in cash.
                  Any claim which any Borrower may have against any other
                  Borrower with respect to any payments to any Agent or Lender
                  hereunder or under any other Loan Documents are hereby
                  expressly made subordinate and junior in right of payment,
                  without limitation as to any increases in the Obligations
                  arising hereunder or thereunder, to the prior payment in full
                  in cash of the Obligations and, in the event of any
                  insolvency, bankruptcy, receivership, liquidation,
                  reorganization or other similar proceeding under the laws of
                  any jurisdiction relating to any Borrower, its debts or its
                  assets, whether voluntary or involuntary, all such Obligations
                  shall be paid in full in cash before any payment or
                  distribution of any character, whether in cash, securities or
                  other property, shall be made to any other Borrower therefor.

                                       22
<PAGE>

         (k)      Each Borrower hereby agrees that, after the occurrence and
                  during the continuance of any Default or Event of Default, the
                  payment of any amounts due with respect to the indebtedness
                  owing by any Borrower to any other Borrower is hereby
                  subordinated to the prior payment in full in cash of the
                  Obligations. Each Borrower hereby agrees that after the
                  occurrence and during the continuance of any Default or Event
                  of Default, such Borrower will not demand, sue for or
                  otherwise attempt to collect any indebtedness of any other
                  Borrower owing to such Borrower until the Obligations shall
                  have been paid in full in cash. If, notwithstanding the
                  foregoing sentence, such Borrower shall collect, enforce or
                  receive any amounts in respect of such indebtedness, such
                  amounts shall be collected, enforced and received by such
                  Borrower as trustee for Agent, and such Borrower shall deliver
                  any such amounts to Agent for application to the Obligations
                  in accordance with SECTION 2.4(b).

3.       CONDITIONS; TERM OF AGREEMENT.

         3.1      CONDITIONS PRECEDENT TO THE INITIAL EXTENSION OF CREDIT. The
                  obligation of each Lender to make its initial extension of
                  credit provided for hereunder, is subject to the fulfillment,
                  to the satisfaction of Agent and each Lender of each of the
                  conditions precedent set forth on SCHEDULE 3.1 (the making of
                  such initial extension of credit by a Lender being
                  conclusively deemed to be its satisfaction or waiver of the
                  conditions precedent).

         3.2      CONDITIONS PRECEDENT TO ALL EXTENSIONS OF CREDIT. The
                  obligation of the Lender Group (or any member thereof) to make
                  any Advances or the Term Loan hereunder at any time (or to
                  extend any other credit hereunder shall be subject to the
                  following conditions precedent:

         (a)      the representations and warranties contained in this Agreement
                  or in the other Loan Documents shall be true and correct in
                  all material respects on and as of the date of such extension
                  of credit, as though made on and as of such date (except to
                  the extent that such representations and warranties relate
                  solely to an earlier date);

         (b)      no Default or Event of Default shall have occurred and be
                  continuing on the date of such extension of credit, nor shall
                  either result from the making thereof;

         (c)      no injunction, writ, restraining order, or other order of any
                  nature restricting or prohibiting, directly or indirectly, the
                  extending of such credit shall have been issued and remain in
                  force by any Governmental Authority against any Borrower,
                  Agent, any Lender, or any of their Affiliates; and

         (d)      no Material Adverse Change shall have occurred.

         3.3      TERM. This Agreement shall continue in full force and effect
                  for a term ending on the earlier of (a) the date that is 90
                  days prior to the maturity date of the Indenture Notes, and
                  (b) January 31, 2008 (such earlier date, the "MATURITY DATE").
                  The foregoing notwithstanding, the Lender Group, upon the
                  election of the Required Lenders, shall have the right to
                  terminate its obligations under this Agreement immediately and
                  without notice upon the occurrence and during the continuation
                  of an Event of Default.

                                       23
<PAGE>

         3.4      EFFECT OF TERMINATION. On the date of termination of this
                  Agreement, all Obligations (including contingent reimbursement
                  obligations of Borrowers with respect to outstanding Letters
                  of Credit and including all Bank Product Obligations)
                  immediately shall become due and payable without notice or
                  demand (including (a) either (i) providing cash collateral to
                  be held by Agent for the benefit of those Lenders with a
                  Revolver Commitment in an amount equal to 105% of the Letter
                  of Credit Usage, or (ii) causing the original Letters of
                  Credit to be returned to the Issuing Lender, and (b) providing
                  cash collateral (in an amount determined by Agent as
                  sufficient to satisfy the reasonably estimated credit
                  exposure) to be held by Agent for the benefit of the Bank
                  Product Providers with respect to the Bank Product
                  Obligations). No termination of this Agreement, however, shall
                  relieve or discharge Borrowers or their Subsidiaries of their
                  duties, Obligations, or covenants hereunder or under any other
                  Loan Document and the Agent's Liens in the Collateral shall
                  remain in effect until all Obligations have been paid in full
                  and the Lender Group's obligations to provide additional
                  credit hereunder have been terminated. When this Agreement has
                  been terminated and all of the Obligations have been paid in
                  full and the Lender Group's obligations to provide additional
                  credit under the Loan Documents have been terminated
                  irrevocably, Agent will, at Borrowers' sole expense, execute
                  and deliver any termination statements, lien releases,
                  mortgage releases, re-assignments of trademarks, discharges of
                  security interests, and other similar discharge or release
                  documents (and, if applicable, in recordable form) as are
                  reasonably necessary to release, as of record, the Agent's
                  Liens and all notices of security interests and liens
                  previously filed by Agent with respect to the Obligations.

         3.5      EARLY TERMINATION BY BORROWERS. Borrowers have the option, at
                  any time upon 90 days prior written notice by Administrative
                  Borrower to Agent, to terminate this Agreement by paying to
                  Agent, in cash, the Obligations (including (a) either (i)
                  providing cash collateral to be held by Agent for the benefit
                  of those Lenders with a Revolver Commitment in an amount equal
                  to 105% of the Letter of Credit Usage, or (ii) causing the
                  original Letters of Credit to be returned to the Issuing
                  Lender, and (b) providing cash collateral (in an amount
                  determined by Agent as sufficient to satisfy the reasonably
                  estimated credit exposure) to be held by Agent for the benefit
                  of the Bank Product Providers with respect to the Bank
                  Products Obligations), in full. If Administrative Borrower has
                  sent a notice of termination pursuant to the provisions of
                  this Section, then the Commitments shall terminate and
                  Borrowers shall be obligated to repay the Obligations
                  (including (a) either (i) providing cash collateral to be held
                  by Agent for the benefit of those Lenders with a Revolver
                  Commitment in an amount equal to 105% of the Letter of Credit
                  Usage, or (ii) causing the original Letters of Credit to be
                  returned to the Issuing Lender, and (b) providing cash
                  collateral (in an amount determined by Agent as sufficient to
                  satisfy the reasonably estimated credit exposure) to be held
                  by Agent for the benefit of the Bank Product Providers with
                  respect to the Bank Products Obligations), in full, on the
                  date set forth as the date of termination of this Agreement in
                  such notice

         3.6      CONDITIONS SUBSEQUENT TO THE INITIAL EXTENSION OF CREDIT. The
                  obligation of the Lender Group (or any member thereof) to
                  continue to make Advances (or otherwise extend credit
                  hereunder) is subject to the fulfillment, on or before the
                  date applicable thereto, of each of the conditions subsequent
                  set forth below (the failure by Borrowers to so perform or
                  cause to be performed constituting an Event of Default):

         (a)      on or prior to the date that is 30 days after the Closing
                  Date, Borrowers shall deliver to Agent satisfactory evidence
                  that Rancho Bernardo Advanced Imaging Center, LLC shall have
                  been dissolved and the assets distributed to Radnet
                  Management, Inc.; and

                                       24
<PAGE>

         (b)      either (i) on or prior to the date that is 10 days after the
                  Closing Date, Borrowers shall have executed and delivered a
                  Cash Management Agreement with City National Bank that is
                  satisfactory to Agent or (ii) on or prior to the date that is
                  30 days after the Closing Date, Borrowers shall have moved its
                  accounts at City National Bank to another bank satisfactory to
                  Agent and entered into a Cash Management Agreement with such
                  other bank that is satisfactory to Agent.

4.       REPRESENTATIONS AND WARRANTIES.

         In order to induce the Lender Group to enter into this Agreement,
Parent and each Borrower makes the following representations and warranties to
the Lender Group which shall be true, correct, and complete, in all material
respects, as of the date hereof, and shall be true, correct, and complete, in
all material respects, as of the Closing Date, and at and as of the date of the
making of each Advance (or other extension of credit) made thereafter, as though
made on and as of the date of such Advance (or other extension of credit)
(except to the extent that such representations and warranties relate solely to
an earlier date) and such representations and warranties shall survive the
execution and delivery of this Agreement (it being understood and agreed that
any representation and warranty as to a Managed Practice (other than Beverly
Radiology Medical Group III) shall be made only with respect to such Managed
Practice's provision of radiology or other related professional medical services
at a medical office, clinic or other facility operated by Parent or any of its
Subsidiaries):

         4.1      NO ENCUMBRANCES. Parent and its Subsidiaries has good and
                  indefeasible title to, or a valid leasehold interest in, their
                  personal property assets and good and marketable title to, or
                  a valid leasehold interest in, their Real Property, in each
                  case, free and clear of Liens except for Permitted Liens.

         4.2      ELIGIBLE ACCOUNTS. As to each Account that is identified by a
                  Borrower as an Eligible Account in a borrowing base report
                  submitted to Agent, such Account is (a) a bona fide existing
                  payment obligation of the applicable Account Debtors created
                  by the sale and delivery of Inventory or the rendition of
                  services to such Account Debtors in the ordinary course of
                  Borrowers' business, (b) owed to Borrowers without any known
                  defenses, disputes, offsets, counterclaims, or rights of
                  return or cancellation, and (c) not excluded as ineligible by
                  virtue of one or more of the excluding criteria set forth in
                  the definition of Eligible Accounts.

         4.3      [INTENTIONALLY OMITTED].

         4.4      EQUIPMENT. Each material item of Equipment of Parent and its
                  Subsidiaries is used or held for use in their business and is
                  in good working order, ordinary wear and tear and damage by
                  casualty excepted.

         4.5      LOCATION OF EQUIPMENT. The Equipment (other than vehicles or
                  Equipment out for repair and other Equipment on which Agent
                  does not have a first priority security interest) of Parent
                  and its Subsidiaries are not stored with a bailee,
                  warehouseman, or similar party and are located only at, or
                  in-transit between, the locations identified on SCHEDULE 4.5
                  (as such Schedule may be updated pursuant to SECTION 5.9).

         4.6      [INTENTIONALLY OMITTED].

                                       25
<PAGE>

         4.7      STATE OF INCORPORATION; LOCATION OF CHIEF EXECUTIVE OFFICE;
                  ORGANIZATIONAL IDENTIFICATION NUMBER; COMMERCIAL TORT CLAIMS.

         (a)      The jurisdiction of organization of Parent and each of its
                  Subsidiaries is set forth on SCHEDULE 4.7(a).

         (b)      The chief executive office of Parent and each of its
                  Subsidiaries is located at the address indicated on SCHEDULE
                  4.7(b) (as such Schedule may be updated pursuant to SECTION
                  5.9).

         (c)      Parent's and each of its Subsidiaries' organizational
                  identification number, if any, are identified on SCHEDULE
                  4.7(c).

         (d)      As of the Closing Date, Parent and its Subsidiaries do not
                  hold any commercial tort claims, except as set forth on
                  SCHEDULE 4.7(d).

         4.8      DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

         (a)      Each of Parent and each Borrower is duly organized and
                  existing and in good standing under the laws of the
                  jurisdiction of its organization and qualified to do business
                  in any state where the failure to be so qualified reasonably
                  could be expected to result in a Material Adverse Change.

         (b)      Set forth on SCHEDULE 4.8(b), is a complete and accurate
                  description of the authorized capital Stock of Parent and each
                  Borrower, by class, and, as of the Closing Date, a description
                  of the number of shares of each such class that are issued and
                  outstanding. Other than as described on SCHEDULE 4.8(b), there
                  are no subscriptions, options, warrants, or calls relating to
                  any shares of Parent's or each Borrower's capital Stock,
                  including any right of conversion or exchange under any
                  outstanding security or other instrument. Except as set forth
                  in the Indenture Notes, none of Parent or any Borrower is
                  subject to any obligation (contingent or otherwise) to
                  repurchase or otherwise acquire or retire any shares of its
                  capital Stock or any security convertible into or exchangeable
                  for any of its capital Stock.

         (c)      Set forth on SCHEDULE 4.8(c), is a complete and accurate list
                  of Parent's direct and indirect Subsidiaries, showing: (i) the
                  jurisdiction of their organization, (ii) the number of shares
                  of each class of common and preferred Stock authorized for
                  each of such Subsidiaries, and (iii) the number and the
                  percentage of the outstanding shares of each such class owned
                  directly or indirectly by Parent or the applicable Borrower.
                  All of the outstanding capital Stock of each such Subsidiary
                  has been validly issued and is fully paid and non-assessable.

         (d)      Except as set forth on SCHEDULE 4.8(c), there are no
                  subscriptions, options, warrants, or calls relating to any
                  shares of Parent's Subsidiaries' capital Stock, including any
                  right of conversion or exchange under any outstanding security
                  or other instrument. None of Parent or any of its Subsidiaries
                  is subject to any obligation (contingent or otherwise) to
                  repurchase or otherwise acquire or retire any shares of
                  Parent's Subsidiaries' capital Stock or any security
                  convertible into or exchangeable for any such capital Stock.

         4.9      DUE AUTHORIZATION; NO CONFLICT.

                                       26
<PAGE>

         (a)      As to each Borrower, the execution, delivery, and performance
                  by such Borrower of this Agreement and the other Loan
                  Documents to which it is a party have been duly authorized by
                  all necessary action on the part of such Borrower.

         (b)      As to each Borrower, the execution, delivery, and performance
                  by such Borrower of this Agreement and the other Loan
                  Documents to which it is a party do not and will not (i)
                  violate any provision of federal, state, or local law or
                  regulation applicable to any Borrower, the Governing Documents
                  of any Borrower, or any order, judgment, or decree of any
                  court or other Governmental Authority binding on any Borrower,
                  (ii) conflict with, result in a breach of, or constitute (with
                  due notice or lapse of time or both) a default under any
                  material contractual obligation of any Borrower, (iii) result
                  in or require the creation or imposition of any Lien of any
                  nature whatsoever upon any properties or assets of Borrower,
                  other than Permitted Liens, or (iv) require any approval of
                  any Borrower's interestholders or any approval or consent of
                  any Person under any material contractual obligation of any
                  Borrower, other than consents or approvals that have been
                  obtained and that are still in force and effect.

         (c)      Other than the filing of financing statements, and the
                  recordation of the Mortgages, the execution, delivery, and
                  performance by each Borrower of this Agreement and the other
                  Loan Documents to which such Borrower is a party do not and
                  will not require any registration with, consent, or approval
                  of, or notice to, or other action with or by, any Governmental
                  Authority, other than consents or approvals that have been
                  obtained and that are still in force and effect.

         (d)      As to each Borrower, this Agreement and the other Loan
                  Documents to which such Borrower is a party, and all other
                  documents contemplated hereby and thereby, when executed and
                  delivered by such Borrower will be the legally valid and
                  binding obligations of such Borrower, enforceable against such
                  Borrower in accordance with their respective terms, except as
                  enforcement may be limited by equitable principles or by
                  bankruptcy, insolvency, reorganization, moratorium, or similar
                  laws relating to or limiting creditors' rights generally.

         (e)      The Agent's Liens are validly created, perfected, and first
                  priority Liens, subject only to Permitted Liens.

         (f)      The execution, delivery, and performance by each Guarantor of
                  the Loan Documents to which it is a party have been duly
                  authorized by all necessary action on the part of such
                  Guarantor.

         (g)      The execution, delivery, and performance by each Guarantor of
                  the Loan Documents to which it is a party do not and will not
                  (i) violate any provision of federal, state, or local law or
                  regulation applicable to such Guarantor, the Governing
                  Documents of such Guarantor, or any order, judgment, or decree
                  of any court or other Governmental Authority binding on such
                  Guarantor, (ii) conflict with, result in a breach of, or
                  constitute (with due notice or lapse of time or both) a
                  default under any material contractual obligation of such
                  Guarantor, (iii) result in or require the creation or
                  imposition of any Lien of any nature whatsoever upon any
                  properties or assets of such Guarantor, other than Permitted
                  Liens, or (iv) require any approval of such Guarantor's
                  interestholders or any approval or consent of any Person under
                  any material contractual obligation of such Guarantor, other
                  than consents or approvals that have been obtained and that
                  are still in force and effect.

                                       27
<PAGE>

         (h)      Other than the filing of financing statements and the
                  recordation of the Mortgages, the execution, delivery, and
                  performance by each Guarantor of the Loan Documents to which
                  such Guarantor is a party do not and will not require any
                  registration with, consent, or approval of, or notice to, or
                  other action with or by, any Governmental Authority, other
                  than consents or approvals that have been obtained and that
                  are still in force and effect.

         (i)      The Loan Documents to which each Guarantor is a party, and all
                  other documents contemplated hereby and thereby, when executed
                  and delivered by such Guarantor will be the legally valid and
                  binding obligations of such Guarantor, enforceable against
                  such Guarantor in accordance with their respective terms,
                  except as enforcement may be limited by equitable principles
                  or by bankruptcy, insolvency, reorganization, moratorium, or
                  similar laws relating to or limiting creditors' rights
                  generally.

         4.10     LITIGATION.

         (a)      Other than those matters disclosed on SCHEDULE 4.10, and other
                  than matters arising after the Closing Date that reasonably
                  could not be expected to result in a Material Adverse Change,
                  there are no actions, suits, or proceedings pending or, to the
                  best knowledge of Parent and each Borrower, threatened against
                  Parent or any of its Subsidiaries.

         (b)      There is no pending investigation of Parent, any of its
                  Subsidiaries or any Managed Practice by CMS or any other
                  Governmental Authority, which investigation is not otherwise
                  conducted in the ordinary course of business and no criminal,
                  civil or administrative action, audit, or investigation by a
                  fiscal intermediary or by or on behalf of any Governmental
                  Authority exists or, to the best knowledge of Parent or any
                  Borrower, is threatened with respect to Parent, any of its
                  Subsidiaries or any Managed Practice, which could reasonably
                  be expected to have a material adverse effect on (A) such
                  Person's right to receive reimbursement under Medicaid,
                  Medicare or any other Third Party Payor program to which such
                  Person would otherwise be entitled, (B) such Person's right to
                  participate in Medicaid, Medicare or any other Third Party
                  Payor program or (C) the ability of such Person to engage in
                  the practice of medicine or to fulfill its obligations as
                  contemplated under the Loan Documents or any Management
                  Agreement. None of Parent, its Subsidiaries or any Managed
                  Practice is subject to any pending but unassessed claim
                  payment adjustments under Medicaid, Medicare or any other
                  Third Party Payor program, except to the extent that such
                  Person is contesting such assessment in good faith by
                  appropriate proceedings diligently pursued and has established
                  and will maintain adequate reserves for such adjustments in
                  accordance with GAAP.

         4.11     NO MATERIAL ADVERSE CHANGE. All financial statements relating
                  to Parent and its Subsidiaries that have been delivered by
                  Borrowers to the Lender Group have been prepared in accordance
                  with GAAP (except, in the case of unaudited financial
                  statements, for the lack of footnotes and being subject to
                  year-end audit adjustments) and present fairly in all material
                  respects, Parent's and its Subsidiaries' financial condition
                  as of the date thereof and results of operations for the
                  period then ended. There has not been a Material Adverse
                  Change with respect to Parent and its Subsidiaries since the
                  date of the latest financial statements submitted to Agent on
                  or before the Closing Date.

         4.12     FRAUDULENT TRANSFER.

         (a)      Each Borrower and each Subsidiary of a Borrower is Solvent.

                                       28
<PAGE>

         (b)      No transfer of property is being made by any Borrower or any
                  Subsidiary of a Borrower and no obligation is being incurred
                  by any Borrower or any Subsidiary of a Borrower in connection
                  with the transactions contemplated by this Agreement or the
                  other Loan Documents with the intent to hinder, delay, or
                  defraud either present or future creditors of Borrowers or
                  their Subsidiaries.

         4.13     EMPLOYEE BENEFITS. None of Borrowers, any of their
                  Subsidiaries, or any of their ERISA Affiliates has maintained
                  or contributed, or currently maintains or contributes, to any
                  Benefit Plan.

         4.14     ENVIRONMENTAL CONDITION. Except as set forth on SCHEDULE 4.14,
                  (a) to Parent's and Borrowers' knowledge, none of Parent's or
                  its Subsidiaries' properties or assets has ever been used by
                  Parent, its Subsidiaries, or by previous owners or operators
                  in the disposal of, or to produce, store, handle, treat,
                  release, or transport, any Hazardous Materials, where such
                  use, production, storage, handling, treatment, release or
                  transport was in violation, in any material respect, of any
                  applicable Environmental Law, (b) to Parent's and Borrowers'
                  knowledge, none of Parent's nor its Subsidiaries' properties
                  or assets has ever been designated or identified in any manner
                  pursuant to any environmental protection statute as a
                  Hazardous Materials disposal site, (c) none of Parent nor any
                  of its Subsidiaries have received notice that a Lien arising
                  under any Environmental Law has attached to any revenues or to
                  any Real Property owned or operated by Parent or its
                  Subsidiaries, and (d) none of Parent nor any of its
                  Subsidiaries have received a summons, citation, notice, or
                  directive from the United States Environmental Protection
                  Agency or any other federal or state governmental agency
                  concerning any action or omission by Parent or any Subsidiary
                  of Parent resulting in the releasing or disposing of Hazardous
                  Materials into the environment.

         4.15     INTELLECTUAL PROPERTY. Parent and each Subsidiary of Parent
                  owns, or holds licenses in, all trademarks, trade names,
                  copyrights, patents, patent rights, and licenses that are
                  necessary to the conduct of its business as currently
                  conducted, and attached hereto as SCHEDULE 4.15 (as updated
                  from time to time) is a true, correct, and complete listing of
                  all material patents, patent applications, trademarks,
                  trademark applications, copyrights, and copyright
                  registrations as to which Parent or one of its Subsidiaries is
                  the owner or is an exclusive licensee.

         4.16     LEASES. Parent and its Subsidiaries enjoy peaceful and
                  undisturbed possession under all leases material to their
                  business and to which they are parties or under which they are
                  operating and all of such material leases are valid and
                  subsisting and no material default by Parent or its
                  Subsidiaries exists under any of them.

         4.17     DEPOSIT ACCOUNTS AND SECURITIES ACCOUNTS. Set forth on
                  SCHEDULE 4.17 is a listing of all of Parent's and its
                  Subsidiaries' Deposit Accounts and Securities Accounts,
                  including, with respect to each bank or securities
                  intermediary (a) the name and address of such Person, and (b)
                  the account numbers of the Deposit Accounts or Securities
                  Accounts maintained with such Person.

         4.18     COMPLETE DISCLOSURE. All factual information (taken as a
                  whole) furnished by or on behalf of Parent or its Subsidiaries
                  in writing to Agent or any Lender (including all information
                  contained in the Schedules hereto or in the other Loan
                  Documents) for purposes of or in connection with this
                  Agreement, the other Loan Documents, or any transaction
                  contemplated herein or therein is, and all other such factual
                  information (taken as a whole) hereafter furnished by or on
                  behalf of Parent or its Subsidiaries in writing to Agent or
                  any Lender will be, true and accurate in all material respects
                  on the date as of which such information is dated or certified
                  and not incomplete by omitting to state any fact necessary to
                  make such information (taken as a whole) not misleading in any

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                  material respect at such time in light of the circumstances
                  under which such information was provided. On the Closing
                  Date, the Closing Date Projections represent, and as of the
                  date on which any other Projections are delivered to Agent,
                  such additional Projections represent Parent's and Borrowers'
                  good faith estimate of their and their Subsidiaries' future
                  performance for the periods covered thereby.

         4.19     INDEBTEDNESS. Set forth on SCHEDULE 4.19 is a true and
                  complete list of all Indebtedness of Parent and each
                  Subsidiary of Parent outstanding immediately prior to the
                  Closing Date that is to remain outstanding after the Closing
                  Date and such Schedule accurately reflects the aggregate
                  principal amount of such Indebtedness and describes the
                  principal terms thereof.

         4.20     RESTRUCTURING DOCUMENTS. Borrowers have delivered to Agent
                  true and correct copies of the Restructuring Documents. The
                  transactions contemplated by the Restructuring Documents will,
                  as of the Closing Date, have been consummated in accordance
                  with the terms of the Restructuring Documents and nothing has
                  come to Borrowers' attention that would indicate that any of
                  the representations and warranties contained in the
                  Restructuring Documents are not true and correct. All of the
                  representations and warranties of Parent and its Subsidiaries
                  (to the extent they are parties) in the Restructuring
                  Documents are true and correct.

         4.21     PERMITS, ETC.

         (a)      Each of Parent and its Subsidiaries has, and is in compliance
                  with, all permits, licenses, authorizations, approvals,
                  certifications, agreements, entitlements and accreditations
                  (collectively, "PERMITS") required for such Person lawfully to
                  own, lease, manage or operate, or to acquire, each business
                  currently owned, leased, managed or operated, or to be
                  acquired, by such Person (including, as applicable,
                  accreditations, licenses, agreements and certifications as a
                  provider of health care services including those necessary for
                  it to be eligible to receive payment and compensation and to
                  participate under Medicaid, Medicare or any other Third Party
                  Payor program). Each such Permit has been duly obtained, is in
                  full force and effect without any known conflict with the
                  rights of others and free from any restrictions. No condition
                  exists or event has occurred which, in itself or with the
                  giving of notice or lapse of time or both, would result in the
                  suspension, revocation, impairment, forfeiture or non-renewal
                  of any such Permit, and there is no claim that any thereof is
                  not in full force and effect.

         (b)      None of Parent, its Subsidiaries or any Managed Practice has
                  received any notification or communication from any
                  Governmental Authority or Third Party Payor (i) that any such
                  Governmental Authority or Third Party Payor has taken or
                  intends to take action to revoke, withdraw, suspend, modify,
                  impose material conditions with respect to, terminate or
                  adversely amend any Permit of such Person to engage in the
                  practice of medicine, to operate a healthcare facility or to
                  participate under Medicaid, Medicare or any other Third Party
                  Payor program, (ii) regarding any violation by Parent or any
                  of its Subsidiaries of any applicable law, or (iii) regarding
                  any other limitations on the conduct of business of Parent and
                  its Subsidiaries.

         4.22     MATERIAL CONTRACTS. Set forth on SCHEDULE 4.22 is a complete
                  and accurate list as of the Closing Date of all Material
                  Contracts of Parent and its Subsidiaries (including all
                  Management Agreements to which it is currently or is to become
                  a party), showing the parties and subject matter thereof and
                  amendments and modifications thereto. Each Material Contract
                  set forth on SCHEDULE 4.22 (a) is in full force and effect and
                  is binding upon and enforceable against each of Parent and its

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<PAGE>

                  Subsidiaries that is a party thereto and, to the best
                  knowledge of Parent and Borrowers, all other parties thereto
                  in accordance with its terms, (b) has not been otherwise
                  amended or modified (other than in accordance with SECTION
                  6.7(d)), and (c) is not in default in any material respect due
                  to the action of Parent or its Subsidiaries or, to the best
                  knowledge of Parent and Borrowers, any other party thereto.

         4.23     MANAGEMENT AGREEMENTS. Each Management Agreement, and each of
                  the transactions contemplated thereunder, does not violate any
                  applicable rule or regulation: (a) relating to the eligibility
                  of a Managed Practice to receive payment and to participate as
                  an accredited and certified provider of health care services
                  under Medicaid, Medicare or any other Third Party Payor
                  program, (b) applicable to such Person as a result of its
                  participation in such programs, (c) relating to the licenses
                  and permits required therein in connection therewith, or (d)
                  relating to the practice of medicine or the sharing of fees
                  generated in connection therewith.

         4.24     THIRD PARTY PAYORS.

         (a)      None of Parent, its Subsidiaries or any Managed Practice is in
                  default in the performance, observance, or fulfillment of any
                  of its obligations, covenants or agreements contained in (i)
                  any Medicare Provider Agreement, Medicaid Provider Agreement
                  or any agreement or instrument with any other Third Party
                  Payor, which default has resulted in, or could be reasonably
                  be expected to result in, the revocation, termination,
                  cancellation or suspension of the Medicaid Certification or
                  Medicare Certification of such Person or the right of such
                  Person to participate in any other Third Party Payor program.

         (b)      If Parent or any of its Subsidiaries or any Managed Practice
                  is or has been audited by any Third Party Payor, (i) none of
                  such audits provides for adjustments in reimbursable costs or
                  asserts claims for reimbursement or repayment by such Person
                  of costs and/or payments theretofore made by such Third Party
                  Payor that, if adversely determined, individually or in the
                  aggregate, could reasonably be expected to have a Material
                  Adverse Change and (ii) none of Parent, its Subsidiaries or
                  any Managed Practice has had requests or assertions of claims
                  for reimbursement or repayment by it of costs and/or payments
                  theretofore made by any Third Party Payor that, if adversely
                  determined, individually or in the aggregate, could reasonably
                  be expected to have a Material Adverse Change.

         (c)      The Accounts of Parent and its Subsidiaries and each Managed
                  Practice have been and will continue to be adjusted to reflect
                  the reimbursement policies of its Third Party Payors. In
                  particular, Accounts relating to Third Party Payors do not and
                  shall not exceed amounts Parent, its Subsidiaries or any
                  Managed Practice is entitled to receive under any capitation
                  arrangement, fee schedule, discount formula, cost-based
                  reimbursement or other adjustment or limitation to such
                  Person's usual charges.

         (d)      The healthcare facilities operated by Parent and its
                  Subsidiaries and each Managed Practice and the services
                  provided at such facilities are qualified for participation in
                  the Government Reimbursement Programs, and Parent and its
                  Subsidiaries and each Managed Practice are entitled to
                  reimbursement under the Government Reimbursement Programs for
                  services rendered to qualified beneficiaries, and Parent and
                  its Subsidiaries and each Managed Practice and the healthcare
                  facilities operated by Parent and its Subsidiaries and each
                  Managed Practice comply in all material respects with the
                  conditions of participation in all Government Reimbursement
                  Programs and related contracts.

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<PAGE>

         4.25     INDENTURE DOCUMENTS. Borrowers incurring Indebtedness from (a)
                  the loans made by the Lenders to Borrowers on and after the
                  Closing Date and (b) the issuance of Letters of Credit, in
                  each case, subject to the limitations set forth in this
                  Agreement, does not conflict with or result in a default under
                  any Indenture Document. The Obligations constitute Senior
                  Indebtedness (as defined in the Indenture). As such, all of
                  the Obligations (and Agent and the Lenders) are entitled to
                  the benefits of each of the subordination and other provisions
                  contained in the Indenture which are available in respect of
                  Senior Indebtedness (and to the holders thereof), and each of
                  such subordination and other provisions is in full force and
                  effect and enforceable in accordance with its terms. Parent
                  and Borrowers acknowledge that Agent and the Lenders are
                  entering into this Agreement, and extending their Commitments,
                  in reliance upon the subordination provisions of the Indenture
                  Documents and this SECTION 4.25.

         4.26     COMPLIANCE WITH HEALTHCARE LAWS AND REGULATIONS.

         (a)      Each of Parent and its Subsidiaries and each Managed Practice
                  has timely filed or caused to be timely filed, all cost
                  reports and other reports of every kind whatsoever required by
                  a Government Reimbursement Program, to have been filed or made
                  with respect to Parent's and its Subsidiaries' or such Managed
                  Practice's business operations. Except as set forth on
                  SCHEDULE 4.26, there are no claims, actions or appeals pending
                  (and none of Parent or its Subsidiaries or any Managed
                  Practice has filed any claims or reports which should result
                  in any such claims, actions or appeals) before any
                  Governmental Authority pertaining to Parent's or such
                  Subsidiary's or such Managed Practice's business operations,
                  including any intermediary or carrier, the Provider
                  Reimbursement Review Board or the Administrator of CMS, with
                  respect to any state or federal Medicare or Medicaid cost
                  reports or claims filed by Parent or such Subsidiary or such
                  Managed Practice, or any disallowance by any Governmental
                  Authority in connection with any audit of such cost reports.

         (b)      Except as set forth on SCHEDULE 4.26, none of Parent or its
                  Subsidiaries or any Managed Practice is currently, nor has in
                  the past been, subject to:

         (1)      any state or local governmental investigation, inspection or
                  inquiry related to any license or licensure standards
                  applicable to Parent or such Subsidiary or such Managed
                  Practice;

         (2)      any federal, state, local governmental or private payor civil
                  or criminal investigations, inquiries or audits involving
                  and/or related to any federal, state or private payor
                  healthcare fraud and abuse provisions or contractual
                  prohibition of healthcare fraud and abuse; or

         (3)      any federal, state or private payor inquiry, investigation,
                  inspection or audit regarding Parent or such Subsidiary or
                  such Managed Practiceor their activities, including any
                  federal, state or private payor inquiry or investigation of
                  any Person having "ownership, financial or control interest"
                  (as that term is defined in 42 C.F.R. ss. 420.201 et seq.) in
                  Parent or such Subsidiary or such Managed Practice involving
                  and/or related to healthcare fraud and abuse, false claims
                  under 31 U.S.C. ss.ss. 3729-3731 or any similar contractual
                  prohibition, or any qui tam action brought pursuant to 31
                  U.S.C. ss. 3729 et seq.

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<PAGE>

         (c)      No director, officer, shareholder, employee or Person with a
                  "direct or indirect ownership interest" (as that phrase is
                  defined in 42 C.F.R. ss. 420.201) in Parent or any of its
                  Subsidiaries or any Managed Practice (it being understood and
                  agreed that this SECTION 4.26(c) shall not apply to any
                  shareholder of Parent that is not also a director, officer or
                  employee of Parent):

         (i)      except as set forth on SCHEDULE 4.26, has had a civil monetary
                  penalty assessed against him or her pursuant to 42 U.S.C.ss.
                  1320a-7a;

         (ii)     has been excluded from participation in a Federal Health Care
                  Program (as that term is defined in 42 U.S.C.ss. 1320a-7b);

         (iii)    except as set forth on SCHEDULE 4.26, has been convicted (as
                  that term is defined in 42 C.F.R. ss. 1001.2) of any of those
                  offenses described in 42 U.S.C. ss. 1320a-7b or 18 U.S.C.
                  ss.ss. 669, 1035, 1347, 1518, including any of the following
                  categories of offenses:

         a.       criminal offenses relating to the delivery of an item or
                  service under any Federal Health Care Program (as that term is
                  defined in 42 U.S.C. ss. 1320a-7b) or healthcare benefit
                  program (as that term is defined in 18 U.S.C. ss. 24(b);

         b.       criminal offenses under federal or state law relating to
                  patient neglect or abuse in connection with the delivery of a
                  healthcare item or service;

         c.       criminal offenses under federal or state law relating to fraud
                  and abuse, theft, embezzlement, false statements to third
                  parties, money laundering, kickbacks, breach of fiduciary
                  responsibility or other financial misconduct in connection
                  with the delivery of a healthcare item or service or with
                  respect to any act or omission in a program operated by or
                  financed in whole or in part by any federal, state or local
                  governmental agency;

         d.       federal or state laws relating to the interference with or
                  obstruction of any investigations into any criminal offenses
                  described in (a) through (c) above; or

         e.       criminal offenses under federal or state law relating to the
                  unlawful manufacturing, distribution, prescription or
                  dispensing of a controlled substance; or

         (iv)     has been involved or named in a U.S. Attorney complaint made
                  or any other action taken pursuant to the False Claims Act
                  under 31 U.S.C.ss.ss. 3729-3731 or qui tam action brought
                  pursuant to 31 U.S.C.ss. 3729 et seq.

         (d)      Each of Parent and its Subsidiaries and each Managed Practice
                  is and shall continue to be in compliance with all applicable
                  laws relating to its relationships with physicians, including
                  42 U.S.C. ss. 1395nn and the regulations issued thereunder.

         (e)      Each of Parent and its Subsidiaries and each Managed Practice
                  is and shall continue to be in compliance with all laws,
                  rules, regulations, orders, decrees and directions of any
                  Governmental Authority (including the Social Security Act, as
                  amended, the rules and regulations promulgated by CMS), and
                  any state laws applicable to the collections on Accounts, any
                  contracts relating thereto or any other Collateral, or
                  otherwise applicable to its business and properties, a
                  violation of which could materially adversely affect its
                  ability to collect on its Accounts or repay the Obligations.

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<PAGE>

         (f)      All persons providing professional health care services for or
                  on behalf of Parent or any of its Subsidiaries or any Managed
                  Practice (either as an employee or independent contractor) are
                  appropriately licensed in every jurisdiction in which they
                  hold themselves out as professional health care providers.

         (g)      Except as set forth on SCHEDULE 4.26, none of Parent or its
                  Subsidiaries or any Managed Practice has had its state or
                  local licenses, permits, registrations, certifications and
                  other approvals relating to providing healthcare services and
                  other services provided by Parent or such Subsidiary or such
                  Managed Practice suspended, revoked, limited or denied renewal
                  at any time.

         4.27     OTHER HEALTHCARE REGULATORY MATTERS. Each of Parent and its
                  Subsidiaries and each Managed Practice has developed and
                  implemented a current and effective compliance program, to the
                  extent guidelines for such compliance program have been
                  developed by CMS for Parent's or such Subsidiary's or such
                  Managed Practice's business operations. As of the Closing
                  Date, none of Parent or any of its Subsidiaries or any Managed
                  Practice (a) is a party to a corporate integrity agreement,
                  (b) has any reporting obligations pursuant to a settlement
                  agreement, plan of correction, or other remedial measure
                  entered into with a Governmental Authority, (c) except as set
                  forth on SCHEDULE 4.27, is currently, or to Parent's and
                  Borrowers' best knowledge, has been the subject of any
                  investigation conducted by any federal or state enforcement
                  agency, including an investigation involving compliance with
                  Healthcare Laws, (d) to Parent's and Borrowers' best
                  knowledge, has been a defendant in any qui tam/false claims
                  act litigation and (e) has been served with or received any
                  written search warrant, subpoena, civil investigative demand
                  or contact letter from any federal or state enforcement agency
                  related to such business operations.

         4.28     HIPAA COMPLIANCE. To the extent that and for so long as Parent
                  or its Subsidiaries or any Managed Practice is a "covered
                  entity" as such term is defined under the requirements and
                  implementing regulations at 45 Code of Federal Regulations
                  Parts 160-64 for the Administrative Simplification provisions
                  of Title II, Subtitle F of the Health Insurance Portability
                  and Accountability Act of 1996 ("HIPAA"), Parent, such
                  Subsidiaries and such Managed Practice (a) has undertaken or
                  will promptly undertake all necessary surveys, audits,
                  inventories, reviews, analyses and/or assessments (including
                  any necessary risk assessments) of all areas of its business
                  and operations required by HIPAA and/or that could be
                  adversely affected by the failure of Parent, such Subsidiary
                  or such Managed Practice to be HIPAA Compliant (as defined
                  below); (b) has developed a detailed plan and time line for
                  becoming HIPAA Compliant (a "HIPAA COMPLIANCE PLAN"); and (c)
                  has implemented those provisions of such HIPAA Compliance Plan
                  in all material respects necessary to ensure that Parent, such
                  Subsidiary or such Managed Practice is or becomes HIPAA
                  Compliant. For purposes hereof, "HIPAA COMPLIANt" shall mean
                  that Parent, such Subsidiary or such Managed Practice (x) is
                  or will be in compliance with each of the applicable
                  requirements of the so-called "Administrative Simplification"
                  provisions of HIPAA on and as of each date that any part
                  thereof, or any final rule or regulation thereunder, becomes
                  effective in accordance with its or their terms, as the case
                  may be (each such date, a "HIPAA COMPLIANCE DATE") and (y) is
                  not and could not reasonably be expected to become, as of any
                  date following any such HIPAA Compliance Date, the subject of
                  any civil or criminal penalty, process, claim, action or
                  proceeding, or any administrative or other regulatory review,
                  survey, process or proceeding (other than routine surveys or
                  reviews conducted by any government health plan or other
                  accreditation entity) that could result in any of the
                  foregoing or that could reasonably be expected to adversely
                  affect such Parent's, such Subsidiary's or such Managed
                  Practice's business, operations, assets, properties or
                  condition (financial or otherwise), in connection with any
                  actual or potential violation by Parent, such Subsidiary or
                  such Managed Practice of the then-effective provisions of
                  HIPAA.

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<PAGE>

         4.29     NON-MATERIAL SUBSIDIARIES. Each Non-Material Subsidiary has no
                  material liabilities, conducts no material operations or
                  business and owns no material assets or properties.

         4.30     DVI REVOLVER.

         (a)      Administrative Borrower has delivered true, correct and
                  complete copies of the DVI Revolver Agreement (including all
                  amendments, modifications and waivers with respect thereto) to
                  Agent.

         (b)      The Collateral under the DVI Revolver Agreement does not
                  include any of the Collateral under the Security Agreement.

         (c)      Radnet Sub, Inc. does not generate any Accounts.

         4.31     None of Parent or its Subsidiaries is an Affiliate of Tower
                  Radiology Medical Group, Inc., Tower Magnetic Imaging Group,
                  Inc., Tower San Vicente Imaging Medical Group, Tower Nuclear
                  Medical Group, Inc., Cardiac and Vascular Diagnostic Center
                  Medical Group, Inc. or Norman Zheutlin, M.D.

         4.32     BEVERLY HILLS MRI.

         (a)      There are no Accounts generated by or on behalf of Parent or
                  any of its Subsidiaries on account of the operation of the
                  imaging facility known as Beverly Hills MRI.

         (b)      None of Parent or any of its Subsidiaries operates an imaging
                  facility known as Beverly Hills MRI.

5.       AFFIRMATIVE COVENANTS.

         Parent and each Borrower covenants and agrees that, until termination
of all of the Commitments and payment in full of the Obligations, Parent and
Borrowers shall and shall cause each of their respective Subsidiaries to do all
of the following:

         5.1      ACCOUNTING SYSTEM. Maintain a system of accounting that
                  enables Parent and Borrowers to produce financial statements
                  in accordance with GAAP and maintain records pertaining to the
                  Collateral that contain information as from time to time
                  reasonably may be requested by Agent. Parent and Borrowers
                  also shall keep a reporting syst em that shows all additions,
                  sales, claims, returns, and allowances with respect to their
                  and their Subsidiaries' sales.

         5.2      COLLATERAL REPORTING. Provide Agent (and if so requested by
                  Agent, with copies for each Lender) with each of the reports
                  set forth on SCHEDULE 5.2 at the times specified therein. In
                  addition, each Borrower agrees to cooperate fully with Agent
                  to facilitate and implement a system of electronic collateral
                  reporting in order to provide electronic reporting of each of
                  the items set forth above.

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<PAGE>

         5.3      FINANCIAL STATEMENTS, REPORTS, CERTIFICATES. Deliver to Agent,
                  with copies to each Lender, each of the financial statements,
                  reports, or other items set forth on SCHEDULE 5.3 at the time
                  specified herein. In addition, Parent agrees that no
                  Subsidiary of Parent will have a fiscal year different from
                  that of Parent.

         5.4      GUARANTOR REPORTS. Cause each Guarantor to deliver its annual
                  financial statements at the time when Parent provides its
                  audited financial statements to Agent, but only to the extent
                  such Guarantor's financial statements are not consolidated
                  with Parent's financial statements.

         5.5      INSPECTION. Permit Agent, each Lender, and each of their duly
                  authorized representatives or agents to visit any of its
                  properties and inspect any of its assets or books and records,
                  to examine and make copies of its books and records, and to
                  discuss its affairs, finances, and accounts with, and to be
                  advised as to the same by, its officers and employees at such
                  reasonable times and intervals as Agent or any such Lender may
                  designate and, so long as no Default or Event of Default
                  exists, with reasonable prior notice to Administrative
                  Borrower.

         5.6      MAINTENANCE OF PROPERTIES. Maintain and preserve all of their
                  properties which are necessary or useful in the proper conduct
                  to their business in good working order and condition,
                  ordinary wear, tear, and casualty excepted (and except where
                  the failure to do so could not be expected to result in a
                  Material Adverse Change), and comply at all times with the
                  provisions of all material leases to which it is a party as
                  lessee, so as to prevent any loss or forfeiture thereof or
                  thereunder.

         5.7      TAXES. Cause all assessments and taxes, whether real,
                  personal, or otherwise, due or payable by, or imposed, levied,
                  or assessed against Parent, its Subsidiaries, or any of their
                  respective assets to be paid in full, before delinquency or
                  before the expiration of any extension period, except to the
                  extent that the validity of such assessment or tax shall be
                  the subject of a Permitted Protest. Parent and Borrowers will
                  and will cause their Subsidiaries to make timely payment or
                  deposit of all tax payments and withholding taxes required of
                  them by applicable laws, including those laws concerning
                  F.I.C.A., F.U.T.A., state disability, and local, state, and
                  federal income taxes, and will, upon request, furnish Agent
                  with proof satisfactory to Agent indicating that Parent or the
                  applicable Subsidiary of Parent has made such payments or
                  deposits.

         5.8      INSURANCE.

         (a)      At Borrowers' expense, maintain insurance respecting Parent
                  and its Subsidiaries' assets wherever located, covering loss
                  or damage by fire, theft, explosion, and all other hazards and
                  risks as ordinarily are insured against by other Persons
                  engaged in the same or similar businesses. Parent and
                  Borrowers also shall maintain business interruption, public
                  liability, and product liability insurance, as well as
                  insurance against larceny, embezzlement, and criminal
                  misappropriation. All such policies of insurance shall be in
                  such amounts and with such insurance companies as are
                  reasonably satisfactory to Agent. Borrowers shall deliver
                  copies of all such policies to Agent with an endorsement
                  naming Agent as a loss payee (under a satisfactory lender's
                  loss payable endorsement) or additional insured, as
                  appropriate, and in each case as Agent's interest may appear.
                  Each policy of insurance or endorsement shall contain a clause
                  requiring the insurer to give not less than 30 days prior
                  written notice to Agent in the event of cancellation of the
                  policy for any reason whatsoever.

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<PAGE>

         (b)      Administrative Borrower shall give Agent prompt notice of any
                  loss exceeding $100,000 covered by such insurance. So long as
                  no Event of Default has occurred and is continuing, Borrowers
                  shall have the exclusive right to adjust (i) any losses
                  payable under any such insurance policies to the extent that
                  such losses relate to Collateral on which Agent has a first
                  priority security interest at such time or (ii) any losses
                  payable under a business interruption insurance policy (any
                  such losses under clause (i) or (ii), "APPLICABLE LOSSES")
                  which are less than $250,000. Following the occurrence and
                  during the continuation of an Event of Default, or in the case
                  of any Applicable Losses payable under such insurance
                  exceeding $250,000, Agent shall have the exclusive right to
                  adjust any Applicable Losses payable under any such insurance
                  policies, without any liability to Borrowers whatsoever in
                  respect of such adjustments. Any monies received as payment
                  for any Applicable Loss under any insurance policy mentioned
                  above (other than liability insurance policies) or as payment
                  of any award or compensation for condemnation or taking by
                  eminent domain, shall be paid over to Agent to be applied at
                  the option of the Required Lenders either to the prepayment of
                  the Obligations or to be disbursed to Administrative Borrower
                  under staged payment terms reasonably satisfactory to the
                  Required Lenders for application to the cost of repairs,
                  replacements, or restorations; PROVIDED, HOWEVER, that, with
                  respect to any such monies in an aggregate amount during any
                  12 consecutive month period not in excess of $250,000, so long
                  as (A) no Default or Event of Default shall have occurred and
                  is continuing, (B) the sum of Borrowers' Excess Availability
                  plus Qualified Cash is greater than $2,000,000, (C)
                  Administrative Borrower shall have given Lender prior written
                  notice of the Borrowers or their respective Subsidiaries'
                  intention to apply such monies to the costs of repairs,
                  replacement, or restoration of the property which is the
                  subject of the loss, destruction, or taking by condemnation,
                  (D) the monies are held in a cash collateral account in which
                  Lender has a perfected first-priority security interest, and
                  (E) Parent or its Subsidiaries complete such repairs,
                  replacements, or restoration within 180 days after the initial
                  receipt of such monies, Borrowers shall have the option to
                  apply such monies to the costs of repairs, replacement, or
                  restoration of the property which is the subject of the loss,
                  destruction, or taking by condemnation unless and to the
                  extent that such applicable period shall have expired without
                  such repairs, replacements, or restoration being made, in
                  which case, any amounts remaining in the cash collateral
                  account shall be paid to Lender and applied as set forth
                  above.

         5.9      LOCATION OF EQUIPMENT. Keep Parent and its Subsidiaries'
                  Equipment (other than vehicles and Equipment out for repair
                  and other Equipment on which Agent does not have a first
                  priority security interest) only at the locations identified
                  on SCHEDULE 4.5 and their chief executive offices only at the
                  locations identified on SCHEDULE 4.7(b); PROVIDED, HOWEVER,
                  that Administrative Borrower may amend SCHEDULE 4.5 or
                  SCHEDULE 4.7 so long as such amendment occurs by written
                  notice to Agent not less than 30 days prior to the date on
                  which such Equipment is moved to such new location or such
                  chief executive office is relocated, so long as such new
                  location is within the continental United States, and so long
                  as, at the time of such written notification, the applicable
                  Borrower provides Agent a Collateral Access Agreement with
                  respect thereto.

         5.10     COMPLIANCE WITH LAWS. Comply with the requirements of all
                  applicable laws, rules, regulations, and orders of any
                  Governmental Authority, other than laws, rules, regulations,
                  and orders the non-compliance with which, individually or in
                  the aggregate, could not reasonably be expected to result in a
                  Material Adverse Change.

         5.11     LEASES. Pay when due all rents and other amounts payable under
                  any material leases to which Parent or any Subsidiary of
                  Parent is a party or by which Parent's or any of its
                  Subsidiaries' properties and assets are bound, unless such
                  payments are the subject of a Permitted Protest.

                                       37
<PAGE>

         5.12     EXISTENCE. At all times preserve and keep in full force and
                  effect Parent's and each of its Subsidiaries' valid existence
                  and good standing and any rights and franchises material to
                  their businesses.

         5.13     ENVIRONMENTAL. (a) Keep any property either owned or operated
                  by Parent or any Subsidiary of Parent free of any
                  Environmental Liens or post bonds or other financial
                  assurances sufficient to satisfy the obligations or liability
                  evidenced by such Environmental Liens, (b) comply, in all
                  material respects, with Environmental Laws and provide to
                  Agent documentation of such compliance which Agent reasonably
                  requests, (c) promptly notify Agent of any release of a
                  Hazardous Material in any reportable quantity from or onto
                  property owned or operated by Parent or any Subsidiary of
                  Parent and take any Remedial Actions required to abate said
                  release or otherwise to come into compliance with applicable
                  Environmental Law, and (d) promptly, but in any event within 5
                  days of its receipt thereof, provide Agent with written notice
                  of any of the following: (i) notice that an Environmental Lien
                  has been filed against any of the real or personal property of
                  Parent or any Subsidiary of Parent, (ii) commencement of any
                  Environmental Action or notice that an Environmental Action
                  will be filed against Parent or any Subsidiary of Parent, and
                  (iii) notice of a violation, citation, or other administrative
                  order which reasonably could be expected to result in a
                  Material Adverse Change.

         5.14     DISCLOSURE UPDATES. Promptly and in no event later than 5
                  Business Days after obtaining knowledge thereof, notify Agent
                  if any written information, exhibit, or report furnished to
                  the Lender Group contained, at the time it was furnished, any
                  untrue statement of a material fact or omitted to state any
                  material fact necessary to make the statements contained
                  therein not misleading in light of the circumstances in which
                  made. The foregoing to the contrary notwithstanding, any
                  notification pursuant to the foregoing provision will not cure
                  or remedy the effect of the prior untrue statement of a
                  material fact or omission of any material fact nor shall any
                  such notification have the affect of amending or modifying
                  this Agreement or any of the Schedules hereto.

         5.15     CONTROL AGREEMENTS. Take all reasonable steps in order for
                  Agent to obtain control in accordance with Sections 8-106,
                  9-104, 9-105, 9-106, and 9-107 of the Code with respect to
                  (subject to the proviso contained in SECTION 6.12) all of its
                  Securities Accounts, Deposit Accounts, electronic chattel
                  paper, investment property, and letter of credit rights.

         5.16     FORMATION OF SUBSIDIARIES. If any Borrower or any Guarantor
                  intends to form any direct or indirect Subsidiary or acquire
                  any direct or indirect Subsidiary after the Closing Date, such
                  Borrower or such Guarantor shall provide at least five (5)
                  days prior written notice to Agent. At the time that any
                  Borrower or any Guarantor forms any direct or indirect
                  Subsidiary or acquires any direct or indirect Subsidiary after
                  the Closing Date, such Borrower or such Guarantor shall (a)
                  cause such new Subsidiary to provide to Agent a joinder to the
                  Guaranty and the Security Agreement, together with such other
                  security documents (including Mortgages with respect to any
                  Real Property of such new Subsidiary), as well as appropriate
                  financing statements (and with respect to all property subject
                  to a Mortgage, fixture filings), all in form and substance
                  satisfactory to Agent (including being sufficient to grant
                  Agent a first priority Lien (subject to Permitted Liens) in
                  and to the assets of such newly formed or acquired Subsidiary)
                  (it being understood and agreed that any such Borrower or
                  Guarantor shall not be required to pledge the Stock of such
                  new Subsidiary), and (b) provide to Agent all other
                  documentation, including one or more opinions of counsel
                  satisfactory to Agent, which in its opinion is appropriate
                  with respect to the execution and delivery of the applicable

                                       38
<PAGE>

                  documentation referred to above (including policies of title
                  insurance or other documentation with respect to all property
                  subject to a Mortgage). Any document, agreement, or instrument
                  executed or issued pursuant to this SECTION 5.16 shall be a
                  Loan Document. Notwithstanding the foregoing provisions of
                  this SECTION 5.16, Agent shall not be obligated to consent to
                  any such formation or acquisition of a Subsidiary unless such
                  formation or acquisition is otherwise expressly permitted
                  hereunder.

         5.17     MATERIAL DOCUMENTS. Promptly provide Agent with true and
                  complete copies of any and all material documents delivered to
                  any Person pursuant to, or in connection with, any Indenture
                  Document, Management Agreement, Restructuring Document, or any
                  other Material Contract.

         5.18     OBTAINING OF PERMITS, ETC. Obtain, maintain and preserve, and
                  cause each of its Subsidiaries and each Managed Practice to
                  obtain, maintain and preserve, and take all necessary action
                  to timely renew, all permits, licenses, authorizations,
                  approvals, entitlements and accreditations which are necessary
                  or useful in the proper conduct of its business.

         5.19     COMPLIANCE WITH MANAGEMENT AGREEMENTS. Comply, and cause each
                  of its Subsidiaries and each Managed Practice to comply, in
                  all material respects, with the terms of each Management
                  Agreement to which it is a party.

         5.20     ACCREDITATION AND LICENSING.

         (a)      Keep, and cause each of its Subsidiaries and each Managed
                  Practice to keep, itself fully licensed with all licenses
                  required to operate such Person's business under applicable
                  law, maintain such Person's qualification to practice medicine
                  in the manner contemplated under the applicable Management
                  Agreement and for participation in, and payment under
                  Medicaid, Medicare and any other Third Party Payor program
                  providing for payment or reimbursement for services rendered
                  by such Person; and promptly furnish or cause to be furnished
                  to Agent copies of all reports and correspondence it or any of
                  its Subsidiaries delivers to or receives from any Person
                  relating to any loss or revocation (or threatened loss or
                  revocation) of any qualification described in this Section or
                  any material claim, audit or complaint received by Parent or
                  its Subsidiaries or any Managed Practice (excluding
                  malpractice claims, routine or random audits and routine
                  license and certification surveys, unless such surveys include
                  a recommendation that the Government Reimbursement Program
                  certification or license of a facility should be terminated,
                  revoked or suspended) by or on behalf of a Government
                  Reimbursement Program or other Person relating to the delivery
                  of medical services and payment therefor or billing
                  procedures.

         (b)      Beverly Radiology Medical Group III shall cause each Managed
                  Practice to: (i) provide professional services to its patients
                  in compliance with ethical standards, laws, rules and
                  regulations applicable to the operations of such Managed
                  Practice; (ii) assure that each physician employee of such
                  Managed Practice has all required licenses, credentials,
                  approvals and other certifications to perform his or her
                  duties and services for such Managed Practice; and (iii)
                  maintain all licenses required to operate such Managed
                  Practices' business under applicable law.

                                       39
<PAGE>

6.       NEGATIVE COVENANTS.

         Parent and each Borrower covenants and agrees that, until termination
of all of the Commitments and payment in full of the Obligations, Parent and
Borrowers will not and will not permit any of their respective Subsidiaries to
do any of the following:

         6.1      INDEBTEDNESS. Create, incur, assume, suffer to exist,
                  guarantee, or otherwise become or remain, directly or
                  indirectly, liable with respect to any Indebtedness, except:

         (a)      Indebtedness evidenced by this Agreement and the other Loan
                  Documents, together with Indebtedness owed to Underlying
                  Issuers with respect to Underlying Letters of Credit,

         (b)      the Indenture Notes and the Indebtedness set forth on SCHEDULE
                  4.19,

         (c)      Permitted Purchase Money Indebtedness,

         (d)      refinancings, renewals, or extensions of Indebtedness
                  permitted under clauses (b) and (c) of this SECTION 6.1 (and
                  continuance or renewal of any Permitted Liens associated
                  therewith) so long as: (i) the terms and conditions of such
                  refinancings, renewals, or extensions do not, in Agent's
                  reasonable judgment, materially impair the prospects of
                  repayment of the Obligations by Borrowers or materially impair
                  Borrowers' creditworthiness, (ii) such refinancings, renewals,
                  or extensions do not result in an increase in the principal
                  amount of, or interest rate with respect to, the Indebtedness
                  so refinanced, renewed, or extended or add one or more
                  Borrowers as liable with respect thereto if such additional
                  Borrowers were not liable with respect to the original
                  Indebtedness, (iii) such refinancings, renewals, or extensions
                  do not result in a shortening of the average weighted maturity
                  of the Indebtedness so refinanced, renewed, or extended, nor
                  are they on terms or conditions, that, taken as a whole, are
                  materially more burdensome or restrictive to the applicable
                  Borrower, (iv) if the Indebtedness that is refinanced,
                  renewed, or extended was subordinated in right of payment to
                  the Obligations, then the terms and conditions of the
                  refinancing, renewal, or extension Indebtedness must include
                  subordination terms and conditions that are at least as
                  favorable to the Lender Group as those that were applicable to
                  the refinanced, renewed, or extended Indebtedness, and (v) the
                  Indebtedness that is refinanced, renewed, or extended is not
                  recourse to any Person that is liable on account of the
                  Obligations other than those Persons which were obligated with
                  respect to the Indebtedness that was refinanced, renewed, or
                  extended,

         (e)      Indebtedness issued in connection with any Permitted
                  Acquisition so long as (i) the incurrence of such Indebtedness
                  would not, on a pro forma basis, after giving effect to any
                  such incurrence of Indebtedness, cause Parent and Borrowers to
                  fail to be in compliance with SECTION 6.16 if such covenants
                  were tested at such time, (ii) no Default or Event of Default
                  shall have occurred and be continuing, both before and
                  immediately after giving effect to the incurrence of such
                  Indebtedness, and (iii) such Indebtedness (other than
                  Indebtedness secured solely by Equipment at the time of such
                  Permitted Acquisition) is subordinated to the Obligations
                  hereunder on terms and conditions reasonably satisfactory to
                  Agent,

         (f)      endorsement of instruments or other payment items for deposit,
                  and

         (g)      Indebtedness composing Permitted Investments.

                                       40
<PAGE>

         6.2      LIENS. Create, incur, assume, or suffer to exist, directly or
                  indirectly, any Lien on or with respect to any of its assets,
                  of any kind, whether now owned or hereafter acquired, or any
                  income or profits therefrom, except for Permitted Liens
                  (including Liens that are replacements of Permitted Liens to
                  the extent that the original Indebtedness is refinanced,
                  renewed, or extended under SECTION 6.1(d) and so long as the
                  replacement Liens only encumber those assets that secured the
                  refinanced, renewed, or extended Indebtedness).

         6.3      RESTRICTIONS ON FUNDAMENTAL CHANGES.

         (a)      Except for Permitted Acquisitions, enter into any merger,
                  consolidation, reorganization, or recapitalization, or
                  reclassify its Stock, or purchase all or substantially all of
                  the assets or Stock of any other Person, in any case, in one
                  transaction or a series of transactions, or enter into any
                  agreement in respect of or to undertake any of the foregoing,

         (b)      Liquidate, wind up, or dissolve itself (or suffer any
                  liquidation or dissolution), or

         (c)      Suspend or go out of a substantial portion of its or their
                  business.

         6.4      DISPOSAL OF ASSETS. Other than Permitted Dispositions, convey,
                  sell, lease, license, assign, transfer, or otherwise dispose
                  of any of the assets of Parent or any Subsidiary of Parent.

         6.5      CHANGE NAME. Change Parent's or any of its Subsidiaries' name,
                  organizational identification number, state of organization,
                  or organizational identity; PROVIDED, HOWEVER, that Parent or
                  a Subsidiary of Parent may change its name upon at least 30
                  days prior written notice by Administrative Borrower to Agent
                  of such change so long as, (a) at the time of such written
                  notification, such Borrower or such Subsidiary provides any
                  financing statements necessary to perfect and continue
                  perfected the Agent's Liens and (b) immediately after such
                  name change, Administrative Borrower provides Agent with
                  evidence of such name change (including copies of any related
                  public filings).

         6.6      NATURE OF BUSINESS. Make any change in the principal nature of
                  their business.

         6.7      PREPAYMENTS AND AMENDMENTS. Except in connection with a
                  refinancing permitted by SECTION 6.1(d),

         (a)      optionally prepay, redeem, defease, purchase, or otherwise
                  acquire (collectively, a "PREPAYMENT") any Indebtedness of
                  Parent or any Subsidiary of Parent, other than (i) the
                  Obligations in accordance with this Agreement, (ii) in
                  accordance with the Restructuring Documents as in effect on
                  the Closing Date without any modification or amendment
                  thereof, and (iii) additional Prepayments in an amount not to
                  exceed $750,000 (or $1,000,000 if the sum of Borrowers' Excess
                  Availability plus Qualified Cash shall be equal to at least
                  $5,000,000, both immediately prior to and immediately after
                  giving effect to any such Prepayment) for any individual
                  Prepayment or in any calendar year or $3,000,000 in the
                  aggregate over the term of this Agreement so long as (A) no
                  Default or Event of Default shall have occurred and be
                  continuing and (B) the sum of Borrowers' Excess Availability
                  plus Qualified Cash shall be equal to at least $4,000,000, in
                  each case both immediately prior to and immediately after
                  giving effect to any such Prepayment,

                                       41
<PAGE>

         (b)      make any payment on account of any Subordinated Indebtedness,
                  other than (i) to the extent permitted under clause (a)(iv)
                  above with respect to the Indenture Notes, (ii) so long as no
                  Default or Event of Default shall have occurred and be
                  continuing immediately prior to or after giving effect to any
                  such payment, (A) interest (but not including any default
                  interest) due and payable on the Indenture Notes (as in effect
                  on the Closing Date without any modification or amendment
                  thereof) and (B) payments due and payable on the Tower
                  Litigation Note (as in effect on the Closing Date without any
                  modification or amendment thereof), and (iii) payments
                  permitted to Norman Hames in respect of the Norman Hames
                  Shareholder Note solely to the extent permitted under the
                  Norman Hames Subordination Agreement,

         (c)      directly or indirectly, amend, modify  , alter, increase, or
                  change any of the terms or conditions of any agreement,
                  instrument, document, indenture, or other writing evidencing
                  or concerning Indebtedness permitted under SECTION 6.1(B) or
                  (C) (other than amendments, modifications or changes to
                  Indebtedness evidenced by, or any instrument or agreement
                  constituting, an Indenture Document, which shall be governed
                  by clause (d) below), or

         (d)      agree to (i) any amendment or other change to or waiver of any
                  of its rights under any Indenture Document that is adverse to
                  the Agent and the Lenders or (ii) any material amendment or
                  other material change to or material waiver of any of its
                  rights under any Management Agreement, Restructuring Document
                  or other Material Contract (including the GE Master Lease
                  Agreement) that is adverse to the Agent and the Lenders.

         6.8      [INTENTIONALLY OMITTED].

         6.9      CONSIGNMENTS. Consign any of their Inventory or sell any of
                  their Inventory on bill and hold, sale or return, sale on
                  approval, or other conditional terms of sale.

         6.10     DISTRIBUTIONS. Other than distributions or declaration and
                  payment of dividends by a Borrower or a Subsidiary of a
                  Borrower to a Borrower, make any distribution or declare or
                  pay any dividends (in cash or other property, other than
                  common Stock) on, or purchase, acquire, redeem, or retire any
                  of any Borrower's Stock, of any class, whether now or
                  hereafter outstanding (collectively, "DISTRIBUTIONS");
                  PROVIDED, HOWEVER, that so long as no Default or Event of
                  Default shall have occurred and be continuing immediately
                  prior to or after giving effect to any such payment, (a)
                  Borrowers may make Distributions to Parent (1) in amounts
                  necessary to pay customary expenses of Parent in the ordinary
                  course of its business as a public holding company (including
                  salaries and related reasonable and customary expenses
                  incurred by employees of Parent) in an aggregate amount not to
                  exceed $750,000 in any fiscal year, (2) in amounts necessary
                  to enable Parent to pay taxes when due and owing by it in the
                  ordinary course of its business as a holding company and (3)
                  in amounts necessary to enable Parent to pay interest on the
                  Indenture Notes to the extent permitted by SECTION 6.7(b) and
                  to make Prepayments in respect of the Indenture Notes to the
                  extent permitted under SECTION 6.7(a), and (b) Parent may make
                  Distributions in the form of common Stock.

         6.11     ACCOUNTING METHODS. Modify or change their fiscal year or
                  their method of accounting (other than as may be required to
                  conform to GAAP) or enter into, modify, or terminate any
                  agreement currently existing, or at any time hereafter entered
                  into with any third party accounting firm or service bureau
                  for the preparation or storage of Parent's or its
                  Subsidiaries' accounting records without said accounting firm
                  or service bureau agreeing to provide Agent information
                  regarding Borrowers' and their Subsidiaries' financial
                  condition.

                                       42
<PAGE>

         6.12     INVESTMENTS. Except for Permitted Investments, directly or
                  indirectly, make or acquire any Investment, or incur any
                  liabilities (including contingent obligations) for or in
                  connection with any Investment; PROVIDED, HOWEVER, that
                  Administrative Borrower and its Subsidiaries shall not have
                  Permitted Investments (other than in the Cash Management
                  Accounts) in Deposit Accounts or Securities Accounts in an
                  aggregate amount in excess of $100,000 at any one time unless
                  Administrative Borrower or its Subsidiary, as applicable, and
                  the applicable securities intermediary or bank have entered
                  into Control Agreements governing such Permitted Investments
                  in order to perfect (and further establish) the Agent's Liens
                  in such Permitted Investments. Subject to the foregoing
                  proviso, Borrowers shall not and shall not permit their
                  Subsidiaries to establish or maintain any Deposit Account or
                  Securities Account unless Agent shall have received a Control
                  Agreement in respect of such Deposit Account or Securities
                  Account.

         6.13     TRANSACTIONS WITH AFFILIATES. Other than the transactions
                  evidenced by promissory notes entered into as of the Closing
                  Date and disclosed on SCHEDULE 6.13, directly or indirectly
                  enter into or permit to exist any transaction with any
                  Affiliate of any Borrower except for transactions that (a) are
                  in the ordinary course of Borrowers' business, (b) are upon
                  fair and reasonable terms, (c) if they involve one or more
                  payments by any Borrower or any of its Subsidiaries in excess
                  of $50,000, are fully disclosed to Agent, and (d) are no less
                  favorable to Borrowers or their respective Subsidiaries, as
                  applicable, than would be obtained in an arm's length
                  transaction with a non-Affiliate.

         6.14     USE OF PROCEEDS. Use the proceeds of the Advances and the Term
                  Loan for any purpose other than (a) on the Closing Date, (i)
                  to repay in full the outstanding principal, accrued interest,
                  and accrued fees and expenses owing to Existing Lender and
                  (ii) to pay transactional fees, costs, and expenses incurred
                  in connection with this Agreement, the other Loan Documents,
                  and the transactions contemplated hereby and thereby, and (b)
                  thereafter, consistent with the terms and conditions hereof,
                  for its lawful and permitted purposes.

         6.15     INVENTORY AND EQUIPMENT WITH BAILEES. Store the Inventory or
                  Equipment of Borrowers or their Subsidiaries at any time now
                  or hereafter with a bailee, warehouseman, or similar party.

         6.16     FINANCIAL COVENANTS.

         (a)      Fail to maintain or achieve:

         (i)      MINIMUM EBITDA. EBITDA, measured on a month-end basis, of at
                  least the required amount set forth in the following table for
                  the applicable period set forth opposite thereto:

                                       43
<PAGE>

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

        Applicable Amount                           Applicable Period

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

         $26,000,000                             For the 12-month period
                                                   ending July 31, 2004
      -------------------------------------------------------------------------

         $26,000,000                             For the 12-month period
                                                  ending August 31, 2004
      -------------------------------------------------------------------------

         $26,000,000                             For the 12-month period
                                                ending September 30, 2004
      -------------------------------------------------------------------------

         $26,000,000                             For the 12-month period
                                                 ending October 31, 2004
      -------------------------------------------------------------------------

         $26,000,000                             For the 12-month period
                                                 ending November 30, 2004
      -------------------------------------------------------------------------

         $26,000,000                             For the 12-month period
                                                 ending December 31, 2004
      -------------------------------------------------------------------------

         $26,500,000                             For the 12-month period
                                                 ending January 31, 2005
      -------------------------------------------------------------------------

         $26,500,000                             For the 12-month period
                                                 ending February 28, 2005
      -------------------------------------------------------------------------

         $27,000,000                             For the 12-month period
                                                  ending March 31, 2005
      -------------------------------------------------------------------------

         $27,500,000                             For the 12-month period
                                                  ending April 30, 2005
      -------------------------------------------------------------------------

         $28,000,000                             For the 12-month period
                                                   ending May 31, 2005
      -------------------------------------------------------------------------

         $28,500,000                             For the 12-month period
                                                   ending June 30, 2005
      -------------------------------------------------------------------------

         $29,000,000                             For the 12-month period
                                                   ending July 31, 2005
      -------------------------------------------------------------------------

         $29,500,000                             For the 12-month period
                                                  ending August 31, 2005
      -------------------------------------------------------------------------

         $30,000,000                             For the 12-month period
                                                ending September 30, 2005
      -------------------------------------------------------------------------

         $30,000,000                             For the 12-month period
                                                 ending October 31, 2005
      -------------------------------------------------------------------------

         $30,500,000                             For the 12-month period
                                                 ending November 30, 2005
      -------------------------------------------------------------------------

                                       44
<PAGE>

         $31,000,000                             For the 12-month period
                                                 ending December 31, 2005
      -------------------------------------------------------------------------

         $31,500,000                             For the 12-month period
                                                 ending January 31, 2006
      -------------------------------------------------------------------------

         $31,500,000                             For the 12-month period
                                                 ending February 28, 2006
      -------------------------------------------------------------------------

         $31,500,000                             For the 12-month period
                                                  ending March 31, 2006
      -------------------------------------------------------------------------

         $32,000,000                             For the 12-month period
                                                  ending April 30, 2006
      -------------------------------------------------------------------------

         $32,000,000                             For the 12-month period
                                                   ending May 31, 2006
      -------------------------------------------------------------------------

         $32,000,000                             For the 12-month period
                                                   ending June 30, 2006
      -------------------------------------------------------------------------

         $32,500,000                             For the 12-month period
                                                   ending July 31, 2006
      -------------------------------------------------------------------------

         $32,500,000                             For the 12-month period
                                                  ending August 31, 2006
      -------------------------------------------------------------------------

         $32,500,000                             For the 12-month period
                                                ending September 30, 2006
      -------------------------------------------------------------------------

         $33,300,000                             For the 12-month period
                                                 ending October 31, 2006
      -------------------------------------------------------------------------

         $33,300,000                             For the 12-month period
                                               ending each month thereafter
      -------------------------------------------------------------------------

         (ii)     FIXED CHARGE COVERAGE RATIO. A Fixed Charge Coverage Ratio,
                  measured on a month-end basis, of at least 1.0:1.0 for each
                  12-month period ending on the last day of each month
                  (commencing with the month ending May 31, 2004) during the
                  term of this Agreement.

         (b)      Permit:

                                       45
<PAGE>

         (i)      MAXIMUM LEVERAGE RATIO. A Leverage Ratio, measured on a fiscal
                  quarter-end basis, to be greater than the amount set forth in
                  the following table measured as of the applicable date set
                  forth opposite thereto:

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

           Applicable Ratio                              Applicable Period
         -----------------------------------------------------------------------

               5.77:1.00                              For the 12-month period
                                                       ending July 31, 2004
         -----------------------------------------------------------------------

               5.59:1.00                              For the 12-month period
                                                      ending October 31, 2004
         -----------------------------------------------------------------------

               5.54:1.00                              For the 12-month period
                                                      ending January 31, 2005
         -----------------------------------------------------------------------

               4.50:1.00                              For the 12-month period
                                                       ending April 30, 2005
         -----------------------------------------------------------------------

               4.50:1.00                              For the 12-month period
                                                       ending July 31, 2005
         -----------------------------------------------------------------------

              4.30: 1.00                              For the 12-month period
                                                      ending October 31, 2005
         -----------------------------------------------------------------------

              4.30: 1.00                              For the 12-month period
                                                      ending January 31, 2006
         -----------------------------------------------------------------------

              4.30: 1.00                              For the 12-month period
                                                       ending April 30, 2006
         -----------------------------------------------------------------------

              4.30: 1.00                              For the 12-month period
                                                       ending July 31, 2006
         -----------------------------------------------------------------------

              4.00: 1.00                              For the 12-month period
                                                      ending October 31, 2006
         -----------------------------------------------------------------------

              4.00: 1.00                              For the 12-month period
                                                      ending January 31, 2007
         -----------------------------------------------------------------------

              4.00: 1.00                              For the 12-month period
                                                       ending April 30, 2007
         -----------------------------------------------------------------------

              4.00: 1.00                              For the 12-month period
                                                       ending July 31, 2007
         -----------------------------------------------------------------------

              3.80: 1.00                              For the 12-month period
                                                   ending each month thereafter
         -----------------------------------------------------------------------

                                       46
<PAGE>

         6.17     NON-MATERIAL SUBSIDIARIES. No Non-Material Subsidiary will
                  incur any material liabilities, conduct any material
                  operations or business or own or acquire any material assets
                  or properties.

         6.18     DVI REVOLVER AGREEMENT.

         (a)      None of Parent or its Subsidiaries will amend, modify, or
                  supplement the DVI Revolver Agreement without the prior
                  written consent of the Agent.

         6.19     None of Parent or its Subsidiaries will make any borrowings
                  under the DVI Revolver Agreement after the Closing Date

         6.20     BEVERLY HILLS MRI. None of Parent or its Subsidiaries will
                  generate any Accounts on account of the operation of the
                  imaging facility known as Beverly Hills MRI.

7.       EVENTS OF DEFAULT.

         Any one or more of the following events shall constitute an event of
default (each, an "EVENT OF DEFAULT") under this Agreement:

         7.1      If Borrowers fail to pay when due and payable, or when
                  declared due and payable, (a) all or any portion of the
                  Obligations consisting of interest, fees, or charges due the
                  Lender Group, reimbursement of Lender Group Expenses, or other
                  amounts (other than any portion thereof constituting
                  principal) constituting Obligations (including any portion
                  thereof that accrues after the commencement of an Insolvency
                  Proceeding, regardless of whether allowed or allowable in
                  whole or in part as a claim in any such Insolvency
                  Proceeding), and such failure continues for a period of 3
                  Business Days, or (b) all or any portion of the principal of
                  the Obligations);

         7.2      If Parent or any Subsidiary of Parent

         (a)      fail to perform or observe any covenant or other agreement
                  contained in any of SECTIONS 2.7, 5.2, 5.3, 5.4, 5.5, 5.8,
                  5.12, 5.14, 5.16, and 6.1 through 6.16 of this Agreement;

         (b)      fail to perform or observe any covenant or other agreement
                  contained in any of SECTIONS 5.6, 5.7, 5.9, 5.10, 5.11, and
                  5.15 of this Agreement and such failure continues for a period
                  of 10 days after the earlier of (i) the date on which such
                  failure shall first become known to any officer of any
                  Borrower or (ii) written notice thereof is given to
                  Administrative Borrower by Agent; or

         (c)      fail to perform or observe any covenant or other agreement
                  contained in this Agreement, or in any of the other Loan
                  Documents; in each case, other than any such covenant or
                  agreement that is the subject of another provision of this
                  SECTION 7 (in which event such other provision of this SECTION
                  7 shall govern), and such failure continues for a period of 20
                  days after the earlier of (i) the date on which such failure
                  shall first become known to any officer of any Borrower or
                  (ii) written notice thereof is given to Administrative
                  Borrower by Agent;

         7.3      If any material portion of Parent's or any of its
                  Subsidiaries' assets is attached, seized, subjected to a writ
                  or distress warrant, or is levied upon, or comes into the
                  possession of any third Person and the same is not discharged
                  before the earlier of 30 days after the date it first arises
                  or 5 days prior to the date on which such property or asset is
                  subject to forfeiture by Parent or the applicable Subsidiary;

         7.4      If an Insolvency Proceeding is commenced by Parent or any
                  Subsidiary of Parent;

         7.5      If an Insolvency Proceeding is commenced against Parent or any
                  Subsidiary of Parent, and any of the following events occur:
                  (a) Parent or the applicable Subsidiary consents to the
                  institution of such Insolvency Proceeding against it, (b) the
                  petition commencing the Insolvency Proceeding is not timely
                  controverted, (c) the petition commencing the Insolvency
                  Proceeding is not dismissed within 60 calendar days of the
                  date of the filing thereof; (d) an interim trustee is
                  appointed to take possession of all or any substantial portion
                  of the properties or assets of, or to operate all or any
                  substantial portion of the business of, Parent or any
                  Subsidiary of Parent, or (e) an order for relief shall have
                  been issued or entered therein;

         7.6      If Parent or any Subsidiary of Parent is enjoined, restrained,
                  or in any way prevented by court order from continuing to
                  conduct all or any material part of its business affairs;

         7.7      If one or more judgments or other claims involving an
                  aggregate amount of $250,000, or more (except to the extent
                  fully covered by insurance pursuant to which the insurer has
                  accepted liability therefor in writing) shall be entered or
                  filed against Parent or any Subsidiary of Parent or with
                  respect to any of their respective assets, and the same is not
                  released, discharged, bonded against, or stayed pending appeal
                  before the earlier of 30 days after the date it first arises
                  or 5 days prior to the date on which such asset is subject to
                  being forfeited by Parent or the applicable Subsidiary;

         7.8      If there is a default in one or more agreements to which
                  Parent or any Subsidiary of Parent is a party with one or more
                  third Persons relative to Indebtedness of Parent or any
                  Subsidiary of Parent involving an aggregate amount of $250,000
                  or more, and such default (a) occurs at the final maturity of
                  the obligations thereunder, or (b) results in a right by such
                  third Person(s), irrespective of whether exercised, to
                  accelerate the maturity of Parent's or the applicable
                  Subsidiary's obligations thereunder;

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<PAGE>

         7.9      If any warranty, representation, statement, or Record made
                  herein or in any other Loan Document or delivered to Lender in
                  connection with this Agreement or any other Loan Document
                  proves to be untrue in any material respect as of the date of
                  issuance or making or deemed making thereof;

         7.10     If the obligation of any Guarantor under the Guaranty is
                  limited or terminated by operation of law or by such Guarantor
                  or any such Guarantor becomes the subject of an Insolvency
                  Proceeding;

         7.11     If the Security Agreement or any other Loan Document that
                  purports to create a Lien, shall, for any reason, fail or
                  cease to create a valid and perfected and, except to the
                  extent permitted by the terms hereof or thereof, first
                  priority Lien on or security interest in the Collateral
                  covered hereby or thereby, except as a result of a disposition
                  of the applicable Collateral in a transaction permitted under
                  this Agreement;

         7.12     Any provision of any Loan Document shall at any time for any
                  reason be declared to be null and void, or the validity or
                  enforceability thereof shall be contested by Parent or any
                  Subsidiary of Parent, or a proceeding shall be commenced by
                  Parent or any Subsidiary of Parent, or by any Governmental
                  Authority having jurisdiction over Parent or any Subsidiary of
                  Parent, seeking to establish the invalidity or
                  unenforceability thereof, or Parent or any Subsidiary of
                  Parent shall deny that it has any liability or obligation
                  purported to be created under any Loan Document;

         7.13     A Change of Control shall occur;

         7.14     The occurrence of (a) any cancellation, revocation, suspension
                  or termination of any Medicare Certification, Medicare
                  Provider Agreement, Medicaid Certification or Medicaid
                  Provider Agreement affecting Parent or any of its Subsidiaries
                  or any Managed Practice, or (b) the loss of any other Permit
                  of Parent or any of its Subsidiaries or any Managed Practice
                  from any Governmental Authority or Third Party Payor or
                  termination of any contract of Parent or any of its
                  Subsidiaries or any Managed Practice with any Governmental
                  Authority or Third Party Payor, in either case, which could
                  reasonably be expected to have a Material Adverse Change;

         7.15     The introduction of, or any change in, any law or regulation
                  governing or affecting a physician practice, a physician
                  practice management company or any practice or practice group
                  managed thereby or a facility providing radiology technical
                  services or any practice or practice group managed thereby,
                  including any Healthcare Laws, which could reasonably be
                  expected to have a Material Adverse Change;

         7.16     Any default or breach shall occur under any Management
                  Agreement, any Restructuring Document or any other Material
                  Contracts (including the GE Master Lease Agreement) and such
                  default or breach, individually or when aggregated with all
                  such defaults or breaches, could reasonably be expected to
                  have a Material Adverse Change; or

         7.17     The revocation by any Borrower or any of their Subsidiaries of
                  any Governmental Account Debtor Sweep Agreement.

8.       THE LENDER GROUP'S RIGHTS AND REMEDIES.

         8.1      RIGHTS AND REMEDIES. Upon the occurrence, and during the
                  continuation, of an Event of Default, the Required Lenders (at
                  their election but without notice of their election and
                  without demand) may authorize and instruct Agent to do any one
                  or more of the following on behalf of the Lender Group (and
                  Agent, acting upon the instructions of the Required Lenders,
                  shall do the same on behalf of the Lender Group), all of which
                  are authorized by Borrowers:

         (a)      Declare all or any portion of the Obligations, whether
                  evidenced by this Agreement, by any of the other Loan
                  Documents, or otherwise, immediately due and payable;

         (b)      Cease or restrict advancing money or extending credit to or
                  for the benefit of Borrowers under this Agreement, under any
                  of the Loan Documents, or under any other agreement between
                  Borrowers and the Lender Group;

         (c)      Terminate this Agreement and any of the other Loan Documents
                  as to any future liability or obligation of the Lender Group,
                  but without affecting any of the Agent's Liens in the
                  Collateral and without affecting the Obligations; and

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<PAGE>

         (d)      The Lender Group shall have all other rights and remedies
                  available at law or in equity or pursuant to any other Loan
                  Document.

The foregoing to the contrary notwithstanding, upon the occurrence of any Event
of Default described in SECTION 7.4 or SECTION 7.5, in addition to the remedies
set forth above, without any notice to Borrowers or any other Person or any act
by the Lender Group, the Commitments shall automatically terminate and the
Obligations then outstanding, together with all accrued and unpaid interest
thereon and all fees and all other amounts due under this Agreement and the
other Loan Documents, shall automatically and immediately become due and
payable, without presentment, demand, protest, or notice of any kind, all of
which are expressly waived by Borrowers.

         8.2      REMEDIES CUMULATIVE. The rights and remedies of the Lender
                  Group under this Agreement, the other Loan Documents, and all
                  other agreements shall be cumulative. The Lender Group shall
                  have all other rights and remedies not inconsistent herewith
                  as provided under the Code, by law, or in equity. No exercise
                  by the Lender Group of one right or remedy shall be deemed an
                  election, and no waiver by the Lender Group of any Event of
                  Default shall be deemed a continuing waiver. No delay by the
                  Lender Group shall constitute a waiver, election, or
                  acquiescence by it.

         8.3      COURT ORDER WITH RESPECT TO GOVERNMENTAL ACCOUNT DEBTOR. In
                  addition to the other rights and remedies set forth in this
                  SECTION 8, each of Parent and its Subsidiaries hereby
                  acknowledges and agrees that, upon the occurrence and
                  continuance of an Event of Default, the Lender Group shall
                  have the right to seek and obtain an immediate court order
                  directing any Governmental Account Debtor to make all future
                  payments on their Accounts directly to a Cash Management
                  Account owned by Agent.

9.       TAXES AND EXPENSES.

         If any Borrower fails to pay any monies (whether taxes, assessments,
insurance premiums, or, in the case of leased properties or assets, rents or
other amounts payable under such leases) due to third Persons, or fails to make
any deposits or furnish any required proof of payment or deposit, all as
required under the terms of this Agreement, then, Agent, in its sole discretion
and without prior notice to any Borrower, may do any or all of the following:
(a) make payment of the same or any part thereof, (b) set up such reserves
against the Borrowing Base or the Maximum Revolver Amount as Agent deems
necessary to protect the Lender Group from the exposure created by such failure,
or (c) in the case of the failure to comply with SECTION 5.8 hereof, obtain and
maintain insurance policies of the type described in SECTION 5.8 and take any
action with respect to such policies as Agent deems prudent. Any such amounts
paid by Agent shall constitute Lender Group Expenses and any such payments shall
not constitute an agreement by the Lender Group to make similar payments in the
future or a waiver by the Lender Group of any Event of Default under this
Agreement. Agent need not inquire as to, or contest the validity of, any such
expense, tax, or Lien and the receipt of the usual official notice for the
payment thereof shall be conclusive evidence that the same was validly due and
owing.

10.      WAIVERS; INDEMNIFICATION.

         10.1     DEMAND; PROTEST; ETC. Each Borrower waives demand, protest,
                  notice of protest, notice of default or dishonor, notice of
                  payment and nonpayment, nonpayment at maturity, release,
                  compromise, settlement, extension, or renewal of documents,
                  instruments, chattel paper, and guarantees at any time held by
                  the Lender Group on which any such Borrower may in any way be
                  liable.

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<PAGE>

         10.2     THE LENDER GROUP'S LIABILITY FOR BORROWER COLLATERAL. Each
                  Borrower hereby agrees that: (a) so long as Agent complies
                  with its obligations, if any, under the Code, the Lender Group
                  shall not in any way or manner be liable or responsible for:
                  (i) the safekeeping of the Borrower Collateral, (ii) any loss
                  or damage thereto occurring or arising in any manner or
                  fashion from any cause, (iii) any diminution in the value
                  thereof, or (iv) any act or default of any carrier,
                  warehouseman, bailee, forwarding agency, or other Person, and
                  (b) all risk of loss, damage, or destruction of the Borrower
                  Collateral shall be borne by Borrowers.

         10.3     INDEMNIFICATION. Each Borrower shall pay, indemnify, defend,
                  and hold the Agent-Related Persons, the Lender-Related
                  Persons, and each Participant (each, an "INDEMNIFIED PERSON")
                  harmless (to the fullest extent permitted by law) from and
                  against any and all claims, demands, suits, actions,
                  investigations, proceedings, liabilities, costs, fines,
                  penalties, and damages, and all reasonable fees and
                  disbursements of attorneys, experts and consultants, and other
                  costs and expenses actually incurred in connection therewith
                  or in connection with the enforcement of this indemnification
                  (as and when they are incurred and irrespective of whether
                  suit is brought), at any time asserted against, imposed upon,
                  or incurred by any of them (a) in connection with or as a
                  result of or related to the execution, delivery, enforcement,
                  performance, or administration (including any restructuring or
                  workout with respect hereto) of this Agreement, any of the
                  other Loan Documents, or the transactions contemplated hereby
                  or thereby or the monitoring of Borrowers' and their
                  Subsidiaries' compliance with the terms of the Loan Documents,
                  and (b) with respect to any investigation, litigation, or
                  proceeding related to this Agreement, any other Loan Document,
                  or the use of the proceeds of the credit provided hereunder
                  (irrespective of whether any Indemnified Person is a party
                  thereto), or any act, omission, event, or circumstance in any
                  manner related thereto (all the foregoing, collectively, the
                  "INDEMNIFIED LIABILITIES"). The foregoing to the contrary
                  notwithstanding, Borrowers shall have no obligation to any
                  Indemnified Person under this SECTION 10.3 with respect to any
                  Indemnified Liability that a court of competent jurisdiction
                  finally determines to have resulted from the gross negligence
                  or willful misconduct of such Indemnified Person. This
                  provision shall survive the termination of this Agreement and
                  the repayment of the Obligations. If any Indemnified Person
                  makes any payment to any other Indemnified Person with respect
                  to an Indemnified Liability as to which Borrowers were
                  required to indemnify the Indemnified Person receiving such
                  payment, the Indemnified Person making such payment is
                  entitled to be indemnified and reimbursed by Borrowers with
                  respect thereto. WITHOUT LIMITATION, THE FOREGOING INDEMNITY
                  SHALL APPLY TO EACH INDEMNIFIED PERSON WITH RESPECT TO
                  INDEMNIFIED LIABILITIES WHICH IN WHOLE OR IN PART ARE CAUSED
                  BY OR ARISE OUT OF ANY NEGLIGENT ACT OR OMISSION OF SUCH
                  INDEMNIFIED PERSON OR OF ANY OTHER PERSON.

11.      NOTICES.

         Unless otherwise provided in this Agreement, all notices or demands by
Borrowers or Agent to the other relating to this Agreement or any other Loan
Document shall be in writing and (except for financial statements and other
informational documents which may be sent by first-class mail, postage prepaid)
shall be personally delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as Administrative Borrower or Agent, as applicable, may
designate to each other in accordance herewith), or telefacsimile to Borrowers
in care of Administrative Borrower or to Agent, as the case may be, at its
address set forth below:

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<PAGE>

         If to Administrative Borrower:  BEVERLY RADIOLOGY MEDICAL GROUP III
                                         1510 Cotner Avenue
                                         Los Angeles, California 90025
                                         Attn:  Dr. Howard G. Berger
                                         Fax No.:  310-445-2980

         If to Agent:                    WELLS FARGO FOOTHILL, INC.
                                         2450 Colorado Avenue
                                         Suite 3000 West
                                         Santa Monica, California 90404
                                         Attn: Specialty Finance Manager
                                         Fax No.:  310-453-7442

         with copies to:                 MORRISON & FOERSTER LLP
                                         1290 Avenue of the Americas, 41st Floor
                                         New York, New York 10104-0050
                                         Attn:  Mark B. Joachim, Esq.
                                         Fax No.:  212-468-7900

         Agent and Borrowers may change the address at which they are to receive
notices hereunder, by notice in writing in the foregoing manner given to the
other party. All notices or demands sent in accordance with this SECTION 11,
other than notices by Agent in connection with enforcement rights against the
Borrower Collateral under the provisions of the Code, shall be deemed received
on the earlier of the date of actual receipt or 3 Business Days after the
deposit thereof in the mail. Each Borrower acknowledges and agrees that notices
sent by the Lender Group in connection with the exercise of enforcement rights
against Borrower Collateral under the provisions of the Code shall be deemed
sent when deposited in the mail or personally delivered, or, where permitted by
law, transmitted by telefacsimile or any other method set forth above.

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<PAGE>

12.      CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER.

         (a)      THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
                  (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
                  DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE
                  CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND
                  THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH
                  RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR
                  RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED
                  BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
                  CALIFORNIA.

         (b)      THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN
                  CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
                  SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND TO THE
                  EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN
                  THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, PROVIDED,
                  HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY
                  COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT AGENT'S
                  OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS
                  TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
                  PROPERTY MAY BE FOUND. PARENT, BORROWERS AND EACH MEMBER OF
                  THE LENDER GROUP WAIVE, TO THE EXTENT PERMITTED UNDER
                  APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
                  OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT
                  ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION
                  12(b).

         (c)      PARENT, BORROWERS AND EACH MEMBER OF THE LENDER GROUP HEREBY
                  WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
                  CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE LOAN
                  DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
                  INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS,
                  AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. PARENT,
                  BORROWERS AND EACH MEMBER OF THE LENDER GROUP REPRESENT THAT
                  EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND
                  VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING
                  CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A
                  COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
                  TRIAL BY THE COURT.

13.      ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.

         13.1     ASSIGNMENTS AND PARTICIPATIONS.

         (a)      Any Lender may assign and delegate to one or more assignees
                  (each an "ASSIGNEE") that are Eligible Transferees all, or any
                  ratable part of all, of the Obligations, the Commitments and
                  the other rights and obligations of such Lender hereunder and
                  under the other Loan Documents, in a minimum amount of
                  $1,000,000; PROVIDED, HOWEVER, that Borrowers and Agent may
                  continue to deal solely and directly with such Lender in
                  connection with the interest so assigned to an Assignee until

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<PAGE>

                  (i) written notice of such assignment, together with payment
                  instructions, addresses, and related information with respect
                  to the Assignee, have been given to Administrative Borrower
                  and Agent by such Lender and the Assignee, (ii) such Lender
                  and its Assignee have delivered to Administrative Borrower and
                  Agent an Assignment and Acceptance, and (iii) the assigning
                  Lender or Assignee has paid to Agent for Agent's separate
                  account a processing fee in the amount of $5,000. Anything
                  contained herein to the contrary notwithstanding, the payment
                  of any fees shall not be required and the Assignee need not be
                  an Eligible Transferee if such assignment is in connection
                  with any merger, consolidation, sale, transfer, or other
                  disposition of all or any substantial portion of the business
                  or loan portfolio of the assigning Lender.

         (b)      From and after the date that Agent notifies the assigning
                  Lender (with a copy to Administrative Borrower) that it has
                  received an executed Assignment and Acceptance and payment of
                  the above-referenced processing fee, (i) the Assignee
                  thereunder shall be a party hereto and, to the extent that
                  rights and obligations hereunder have been assigned to it
                  pursuant to such Assignment and Acceptance, shall have the
                  rights and obligations of a Lender under the Loan Documents,
                  and (ii) the assigning Lender shall, to the extent that rights
                  and obligations hereunder and under the other Loan Documents
                  have been assigned by it pursuant to such Assignment and
                  Acceptance, relinquish its rights (except with respect to
                  SECTION 10.3 hereof) and be released from any future
                  obligations under this Agreement (and in the case of an
                  Assignment and Acceptance covering all or the remaining
                  portion of an assigning Lender's rights and obligations under
                  this Agreement and the other Loan Documents, such Lender shall
                  cease to be a party hereto and thereto), and such assignment
                  shall effect a novation between Borrowers and the Assignee;
                  PROVIDED, HOWEVER, that nothing contained herein shall release
                  any assigning Lender from obligations that survive the
                  termination of this Agreement, including such assigning
                  Lender's obligations under ARTICLE 16 and SECTION 16.7 of this
                  Agreement.

         (c)      By executing and delivering an Assignment and Acceptance, the
                  assigning Lender thereunder and the Assignee thereunder
                  confirm to and agree with each other and the other parties
                  hereto as follows: (1) other than as provided in such
                  Assignment and Acceptance, such assigning Lender makes no
                  representation or warranty and assumes no responsibility with
                  respect to any statements, warranties or representations made
                  in or in connection with this Agreement or the execution,
                  legality, validity, enforceability, genuineness, sufficiency
                  or value of this Agreement or any other Loan Document
                  furnished pursuant hereto, (2) such assigning Lender makes no
                  representation or warranty and assumes no responsibility with
                  respect to the financial condition of Borrowers or the
                  performance or observance by Borrowers of any of their
                  obligations under this Agreement or any other Loan Document
                  furnished pursuant hereto, (3) such Assignee confirms that it
                  has received a copy of this Agreement, together with such
                  other documents and information as it has deemed appropriate
                  to make its own credit analysis and decision to enter into
                  such Assignment and Acceptance, (4) such Assignee will,
                  independently and without reliance upon Agent, such assigning
                  Lender or any other Lender, and based on such documents and
                  information as it shall deem appropriate at the time, continue
                  to make its own credit decisions in taking or not taking
                  action under this Agreement, (5) such Assignee appoints and
                  authorizes Agent to take such actions and to exercise such
                  powers under this Agreement as are delegated to Agent, by the
                  terms hereof, together with such powers as are reasonably
                  incidental thereto, and (6) such Assignee agrees that it will
                  perform all of the obligations which by the terms of this
                  Agreement are required to be performed by it as a Lender.

                                       53
<PAGE>

         (d)      Immediately upon Agent's receipt of the required processing
                  fee payment and the fully executed Assignment and Acceptance,
                  this Agreement shall be deemed to be amended to the extent,
                  but only to the extent, necessary to reflect the addition of
                  the Assignee and the resulting adjustment of the Commitments
                  arising therefrom. The Commitment allocated to each Assignee
                  shall reduce such Commitments of the assigning Lender PRO
                  TANTO.

         (e)      Any Lender may at any time sell to one or more commercial
                  banks, financial institutions, or other Persons (a
                  "PARTICIPANT") participating interests in its Obligations, the
                  Commitment, and the other rights and interests of that Lender
                  (the "ORIGINATING LENDER") hereunder and under the other Loan
                  Documents; PROVIDED, HOWEVER, that (i) the Originating Lender
                  shall remain a "Lender" for all purposes of this Agreement and
                  the other Loan Documents and the Participant receiving the
                  participating interest in the Obligations, the Commitments,
                  and the other rights and interests of the Originating Lender
                  hereunder shall not constitute a "Lender" hereunder or under
                  the other Loan Documents and the Originating Lender's
                  obligations under this Agreement shall remain unchanged, (ii)
                  the Originating Lender shall remain solely responsible for the
                  performance of such obligations, (iii) Borrowers, Agent, and
                  the Lenders shall continue to deal solely and directly with
                  the Originating Lender in connection with the Originating
                  Lender's rights and obligations under this Agreement and the
                  other Loan Documents, (iv) no Lender shall transfer or grant
                  any participating interest under which the Participant has the
                  right to approve any amendment to, or any consent or waiver
                  with respect to, this Agreement or any other Loan Document,
                  except to the extent such amendment to, or consent or waiver
                  with respect to this Agreement or of any other Loan Document
                  would (A) extend the final maturity date of the Obligations
                  hereunder in which such Participant is participating, (B)
                  reduce the interest rate applicable to the Obligations
                  hereunder in which such Participant is participating, (C)
                  release all or substantially all of the Collateral or
                  guaranties (except to the extent expressly provided herein or
                  in any of the Loan Documents) supporting the Obligations
                  hereunder in which such Participant is participating, (D)
                  postpone the payment of, or reduce the amount of, the interest
                  or fees payable to such Participant through such Lender, or
                  (E) change the amount or due dates of scheduled principal
                  repayments or prepayments or premiums, and (v) all amounts
                  payable by Borrowers hereunder shall be determined as if such
                  Lender had not sold such participation, except that, if
                  amounts outstanding under this Agreement are due and unpaid,
                  or shall have been declared or shall have become due and
                  payable upon the occurrence of an Event of Default, each
                  Participant shall be deemed to have the right of set off in
                  respect of its participating interest in amounts owing under
                  this Agreement to the same extent as if the amount of its
                  participating interest were owing directly to it as a Lender
                  under this Agreement. The rights of any Participant only shall
                  be derivative through the Originating Lender with whom such
                  Participant participates and no Participant shall have any
                  rights under this Agreement or the other Loan Documents or any
                  direct rights as to the other Lenders, Agent, Borrowers, the
                  Collections of Borrowers or their Subsidiaries, the
                  Collateral, or otherwise in respect of the Obligations. No
                  Participant shall have the right to participate directly in
                  the making of decisions by the Lenders among themselves.

         (f)      In connection with any such assignment or participation or
                  proposed assignment or participation, a Lender may, subject to
                  the provisions of SECTION 16.7, disclose all documents and
                  information which it now or hereafter may have relating to
                  Borrowers and their Subsidiaries and their respective
                  businesses.

                                       54
<PAGE>

         (g)      Any other provision in this Agreement notwithstanding, any
                  Lender may at any time create a security interest in, or
                  pledge, all or any portion of its rights under and interest in
                  this Agreement in favor of any Federal Reserve Bank in
                  accordance with Regulation A of the Federal Reserve Bank or
                  U.S. Treasury Regulation 31 CFR ss. 203.24, and such Federal
                  Reserve Bank may enforce such pledge or security interest in
                  any manner permitted under applicable law.

         13.2     SUCCESSORS. This Agreement shall bind and inure to the benefit
                  of the respective successors and assigns of each of the
                  parties; PROVIDED, HOWEVER, that Borrowers may not assign this
                  Agreement or any rights or duties hereunder without the
                  Lenders' prior written consent and any prohibited assignment
                  shall be absolutely void AB INITIO. No consent to assignment
                  by the Lenders shall release any Borrower from its
                  Obligations. A Lender may assign this Agreement and the other
                  Loan Documents and its rights and duties hereunder and
                  thereunder pursuant to SECTION 13.1 hereof and, except as
                  expressly required pursuant to SECTION 13.1 hereof, no consent
                  or approval by any Borrower is required in connection with any
                  such assignment.

14.      AMENDMENTS; WAIVERS.

         14.1     AMENDMENTS AND WAIVERS. No amendment or waiver of any
                  provision of this Agreement or any other Loan Document (other
                  than Bank Product Agreements), and no consent with respect to
                  any departure by Borrowers therefrom, shall be effective
                  unless the same shall be in writing and signed by the Required
                  Lenders (or by Agent at the written request of the Required
                  Lenders) and Administrative Borrower (on behalf of all
                  Borrowers) and then any such waiver or consent shall be
                  effective, but only in the specific instance and for the
                  specific purpose for which given; PROVIDED, however, that no
                  such waiver, amendment, or consent shall, unless in writing
                  and signed by all of the Lenders affected thereby and
                  Administrative Borrower (on behalf of all Borrowers), do any
                  of the following:

         (a)      increase or extend any Commitment of any Lender,

         (b)      postpone or delay any date fixed by this Agreement or any
                  other Loan Document for any payment of principal, interest,
                  fees, or other amounts due hereunder or under any other Loan
                  Document,

         (c)      reduce the principal of, or the rate of interest on, any loan
                  or other extension of credit hereunder, or reduce any fees or
                  other amounts payable hereunder or under any other Loan
                  Document,

         (d)      change the Pro Rata Share that is required to take any action
                  hereunder,

         (e)      amend or modify this Section or any provision of this
                  Agreement providing for consent or other action by all
                  Lenders,

         (f)      other than as permitted by SECTION 15.12, release Agent's Lien
                  in and to any of the Collateral,

         (g)      change the definition of "Required Lenders" or "Pro Rata
                  Share",

         (h)      contractually subordinate any of the Agent's Liens,

         (i)      release any Borrower or any Guarantor from any obligation for
                  the payment of money,

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         (j)      change the definition of Borrowing Base or the definitions of
                  Eligible Accounts, Maximum Revolver Amount, Term Loan Amount,
                  or change SECTION 2.1(c), or

         (k)      amend any of the provisions of SECTION 15.

and, PROVIDED FURTHER, HOWEVER, that no amendment, waiver or consent shall,
unless in writing and signed by Agent, Issuing Lender, or Swing Lender, as
applicable, affect the rights or duties of Agent, Issuing Lender, or Swing
Lender, as applicable, under this Agreement or any other Loan Document. The
foregoing notwithstanding, any amendment, modification, waiver, consent,
termination, or release of, or with respect to, any provision of this Agreement
or any other Loan Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or obligations of
Borrowers, shall not require consent by or the agreement of Borrowers.

         14.2     REPLACEMENT OF HOLDOUT LENDER.

         (a)      If any action to be taken by the Lender Group or Agent
                  hereunder requires the unanimous consent, authorization, or
                  agreement of all Lenders, and a Lender ("HOLDOUT LENDER")
                  fails to give its consent, authorization, or agreement, then
                  Agent, upon at least 5 Business Days prior irrevocable notice
                  to the Holdout Lender, may permanently replace the Holdout
                  Lender with one or more substitute Lenders (each, a
                  "REPLACEMENT LENDER"), and the Holdout Lender shall have no
                  right to refuse to be replaced hereunder. Such notice to
                  replace the Holdout Lender shall specify an effective date for
                  such replacement, which date shall not be later than 15
                  Business Days after the date such notice is given.

         (b)      Prior to the effective date of such replacement, the Holdout
                  Lender and each Replacement Lender shall execute and deliver
                  an Assignment and Acceptance, subject only to the Holdout
                  Lender being repaid its share of the outstanding Obligations
                  (including an assumption of its Pro Rata Share of the Risk
                  Participation Liability) without any premium or penalty of any
                  kind whatsoever. If the Holdout Lender shall refuse or fail to
                  execute and deliver any such Assignment and Acceptance prior
                  to the effective date of such replacement, the Holdout Lender
                  shall be deemed to have executed and delivered such Assignment
                  and Acceptance. The replacement of any Holdout Lender shall be
                  made in accordance with the terms of SECTION 13.1. Until such
                  time as the Replacement Lenders shall have acquired all of
                  rights and obligations of the Holdout Lender hereunder and
                  under the other Loan Documents, the Holdout Lender shall
                  remain obligated to make the Holdout Lender's Pro Rata Share
                  of Advances and to purchase a participation in each Letter of
                  Credit, in an amount equal to its Pro Rata Share of the Risk
                  Participation Liability of such Letter of Credit.

         14.3     NO WAIVERS; CUMULATIVE REMEDIES. No failure by Agent or any
                  Lender to exercise any right, remedy, or option under this
                  Agreement or any other Loan Document, or delay by Agent or any
                  Lender in exercising the same, will operate as a waiver
                  thereof. No waiver by Agent or any Lender will be effective
                  unless it is in writing, and then only to the extent
                  specifically stated. No waiver by Agent or any Lender on any
                  occasion shall affect or diminish Agent's and each Lender's
                  rights thereafter to require strict performance by Borrowers
                  of any provision of this Agreement. Agent's and each Lender's
                  rights under this Agreement and the other Loan Documents will
                  be cumulative and not exclusive of any other right or remedy
                  that Agent or any Lender may have.

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15.      AGENT; THE LENDER GROUP.

         15.1     APPOINTMENT AND AUTHORIZATION OF AGENT. Each Lender hereby
                  designates and appoints WFF as its representative under this
                  Agreement and the other Loan Documents and each Lender hereby
                  irrevocably authorizes Agent to execute and deliver each of
                  the other Loan Documents on its behalf and to take such other
                  action on its behalf under the provisions of this Agreement
                  and each other Loan Document and to exercise such powers and
                  perform such duties as are expressly delegated to Agent by the
                  terms of this Agreement or any other Loan Document, together
                  with such powers as are reasonably incidental thereto. Agent
                  agrees to act as such on the express conditions contained in
                  this SECTION 15. The provisions of this SECTION 16 (other than
                  the proviso to SECTION 15.11(a)) are solely for the benefit of
                  Agent, and the Lenders, and Borrowers and their Subsidiaries
                  shall have no rights as a third party beneficiary of any of
                  the provisions contained herein. Any provision to the contrary
                  contained elsewhere in this Agreement or in any other Loan
                  Document notwithstanding, Agent shall not have any duties or
                  responsibilities, except those expressly set forth herein, nor
                  shall Agent have or be deemed to have any fiduciary
                  relationship with any Lender, and no implied covenants,
                  functions, responsibilities, duties, obligations or
                  liabilities shall be read into this Agreement or any other
                  Loan Document or otherwise exist against Agent; it being
                  expressly understood and agreed that the use of the word
                  "Agent" is for convenience only, that WFF is merely the
                  representative of the Lenders, and only has the contractual
                  duties set forth herein. Except as expressly otherwise
                  provided in this Agreement, Agent shall have and may use its
                  sole discretion with respect to exercising or refraining from
                  exercising any discretionary rights or taking or refraining
                  from taking any actions that Agent expressly is entitled to
                  take or assert under or pursuant to this Agreement and the
                  other Loan Documents. Without limiting the generality of the
                  foregoing, or of any other provision of the Loan Documents
                  that provides rights or powers to Agent, Lenders agree that
                  Agent shall have the right to exercise the following powers as
                  long as this Agreement remains in effect: (a) maintain, in
                  accordance with its customary business practices, ledgers and
                  records reflecting the status of the Obligations, the
                  Collateral, the Collections of Borrowers and their
                  Subsidiaries, and related matters, (b) execute or file any and
                  all financing or similar statements or notices, amendments,
                  renewals, supplements, documents, instruments, proofs of
                  claim, notices and other written agreements with respect to
                  the Loan Documents, (c) make Advances, for itself or on behalf
                  of Lenders as provided in the Loan Documents, (d) exclusively
                  receive, apply, and distribute the Collections of Borrowers
                  and their Subsidiaries as provided in the Loan Documents, (e)
                  open and maintain such bank accounts and cash management
                  arrangements as Agent deems necessary and appropriate in
                  accordance with the Loan Documents for the foregoing purposes
                  with respect to the Collateral and the Collections of
                  Borrowers and their Subsidiaries, (f) perform, exercise, and
                  enforce any and all other rights and remedies of the Lender
                  Group with respect to Borrowers, the Obligations, the
                  Collateral, the Collections of Borrowers and their
                  Subsidiaries, or otherwise related to any of same as provided
                  in the Loan Documents, and (g) incur and pay such Lender Group
                  Expenses as Agent may deem necessary or appropriate for the
                  performance and fulfillment of its functions and powers
                  pursuant to the Loan Documents.

         15.2     DELEGATION OF DUTIES. Agent may execute any of its duties
                  under this Agreement or any other Loan Document by or through
                  agents, employees or attorneys in fact and shall be entitled
                  to advice of counsel concerning all matters pertaining to such
                  duties. Agent shall not be responsible for the negligence or
                  misconduct of any agent or attorney in fact that it selects as
                  long as such selection was made without gross negligence or
                  willful misconduct.

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         15.3     LIABILITY OF AGENT. None of the Agent Related Persons shall
                  (a) be liable for any action taken or omitted to be taken by
                  any of them under or in connection with this Agreement or any
                  other Loan Document or the transactions contemplated hereby
                  (except for its own gross negligence or willful misconduct),
                  or (b) be responsible in any manner to any of the Lenders for
                  any recital, statement, representation or warranty made by any
                  Borrower or any Subsidiary or Affiliate of any Borrower, or
                  any officer or director thereof, contained in this Agreement
                  or in any other Loan Document, or in any certificate, report,
                  statement or other document referred to or provided for in, or
                  received by Agent under or in connection with, this Agreement
                  or any other Loan Document, or the validity, effectiveness,
                  genuineness, enforceability or sufficiency of this Agreement
                  or any other Loan Document, or for any failure of any Borrower
                  or any other party to any Loan Document to perform its
                  obligations hereunder or thereunder. No Agent Related Person
                  shall be under any obligation to any Lender to ascertain or to
                  inquire as to the observance or performance of any of the
                  agreements contained in, or conditions of, this Agreement or
                  any other Loan Document, or to inspect the books and records
                  or properties of Borrowers or the books or records or
                  properties of any of Borrowers' Subsidiaries or Affiliates.

         15.4     RELIANCE BY AGENT. Agent shall be entitled to rely, and shall
                  be fully protected in relying, upon any writing, resolution,
                  notice, consent, certificate, affidavit, letter, telegram,
                  telefacsimile or other electronic method of transmission,
                  telex or telephone message, statement or other document or
                  conversation believed by it to be genuine and correct and to
                  have been signed, sent, or made by the proper Person or
                  Persons, and upon advice and statements of legal counsel
                  (including counsel to Borrowers or counsel to any Lender),
                  independent accountants and other experts selected by Agent.
                  Agent shall be fully justified in failing or refusing to take
                  any action under this Agreement or any other Loan Document
                  unless Agent shall first receive such advice or concurrence of
                  the Lenders as it deems appropriate and until such
                  instructions are received, Agent shall act, or refrain from
                  acting, as it deems advisable. If Agent so requests, it shall
                  first be indemnified to its reasonable satisfaction by the
                  Lenders against any and all liability and expense that may be
                  incurred by it by reason of taking or continuing to take any
                  such action. Agent shall in all cases be fully protected in
                  acting, or in refraining from acting, under this Agreement or
                  any other Loan Document in accordance with a request or
                  consent of the requisite Lenders and such request and any
                  action taken or failure to act pursuant thereto shall be
                  binding upon all of the Lenders.

         15.5     NOTICE OF DEFAULT OR EVENT OF DEFAULT. Agent shall not be
                  deemed to have knowledge or notice of the occurrence of any
                  Default or Event of Default, except with respect to defaults
                  in the payment of principal, interest, fees, and expenses
                  required to be paid to Agent for the account of the Lenders
                  and, except with respect to Events of Default of which Agent
                  has actual knowledge, unless Agent shall have received written
                  notice from a Lender or Administrative Borrower referring to
                  this Agreement, describing such Default or Event of Default,
                  and stating that such notice is a "notice of default." Agent
                  promptly will notify the Lenders of its receipt of any such
                  notice or of any Event of Default of which Agent has actual
                  knowledge. If any Lender obtains actual knowledge of any Event
                  of Default, such Lender promptly shall notify the other
                  Lenders and Agent of such Event of Default. Each Lender shall
                  be solely responsible for giving any notices to its
                  Participants, if any. Subject to SECTION 15.4, Agent shall
                  take such action with respect to such Default or Event of
                  Default as may be requested by the Required Lenders in
                  accordance with SECTION 8; PROVIDED, HOWEVER, that unless and
                  until Agent has received any such request, Agent may (but
                  shall not be obligated to) take such action, or refrain from
                  taking such action, with respect to such Default or Event of
                  Default as it shall deem advisable.

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<PAGE>

         15.6     CREDIT DECISION. Each Lender acknowledges that none of the
                  Agent Related Persons has made any representation or warranty
                  to it, and that no act by Agent hereinafter taken, including
                  any review of the affairs of Borrowers and their Subsidiaries
                  or Affiliates, shall be deemed to constitute any
                  representation or warranty by any Agent-Related Person to any
                  Lender. Each Lender represents to Agent that it has,
                  independently and without reliance upon any Agent-Related
                  Person and based on such documents and information as it has
                  deemed appropriate, made its own appraisal of and
                  investigation into the business, prospects, operations,
                  property, financial and other condition and creditworthiness
                  of Borrowers and any other Person party to a Loan Document,
                  and all applicable bank regulatory laws relating to the
                  transactions contemplated hereby, and made its own decision to
                  enter into this Agreement and to extend credit to Borrowers.
                  Each Lender also represents that it will, independently and
                  without reliance upon any Agent-Related Person and based on
                  such documents and information as it shall deem appropriate at
                  the time, continue to make its own credit analysis, appraisals
                  and decisions in taking or not taking action under this
                  Agreement and the other Loan Documents, and to make such
                  investigations as it deems necessary to inform itself as to
                  the business, prospects, operations, property, financial and
                  other condition and creditworthiness of Borrowers and any
                  other Person party to a Loan Document. Except for notices,
                  reports, and other documents expressly herein required to be
                  furnished to the Lenders by Agent, Agent shall not have any
                  duty or responsibility to provide any Lender with any credit
                  or other information concerning the business, prospects,
                  operations, property, financial and other condition or
                  creditworthiness of Borrowers and any other Person party to a
                  Loan Document that may come into the possession of any of the
                  Agent Related Persons.

         15.7     COSTS AND EXPENSES; INDEMNIFICATION. Agent may incur and pay
                  Lender Group Expenses to the extent Agent reasonably deems
                  necessary or appropriate for the performance and fulfillment
                  of its functions, powers, and obligations pursuant to the Loan
                  Documents, including court costs, attorneys fees and expenses,
                  fees and expenses of financial accountants, advisors,
                  consultants, and appraisers, costs of collection by outside
                  collection agencies, auctioneer fees and expenses, and costs
                  of security guards or insurance premiums paid to maintain the
                  Collateral, whether or not Borrowers are obligated to
                  reimburse Agent or Lenders for such expenses pursuant to this
                  Agreement or otherwise. Agent is authorized and directed to
                  deduct and retain sufficient amounts from the Collections of
                  Borrowers and their Subsidiaries received by Agent to
                  reimburse Agent for such out-of-pocket costs and expenses
                  prior to the distribution of any amounts to Lenders. In the
                  event Agent is not reimbursed for such costs and expenses from
                  the Collections of Borrowers and their Subsidiaries received
                  by Agent, each Lender hereby agrees that it is and shall be
                  obligated to pay to or reimburse Agent for the amount of such
                  Lender's Pro Rata Share thereof. Whether or not the
                  transactions contemplated hereby are consummated, the Lenders
                  shall indemnify upon demand the Agent Related Persons (to the
                  extent not reimbursed by or on behalf of Borrowers and without
                  limiting the obligation of Borrowers to do so), according to
                  their Pro Rata Shares, from and against any and all
                  Indemnified Liabilities; PROVIDED, HOWEVER, that no Lender
                  shall be liable for the payment to any Agent Related Person of
                  any portion of such Indemnified Liabilities resulting solely
                  from such Person's gross negligence or willful misconduct nor
                  shall any Lender be liable for the obligations of any
                  Defaulting Lender in failing to make an Advance or other
                  extension of credit hereunder. Without limitation of the
                  foregoing, each Lender shall reimburse Agent upon demand for
                  such Lender's Pro Rata Share of any costs or out of pocket
                  expenses (including attorneys, accountants, advisors, and

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                  consultants fees and expenses) incurred by Agent in connection
                  with the preparation, execution, delivery, administration,
                  modification, amendment, or enforcement (whether through
                  negotiations, legal proceedings or otherwise) of, or legal
                  advice in respect of rights or responsibilities under, this
                  Agreement, any other Loan Document, or any document
                  contemplated by or referred to herein or therein, to the
                  extent that Agent is not reimbursed for such expenses by or on
                  behalf of Borrowers. The undertaking in this Section shall
                  survive the payment of all Obligations hereunder and the
                  resignation or replacement of Agent.

         15.8     AGENT IN INDIVIDUAL CAPACITY. WFF and its Affiliates may make
                  loans to, issue letters of credit for the account of, accept
                  deposits from, acquire equity interests in, and generally
                  engage in any kind of banking, trust, financial advisory,
                  underwriting, or other business with Borrowers and their
                  Subsidiaries and Affiliates and any other Person party to any
                  Loan Documents as though WFF were not Agent hereunder, and, in
                  each case, without notice to or consent of the other members
                  of the Lender Group. The other members of the Lender Group
                  acknowledge that, pursuant to such activities, WFF or its
                  Affiliates may receive information regarding Borrowers or
                  their Affiliates and any other Person party to any Loan
                  Documents that is subject to confidentiality obligations in
                  favor of Borrowers or such other Person and that prohibit the
                  disclosure of such information to the Lenders, and the Lenders
                  acknowledge that, in such circumstances (and in the absence of
                  a waiver of such confidentiality obligations, which waiver
                  Agent will use its reasonable best efforts to obtain), Agent
                  shall not be under any obligation to provide such information
                  to them. The terms "Lender" and "Lenders" include WFF in its
                  individual capacity.

         15.9     SUCCESSOR AGENT. Agent may resign as Agent upon 45 days notice
                  to the Lenders. If Agent resigns under this Agreement, the
                  Required Lenders shall appoint a successor Agent for the
                  Lenders. If no successor Agent is appointed prior to the
                  effective date of the resignation of Agent, Agent may appoint,
                  after consulting with the Lenders, a successor Agent. If Agent
                  has materially breached or failed to perform any material
                  provision of this Agreement or of applicable law, the Required
                  Lenders may agree in writing to remove and replace Agent with
                  a successor Agent from among the Lenders. In any such event,
                  upon the acceptance of its appointment as successor Agent
                  hereunder, such successor Agent shall succeed to all the
                  rights, powers, and duties of the retiring Agent and the term
                  "Agent" shall mean such successor Agent and the retiring
                  Agent's appointment, powers, and duties as Agent shall be
                  terminated. After any retiring Agent's resignation hereunder
                  as Agent, the provisions of this SECTION 15 shall inure to its
                  benefit as to any actions taken or omitted to be taken by it
                  while it was Agent under this Agreement. If no successor Agent
                  has accepted appointment as Agent by the date which is 45 days
                  following a retiring Agent's notice of resignation, the
                  retiring Agent's resignation shall nevertheless thereupon
                  become effective and the Lenders shall perform all of the
                  duties of Agent hereunder until such time, if any, as the
                  Lenders appoint a successor Agent as provided for above.

         15.10    LENDER IN INDIVIDUAL CAPACITY. Any Lender and its respective
                  Affiliates may make loans to, issue letters of credit for the
                  account of, accept deposits from, acquire equity interests in
                  and generally engage in any kind of banking, trust, financial
                  advisory, underwriting or other business with Borrowers and
                  their Subsidiaries and Affiliates and any other Person party
                  to any Loan Documents as though such Lender were not a Lender
                  hereunder without notice to or consent of the other members of
                  the Lender Group. The other members of the Lender Group
                  acknowledge that, pursuant to such activities, such Lender and
                  its respective Affiliates may receive information regarding
                  Borrowers or their Affiliates and any other Person party to
                  any Loan Documents that is subject to confidentiality
                  obligations in favor of Borrowers or such other Person and
                  that prohibit the disclosure of such information to the
                  Lenders, and the Lenders acknowledge that, in such
                  circumstances (and in the absence of a waiver of such
                  confidentiality obligations, which waiver such Lender will use
                  its reasonable best efforts to obtain), such Lender shall not
                  be under any obligation to provide such information to them.
                  With respect to the Swing Loans and Protective Advances, Swing
                  Lender shall have the same rights and powers under this
                  Agreement as any other Lender and may exercise the same as
                  though it were not the sub-agent of Agent.

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         15.11    WITHHOLDING TAXES.

         (a)      All payments made by any Borrower hereunder or under any note
                  or other Loan Document will be made without setoff,
                  counterclaim, or other defense. In addition, all such payments
                  will be made free and clear of, and without deduction or
                  withholding for, any present or future Taxes, and in the event
                  any deduction or withholding of Taxes is required, each
                  Borrower shall comply with the penultimate sentence of this
                  SECTION 15.11(a). "TAXES" shall mean, any taxes, levies,
                  imposts, duties, fees, assessments or other charges of
                  whatever nature now or hereafter imposed by any jurisdiction
                  or by any political subdivision or taxing authority thereof or
                  therein with respect to such payments (but excluding any tax
                  imposed by any jurisdiction or by any political subdivision or
                  taxing authority thereof or therein measured by or based on
                  the net income or net profits of Lender) and all interest,
                  penalties or similar liabilities with respect thereto. If any
                  Taxes are so levied or imposed, each Borrower agrees to pay
                  the full amount of such Taxes and such additional amounts as
                  may be necessary so that every payment of all amounts due
                  under this Agreement, any note, or Loan Document, including
                  any amount paid pursuant to this SECTION 15.11(a) after
                  withholding or deduction for or on account of any Taxes, will
                  not be less than the amount provided for herein; provided,
                  however, that Borrowers shall not be required to increase any
                  such amounts if the increase in such amount payable results
                  from Agent's or such Lender's own willful misconduct or gross
                  negligence (as finally determined by a court of competent
                  jurisdiction). Each Borrower will furnish to Lender as
                  promptly as possible after the date the payment of any Tax is
                  due pursuant to applicable law certified copies of tax
                  receipts evidencing such payment by any Borrower.

         (b)      If a Lender claims an exemption from United States withholding
                  tax, Lender agrees with and in favor of Agent and any
                  Borrower, to deliver to Agent:

         (i)      if such Lender claims an exemption from United States
                  withholding tax pursuant to its portfolio interest exception,
                  (A) a statement of the Lender, signed under penalty of
                  perjury, that it is not a (I) a "bank" as described in Section
                  881(c)(3)(A) of the IRC, (II) a 10% shareholder of any
                  Borrower (within the meaning of Section 871(h)(3)(B) of the
                  IRC), or (III) a controlled foreign corporation related to any
                  Borrower within the meaning of Section 864(d)(4) of the IRC,
                  and (B) a properly completed and executed IRS Form W-8BEN,
                  before receiving its first payment under this Agreement and at
                  any other time reasonably requested by Agent or any Borrower;

         (ii)     if such Lender claims an exemption from, or a reduction of,
                  withholding tax under a United States tax treaty, properly
                  completed and executed IRS Form W-8BEN before receiving its
                  first payment under this Agreement and at any other time
                  reasonably requested by Agent or any Borrower;

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<PAGE>

         (iii)    if such Lender claims that interest paid under this Agreement
                  is exempt from United States withholding tax because it is
                  effectively connected with a United States trade or business
                  of such Lender, two properly completed and executed copies of
                  IRS Form W-8ECI before receiving its first payment under this
                  Agreement and at any other time reasonably requested by Agent
                  or any Borrower; or

         (iv)     such other form or forms, including IRS Form W-9, as may be
                  required under the IRC or other laws of the United States as a
                  condition to exemption from, or reduction of, United States
                  withholding or backup withholding tax before receiving its
                  first payment under this Agreement and at any other time
                  reasonably requested by Agent or any Borrower.

Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.

         (c)      If a Lender claims an exemption from withholding tax in a
                  jurisdiction other than the United States, Lender agrees with
                  and in favor of Agent and Borrowers, to deliver to Agent any
                  such form or forms, as may be required under the laws of such
                  jurisdiction as a condition to exemption from, or reduction
                  of, foreign withholding or backup withholding tax before
                  receiving its first payment under this Agreement and at any
                  other time reasonably requested by Agent or Administrative
                  Borrower.

Lender agrees promptly to notify Agent and Administrative Borrower of any change
in circumstances which would modify or render invalid any claimed exemption or
reduction.

         (d)      If any Lender claims exemption from, or reduction of,
                  withholding tax and such Lender sells, assigns, grants a
                  participation in, or otherwise transfers all or part of the
                  Obligations of Borrowers to such Lender, such Lender agrees to
                  notify Agent and Administrative Borrower of the percentage
                  amount in which it is no longer the beneficial owner of
                  Obligations of Borrowers to such Lender. To the extent of such
                  percentage amount, Agent and Borrowers will treat such
                  Lender's documentation provided pursuant to SECTIONS 15.11(b)
                  or 15.11(c) as no longer valid. With respect to such
                  percentage amount, Lender may provide new documentation,
                  pursuant to SECTIONS 15.11(b) or 15.11(c), if applicable.

         (e)      If any Lender is entitled to a reduction in the applicable
                  withholding tax, Agent may withhold from any interest payment
                  to such Lender an amount equivalent to the applicable
                  withholding tax after taking into account such reduction. If
                  the forms or other documentation required by subsection (b) or
                  (c) of this SECTION 15.11 are not delivered to Agent, then
                  Agent may withhold from any interest payment to such Lender
                  not providing such forms or other documentation an amount
                  equivalent to the applicable withholding tax.

         (f)      If the IRS or any other Governmental Authority of the United
                  States or other jurisdiction asserts a claim that Agent did
                  not properly withhold tax from amounts paid to or for the
                  account of any Lender due to a failure on the part of the
                  Lender (because the appropriate form was not delivered, was
                  not properly executed, or because such Lender failed to notify
                  Agent of a change in circumstances which rendered the
                  exemption from, or reduction of, withholding tax ineffective,
                  or for any other reason) such Lender shall indemnify and hold
                  Agent harmless for all amounts paid, directly or indirectly,
                  by Agent, as tax or otherwise, including penalties and
                  interest, and including any taxes imposed by any jurisdiction
                  on the amounts payable to Agent under this SECTION 15.11,
                  together with all costs and expenses (including attorneys fees
                  and expenses). The obligation of the Lenders under this
                  subsection shall survive the payment of all Obligations and
                  the resignation or replacement of Agent.

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         15.12    COLLATERAL MATTERS.

         (a)      The Lenders hereby irrevocably authorize Agent, at its option
                  and in its sole discretion, to release any Lien on any
                  Collateral (i) upon the termination of the Commitments and
                  payment and satisfaction in full by Borrowers of all
                  Obligations, (ii) constituting property being sold or disposed
                  of if a release is required or desirable in connection
                  therewith and if Administrative Borrower certifies to Agent
                  that the sale or disposition is permitted under SECTION 6.4 of
                  this Agreement or the other Loan Documents (and Agent may rely
                  conclusively on any such certificate, without further
                  inquiry), (iii) constituting property in which no Borrower or
                  its Subsidiaries owned any interest at the time the Agent's
                  Lien was granted nor at any time thereafter, or (iv)
                  constituting property leased to a Borrower or its Subsidiaries
                  under a lease that has expired or is terminated in a
                  transaction permitted under this Agreement. Except as provided
                  above, Agent will not execute and deliver a release of any
                  Lien on any Collateral without the prior written authorization
                  of (y) if the release is of all or substantially all of the
                  Collateral, all of the Lenders, or (z) otherwise, the Required
                  Lenders. Upon request by Agent or Administrative Borrower at
                  any time, the Lenders will confirm in writing Agent's
                  authority to release any such Liens on particular types or
                  items of Collateral pursuant to this SECTION 15.12; PROVIDED,
                  HOWEVER, that (1) Agent shall not be required to execute any
                  document necessary to evidence such release on terms that, in
                  Agent's opinion, would expose Agent to liability or create any
                  obligation or entail any consequence other than the release of
                  such Lien without recourse, representation, or warranty, and
                  (2) such release shall not in any manner discharge, affect, or
                  impair the Obligations or any Liens (other than those
                  expressly being released) upon (or obligations of Borrowers in
                  respect of) all interests retained by Borrowers, including,
                  the proceeds of any sale, all of which shall continue to
                  constitute part of the Collateral.

         (b)      Agent shall have no obligation whatsoever to any of the
                  Lenders to assure that the Collateral exists or is owned by
                  Borrowers or is cared for, protected, or insured or has been
                  encumbered, or that the Agent's Liens have been properly or
                  sufficiently or lawfully created, perfected, protected, or
                  enforced or are entitled to any particular priority, or to
                  exercise at all or in any particular manner or under any duty
                  of care, disclosure or fidelity, or to continue exercising,
                  any of the rights, authorities and powers granted or available
                  to Agent pursuant to any of the Loan Documents, it being
                  understood and agreed that in respect of the Collateral, or
                  any act, omission, or event related thereto, subject to the
                  terms and conditions contained herein, Agent may act in any
                  manner it may deem appropriate, in its sole discretion given
                  Agent's own interest in the Collateral in its capacity as one
                  of the Lenders and that Agent shall have no other duty or
                  liability whatsoever to any Lender as to any of the foregoing,
                  except as otherwise provided herein.

         15.13    RESTRICTIONS ON ACTIONS BY LENDERS; SHARING OF PAYMENTS.

         (a)      Each of the Lenders agrees that it shall not, without the
                  express written consent of Agent, and that it shall, to the
                  extent it is lawfully entitled to do so, upon the written
                  request of Agent, set off against the Obligations, any amounts
                  owing by such Lender to Borrowers or any deposit accounts of
                  Borrowers now or hereafter maintained with such Lender. Each
                  of the Lenders further agrees that it shall not, unless
                  specifically requested to do so in writing by Agent, take or
                  cause to be taken any action, including, the commencement of
                  any legal or equitable proceedings, to foreclose any Lien on,
                  or otherwise enforce any security interest in, any of the
                  Collateral.

                                       63
<PAGE>

         (b)      If, at any time or times any Lender shall receive (i) by
                  payment, foreclosure, setoff, or otherwise, any proceeds of
                  Collateral or any payments with respect to the Obligations,
                  except for any such proceeds or payments received by such
                  Lender from Agent pursuant to the terms of this Agreement, or
                  (ii) payments from Agent in excess of such Lender's ratable
                  portion of all such distributions by Agent, such Lender
                  promptly shall (1) turn the same over to Agent, in kind, and
                  with such endorsements as may be required to negotiate the
                  same to Agent, or in immediately available funds, as
                  applicable, for the account of all of the Lenders and for
                  application to the Obligations in accordance with the
                  applicable provisions of this Agreement, or (2) purchase,
                  without recourse or warranty, an undivided interest and
                  participation in the Obligations owed to the other Lenders so
                  that such excess payment received shall be applied ratably as
                  among the Lenders in accordance with their Pro Rata Shares;
                  provided, however, that to the extent that such excess payment
                  received by the purchasing party is thereafter recovered from
                  it, those purchases of participations shall be rescinded in
                  whole or in part, as applicable, and the applicable portion of
                  the purchase price paid therefor shall be returned to such
                  purchasing party, but without interest except to the extent
                  that such purchasing party is required to pay interest in
                  connection with the recovery of the excess payment.

         15.14    AGENCY FOR PERFECTION. Agent hereby appoints each other Lender
                  as its agent (and each Lender hereby accepts such appointment)
                  for the purpose of perfecting the Agent's Liens in assets
                  which, in accordance with Article 8 or Article 9, as
                  applicable, of the Code can be perfected only by possession or
                  control. Should any Lender obtain possession or control of any
                  such Collateral, such Lender shall notify Agent thereof, and,
                  promptly upon Agent's request therefor shall deliver
                  possession or control of such Collateral to Agent or in
                  accordance with Agent's instructions.

         15.15    PAYMENTS BY AGENT TO THE LENDERS. All payments to be made by
                  Agent to the Lenders shall be made by bank wire transfer of
                  immediately available funds pursuant to such wire transfer
                  instructions as each party may designate for itself by written
                  notice to Agent. Concurrently with each such payment, Agent
                  shall identify whether such payment (or any portion thereof)
                  represents principal, premium, fees, or interest of the
                  Obligations.

         15.16    CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS. Each
                  member of the Lender Group authorizes and directs Agent to
                  enter into this Agreement and the other Loan Documents. Each
                  member of the Lender Group agrees that any action taken by
                  Agent in accordance with the terms of this Agreement or the
                  other Loan Documents relating to the Collateral and the
                  exercise by Agent of its powers set forth therein or herein,
                  together with such other powers that are reasonably incidental
                  thereto, shall be binding upon all of the Lenders.

         15.17    FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
                  DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION. By
                  becoming a party to this Agreement, each Lender:

         (a)      is deemed to have requested that Agent furnish such Lender,
                  promptly after it becomes available, a copy of each field
                  audit or examination report (each a "REPORT" and collectively,
                  "REPORTS") prepared by or at the request of Agent, and Agent
                  shall so furnish each Lender with such Reports,

         (b)      expressly agrees and acknowledges that Agent does not (i) make
                  any representation or warranty as to the accuracy of any
                  Report, and (ii) shall not be liable for any information
                  contained in any Report,

                                       64
<PAGE>

         (c)      expressly agrees and acknowledges that the Reports are not
                  comprehensive audits or examinations, that Agent or other
                  party performing any audit or examination will inspect only
                  specific information regarding Borrowers and will rely
                  significantly upon the books and records of Borrowers and
                  their Subsidiaries, as well as on representations of
                  Borrowers' personnel,

         (d)      agrees to keep all Reports and other material, non-public
                  information regarding Borrowers and their Subsidiaries and
                  their operations, assets, and existing and contemplated
                  business plans in a confidential manner in accordance with
                  SECTION 16.7, and

         (e)      without limiting the generality of any other indemnification
                  provision contained in this Agreement, agrees: (i) to hold
                  Agent and any such other Lender preparing a Report harmless
                  from any action the indemnifying Lender may take or fail to
                  take or any conclusion the indemnifying Lender may reach or
                  draw from any Report in connection with any loans or other
                  credit accommodations that the indemnifying Lender has made or
                  may make to Borrowers, or the indemnifying Lender's
                  participation in, or the indemnifying Lender's purchase of, a
                  loan or loans of Borrowers; and (ii) to pay and protect, and
                  indemnify, defend and hold Agent, and any such other Lender
                  preparing a Report harmless from and against, the claims,
                  actions, proceedings, damages, costs, expenses, and other
                  amounts (including, attorneys fees and costs) incurred by
                  Agent and any such other Lender preparing a Report as the
                  direct or indirect result of any third parties who might
                  obtain all or part of any Report through the indemnifying
                  Lender.

In addition to the foregoing: (x) any Lender may from time to time request of
Agent in writing that Agent provide to such Lender a copy of any report or
document provided by Borrowers to Agent that has not been contemporaneously
provided by Borrowers to such Lender, and, upon receipt of such request, Agent
promptly shall provide a copy of same to such Lender, (y) to the extent that
Agent is entitled, under any provision of the Loan Documents, to request
additional reports or information from Borrowers, any Lender may, from time to
time, reasonably request Agent to exercise such right as specified in such
Lender's notice to Agent, whereupon Agent promptly shall request of
Administrative Borrower the additional reports or information reasonably
specified by such Lender, and, upon receipt thereof from Administrative
Borrower, Agent promptly shall provide a copy of same to such Lender, and (z)
any time that Agent renders to Administrative Borrower a statement regarding the
Loan Account, Agent shall send a copy of such statement to each Lender.

         15.18    SEVERAL OBLIGATIONS; NO LIABILITY. Notwithstanding that
                  certain of the Loan Documents now or hereafter may have been
                  or will be executed only by or in favor of Agent in its
                  capacity as such, and not by or in favor of the Lenders, any
                  and all obligations on the part of Agent (if any) to make any
                  credit available hereunder shall constitute the several (and
                  not joint) obligations of the respective Lenders on a ratable
                  basis, according to their respective Commitments, to make an
                  amount of such credit not to exceed, in principal amount, at
                  any one time outstanding, the amount of their respective
                  Commitments. Nothing contained herein shall confer upon any
                  Lender any interest in, or subject any Lender to any liability
                  for, or in respect of, the business, assets, profits, losses,
                  or liabilities of any other Lender. Each Lender shall be
                  solely responsible for notifying its Participants of any
                  matters relating to the Loan Documents to the extent any such
                  notice may be required, and no Lender shall have any
                  obligation, duty, or liability to any Participant of any other
                  Lender. Except as provided in SECTION 16.7, no member of the
                  Lender Group shall have any liability for the acts of any
                  other member of the Lender Group. No Lender shall be
                  responsible to any Borrower or any other Person for any
                  failure by any other Lender to fulfill its obligations to make
                  credit available hereunder, nor to advance for it or on its
                  behalf in connection with its Commitment, nor to take any
                  other action on its behalf hereunder or in connection with the
                  financing contemplated herein.

                                       65
<PAGE>

         15.19    BANK PRODUCT PROVIDERS. Each Bank Product Provider shall be
                  deemed a party hereto for purposes of any reference in a Loan
                  Document to the parties for whom Agent is acting; it being
                  understood and agreed that the rights and benefits of such
                  Bank Product Provider under the Loan Documents consist
                  exclusively of such Bank Product Provider's right to share in
                  payments and collections out of the Collateral as more fully
                  set forth herein. In connection with any such distribution of
                  payments and collections, Agent shall be entitled to assume no
                  amounts are due to any Bank Product Provider unless such Bank
                  Product Provider has notified Agent in writing of the amount
                  of any such liability owed to it prior to such distribution.

16.      GENERAL PROVISIONS.

         16.1     EFFECTIVENESS. This Agreement shall be binding and deemed
                  effective when executed by Borrowers, Agent, and each Lender
                  whose signature is provided for on the signature pages hereof.

         16.2     SECTION HEADINGS. Headings and numbers have been set forth
                  herein for convenience only. Unless the contrary is compelled
                  by the context, everything contained in each Section applies
                  equally to this entire Agreement.

         16.3     INTERPRETATION. Neither this Agreement nor any uncertainty or
                  ambiguity herein shall be construed against the Lender Group
                  or Borrowers, whether under any rule of construction or
                  otherwise. On the contrary, this Agreement has been reviewed
                  by all parties and shall be construed and interpreted
                  according to the ordinary meaning of the words used so as to
                  accomplish fairly the purposes and intentions of all parties
                  hereto.

         16.4     SEVERABILITY OF PROVISIONS. Each provision of this Agreement
                  shall be severable from every other provision of this
                  Agreement for the purpose of determining the legal
                  enforceability of any specific provision.

         16.5     COUNTERPARTS; ELECTRONIC EXECUTION. This Agreement may be
                  executed in any number of counterparts and by different
                  parties on separate counterparts, each of which, when executed
                  and delivered, shall be deemed to be an original, and all of
                  which, when taken together, shall constitute but one and the
                  same Agreement. Delivery of an executed counterpart of this
                  Agreement by telefacsimile or other electronic method of
                  transmission shall be equally as effective as delivery of an
                  original executed counterpart of this Agreement. Any party
                  delivering an executed counterpart of this Agreement by
                  telefacsimile or other electronic method of transmission also
                  shall deliver an original executed counterpart of this
                  Agreement but the failure to deliver an original executed
                  counterpart shall not affect the validity, enforceability, and
                  binding effect of this Agreement. The foregoing shall apply to
                  each other Loan Document MUTATIS MUTANDIS.

         16.6     REVIVAL AND REINSTATEMENT OF OBLIGATIONS. If the incurrence or
                  payment of the Obligations by any Borrower or Guarantor or the
                  transfer to the Lender Group of any property should for any
                  reason subsequently be declared to be void or voidable under
                  any state or federal law relating to creditors' rights,
                  including provisions of the Bankruptcy Code relating to
                  fraudulent conveyances, preferences, or other voidable or
                  recoverable payments of money or transfers of property
                  (collectively, a "VOIDABLE TRANSFER"), and if the Lender Group
                  is required to repay or restore, in whole or in part, any such

                                       66
<PAGE>

                  Voidable Transfer, or elects to do so upon the reasonable
                  advice of its counsel, then, as to any such Voidable Transfer,
                  or the amount thereof that the Lender Group is required or
                  elects to repay or restore, and as to all reasonable costs,
                  expenses, and attorneys fees of the Lender Group related
                  thereto, the liability of Borrowers or Guarantors
                  automatically shall be revived, reinstated, and restored and
                  shall exist as though such Voidable Transfer had never been
                  made.

         16.7     CONFIDENTIALITY. Agent and Lenders each individually (and not
                  jointly or jointly and severally) agree that material,
                  non-public information regarding Parent and its Subsidiaries,
                  their operations, assets, and existing and contemplated
                  business plans shall be treated by Agent and the Lenders in a
                  confidential manner, and shall not be disclosed by Agent and
                  the Lenders to Persons who are not parties to this Agreement,
                  except: (a) to attorneys for and other advisors, accountants,
                  auditors, and consultants to any member of the Lender Group,
                  (b) to Subsidiaries and Affiliates of any member of the Lender
                  Group (including the Bank Product Providers), provided that
                  any such Subsidiary or Affiliate shall have agreed to receive
                  such information hereunder subject to the terms of this
                  SECTION 16.7, (c) as may be required by statute, decision, or
                  judicial or administrative order, rule, or regulation, (d) as
                  may be agreed to in advance by Administrative Borrower or its
                  Subsidiaries or as requested or required by any Governmental
                  Authority pursuant to any subpoena or other legal process, (e)
                  as to any such information that is or becomes generally
                  available to the public (other than as a result of prohibited
                  disclosure by Agent or the Lenders), (f) in connection with
                  any assignment, prospective assignment, sale, prospective
                  sale, participation or prospective participations, or pledge
                  or prospective pledge of any Lender's interest under this
                  Agreement, provided that any such assignee, prospective
                  assignee, purchaser, prospective purchaser, participant,
                  prospective participant, pledgee, or prospective pledgee shall
                  have agreed in writing to receive such information hereunder
                  subject to the terms of this Section, and (g) in connection
                  with any litigation or other adversary proceeding involving
                  parties hereto which such litigation or adversary proceeding
                  involves claims related to the rights or duties of such
                  parties under this Agreement or the other Loan Documents. The
                  provisions of this SECTION 16.7 shall survive for 2 years
                  after the payment in full of the Obligations.

         16.8     INTEGRATION. This Agreement, together with the other Loan
                  Documents, reflects the entire understanding of the parties
                  with respect to the transactions contemplated hereby and shall
                  not be contradicted or qualified by any other agreement, oral
                  or written, before the date hereof.

         16.9     BEVERLY RADIOLOGY MEDICAL GROUP III AS AGENT FOR BORROWERS.
                  Each Borrower hereby irrevocably appoints Beverly Radiology
                  Medical Group III as the borrowing agent and attorney-in-fact
                  for all Borrowers (the "ADMINISTRATIVE BORROWER") which
                  appointment shall remain in full force and effect unless and
                  until Agent shall have received prior written notice signed by
                  each Borrower that such appointment has been revoked and that
                  another Borrower has been appointed Administrative Borrower.
                  Each Borrower hereby irrevocably appoints and authorizes the
                  Administrative Borrower (i) to provide Agent with all notices
                  with respect to Advances and Letters of Credit obtained for
                  the benefit of any Borrower and all other notices and
                  instructions under this Agreement and (ii) to take such action
                  as the Administrative Borrower deems appropriate on its behalf
                  to obtain Advances and Letters of Credit and to exercise such
                  other powers as are reasonably incidental thereto to carry out
                  the purposes of this Agreement. It is understood that the
                  handling of the Loan Account and Collateral of Borrowers in a

                                       67
<PAGE>

                  combined fashion, as more fully set forth herein, is done
                  solely as an accommodation to Borrowers in order to utilize
                  the collective borrowing powers of Borrowers in the most
                  efficient and economical manner and at their request, and that
                  Lender Group shall not incur liability to any Borrower as a
                  result hereof. Each Borrower expects to derive benefit,
                  directly or indirectly, from the handling of the Loan Account
                  and the Collateral in a combined fashion since the successful
                  operation of each Borrower is dependent on the continued
                  successful performance of the integrated group. To induce the
                  Lender Group to do so, and in consideration thereof, each
                  Borrower hereby jointly and severally agrees to indemnify each
                  member of the Lender Group and hold each member of the Lender
                  Group harmless against any and all liability, expense, loss or
                  claim of damage or injury, made against the Lender Group by
                  any Borrower or by any third party whosoever, arising from or
                  incurred by reason of (a) the handling of the Loan Account and
                  Collateral of Borrowers as herein provided, (b) the Lender
                  Group's relying on any instructions of the Administrative
                  Borrower, or (c) any other action taken by the Lender Group
                  hereunder or under the other Loan Documents, except that
                  Borrowers will have no liability to the relevant Agent-Related
                  Person or Lender-Related Person under this SECTION 17.9 with
                  respect to any liability that has been finally determined by a
                  court of competent jurisdiction to have resulted solely from
                  the gross negligence or willful misconduct of such
                  Agent-Related Person or Lender-Related Person, as the case may
                  be.

                           [Signature page to follow.]

                                       68
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.

                                PRIMEDEX HEALTH SYSTEMS, INC.,
                                a New York corporation, as Parent

                                By:          ___________________________
                                Name:        ___________________________
                                Title:       ___________________________

                                RADNET MANAGEMENT, INC.,
                                a California corporation, as a Borrower

                                By:          ___________________________
                                Name:        ___________________________
                                Title:       ___________________________

                                BEVERLY RADIOLOGY MEDICAL GROUP III,
                                a California general partnership, as a Borrower

                                By: Beverly Radiology Medical Group, Inc., its
                                general partner,
                                     By:     ___________________________
                                     Name:   ___________________________
                                     Title:  ___________________________

                                By: Pronet Imaging Medical Group, Inc., its
                                general partner,
                                     By:     ___________________________
                                     Name:   ___________________________
                                     Title:  ___________________________

                                WELLS FARGO FOOTHILL, INC.,
                                a California corporation, as Agent and as a
                                Lender

                                By:          ___________________________
                                Name:        ___________________________
                                Title:       ___________________________

                      [SIGNATURE PAGE OF CREDIT AGREEMENT]

                                       69Exhibit 4(a)

 

EXECUTION COPY

 

 

TENET HEALTHCARE CORPORATION

Seventh Supplemental Indenture

Dated as of  June 18, 2004

(Supplemental
to Indenture Dated as of November 6, 2001)

THE BANK OF NEW YORK,

as
Trustee

 

SEVENTH SUPPLEMENTAL
INDENTURE, dated as of June 18, 2004, between Tenet Healthcare Corporation, a
corporation duly organized and existing under the laws of the State of Nevada
(herein called the “Company”), and The Bank of New York, a New York banking
corporation, as trustee (herein called “Trustee”).

R E C I
T A L S:

WHEREAS, the Company has
heretofore executed and delivered to the Trustee, an Indenture, dated as of
November 6, 2001 (the “Existing Indenture”, and the Existing Indenture, as the
same may be amended or supplemented from time to time, including by this
Seventh Supplemental Indenture, the “Indenture”), providing for the issuance
from time to time of the Company’s unsecured debentures, notes or other
evidences of indebtedness (herein and therein called the “Securities”), to be
issued in one or more series as provided in the Indenture;

WHEREAS, Section 901 of the
Existing Indenture permits the Company and the Trustee to enter into an
indenture supplemental to the Existing Indenture to provide for the issuance of
and establish the form and terms and conditions of any additional series of
Securities;

WHEREAS, Sections 201, 301
and 901 of the Existing Indenture permit the form of notes of each additional
series of notes to be established pursuant to an indenture supplemental to the
Existing Indenture;

WHEREAS, Section 301 of the
Existing Indenture permits certain terms of any additional series of notes to
be established pursuant to an indenture supplemental to the Existing Indenture;
and

WHEREAS, pursuant to
resolutions of the Board of Directors of the Company adopted at a meeting duly
called on June 7, 2004 and resolutions of the Audit Committee of the Board of
Directors of the Company adopted at a meeting duly called on June 14, 2004, the
Company is authorized to issue up to $1,000,000,000 aggregate principal amount
of Securities in one or more series of Securities;

WHEREAS, in accordance with
such resolutions, the Company has authorized the issuance of $1,000,000,000
aggregate principal amount of 9.875% Senior Notes due 2014 (the “Notes”);

WHEREAS, the Company has
duly authorized the execution and delivery of this Seventh Supplemental
Indenture to establish the form and terms of the Notes;

WHEREAS, all things
necessary to make this Seventh Supplemental Indenture a valid agreement
according to its terms have been done; and

 

1

 

WHEREAS, the foregoing
recitals are made as statements of fact by the Company and not by the Trustee;

NOW, THEREFORE, THIS SEVENTH
SUPPLEMENTAL INDENTURE WITNESSETH:

For and in consideration of
the premises and the issuance of the Notes provided for herein, it is mutually
agreed, for the equal and proportionate benefit of all Holders of the Notes, as
follows:

ARTICLE I

DEFINITIONS AND OTHER PROVISIONS

OF GENERAL APPLICATION

Section 1.1                                   Relation to Existing Indenture

This Seventh Supplemental
Indenture constitutes an integral part of the Existing Indenture (the
provisions of which, as modified by this Seventh Supplemental Indenture, shall
apply to the Notes) in respect of the Notes but shall not modify, amend or
otherwise affect the Existing Indenture insofar as it relates to any other
series of Securities or affect in any manner the terms and conditions of the
Securities of any other series.

Section 1.2                                   Definitions

For all purposes of this
Seventh Supplemental Indenture, the capitalized terms used herein
(i) which are defined in this Section 1.2 have the respective meanings
assigned thereto in this Section 1.2, and (ii) which are defined in the
Existing Indenture (and which are not defined in this Section 1.2) have the
respective meanings assigned thereto in the Existing Indenture.  For all purposes of this Seventh
Supplemental Indenture:

1.2.1           All references herein to Articles and
Sections, unless otherwise specified, refer to the corresponding Articles and
Sections of this Seventh Supplemental Indenture;

1.2.2        The terms “hereof”, “herein”, “hereby”,
“hereto”, “hereunder” and “herewith” refer to this Seventh Supplemental
Indenture; and

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

“Adjusted Treasury Rate” has
the meaning specified in the form of Note contained in Section 2.3.

“Affiliated Entity” has the
meaning specified under the definition of “Subsidiary” in this Section 1.2.3.

 

2

 

“Attributable Debt” when
used in connection with a Sale and Lease-Back Transaction, means, as of the
date of determination, (i) as to any capitalized lease obligations, the
liability related thereto set forth on the consolidated balance sheet of the
Company and (ii) as to any operating lease, the present value (discounted at
the rate per annum equal to the rate of interest set forth or implicit in the
term of the lease, as determined in good faith by the Board of Directors of the
Company) of the total obligation of the lessee for net rental payments during
the remaining term of the lease (including any period for which an option to
extend such lease has been exercised).

“Code” means the Internal
Revenue Code of 1986, as amended and as in effect on the date hereof.

“Comparable Treasury Issue”
has the meaning specified in the form of Note contained in Section 2.3.

“Comparable Treasury Price”
has the meaning specified in the form of Note contained in Section 2.3.

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

“Exchange Notes” means the
notes issued pursuant to the Exchange Offer and their Successor Securities.

“Exchange Offer” has the
meaning specified in the form of Note contained in Section 2.2.

“Exchange Offer Registration
Statement” has the meaning specified in the form of Note contained in Section
2.2.

“Global Note” means any Note
bearing the legend specified in Section 2.2 evidencing all or part of the
Notes, issued to the Depositary or its nominee and registered in the name of
the Depositary.  The Restricted Global
Note shall be a Global Note.

“Independent Investment
Banker” has the meaning specified in the form of Note contained in Section 2.3.

“Initial Purchasers” means
Citigroup Global Markets Inc., Banc of America Securities LLC, Credit Suisse
First Boston LLC and J.P. Morgan Securities Inc.

“Interest Payment Date” has
the meaning specified in the form of Note contained in Section 2.2.

“Liens” means liens,
mortgages, pledges, charges, security interests or other encumbrances.

 

3

 

“Make-Whole Price” has the
meaning specified in the form of Note contained in Section 2.3.

“Original Notes” means all
Notes other than Exchange Notes.

“Primary Treasury Dealer”
has the meaning specified in the form of Note contained in Section 2.3.

“Principal Property” means
each hospital owned solely by the Company and/or one or more of its
Subsidiaries which has an asset value shown on the books of the Company in
excess of 5% of the Consolidated Net Tangible Assets of the Company.

“Purchase Agreement” means
the Purchase Agreement, dated as of June 15, 2004 among the Company and
the Initial Purchasers.

“Reference Treasury Dealer”
has the meaning specified in the form of Note contained in Section 2.3.

“Reference Treasury Dealer
Quotations” has the meaning specified in the form of Note contained in Section
2.3.

“Registered Notes” means the
Exchange Notes and all other Notes sold or otherwise disposed of pursuant to an
effective registration statement under the Securities Act, together with their
respective Successor Securities.

“Registration Default” has
the meaning specified in the form of Note contained in Section 2.2.

“Registration Default
Period” has the meaning specified in the form of Note contained in
Section 2.2.

“Registration Rights
Agreement” has the meaning specified in Section 2.2.

“Regulation S” means
Regulation S under the Securities Act (including any successor rule or
regulation thereto), as the same may be amended from time to time.

“Remaining Life” has the
meaning specified in the form of Note contained in Section 2.3.

“Restricted Global Note” has
the meaning specified in Section 2.1.

“Restricted Note” means all
Notes required pursuant to Section 2.6 to bear any Restricted Securities
Legend.  Such term includes the
Restricted Global Note.

“Restricted Securities
Legend” has the meaning specified in Section 2.6.

 

4

 

“Rule 144A” means Rule 144A
under the Securities Act (including any successor rule thereto), as the same
may be amended from time to time.

“Sale and Lease-Back
Transactions” has the meaning specified in Section 3.2.

“Securities” has the meaning
ascribed to it in the first paragraph under the caption “Recitals.”

“Securities Act” means the
Securities Act of 1933, as amended.

“Shelf Registration
Statement” has the meaning specified in the form of Note contained in
Section 2.2.

“Special Interest” has the
meaning specified in the form of Note contained in Section 2.2.

“Special Interest Notice”
has the meaning specified in Section 2.5.

“Step Down Date” has the
meaning specified in the form of Note contained in Section 2.2.

“Step Up” has the meaning
specified in the form of Note contained in Section 2.2.

“Subsequent Step Up” has the
meaning specified in the form of Note contained in Section 2.2.

“Successor Security” of any
particular Security means every Security issued after, and evidencing all or a
portion of the same debt as that evidenced by, such particular Security; and,
for the purposes of this definition, any Security authenticated and delivered
under Section 306 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Security shall be deemed to evidence the same debt as the mutilated,
destroyed, lost or stolen Security.

ARTICLE II

GENERAL TERMS AND CONDITIONS OF THE NOTES

Section 2.1                                   Forms of Notes Generally

The Notes shall be in
substantially the forms set forth in this Article with such appropriate
insertions, omissions, substitutions and other variations as are required or
permitted by the Indenture, and may have such letters, numbers or other marks
of identification and such legends or endorsements placed thereon as may be
required to comply with the rules of any securities exchange or Depositary
thereof, the Code and regulations thereunder, or as may, consistently herewith,
be determined by the officers 

 

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executing such Notes, as
evidenced by their execution thereof. 
The Trustee’s certificates of authentication shall be in substantially
the form set forth in Section 2.4.

The definitive Notes shall
be printed, lithographed or engraved or produced by any combination of these
methods on steel engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange on which the Notes may be
listed, all as determined by the officers executing such Notes, as evidenced by
their execution thereof.

In certain cases described
elsewhere herein, the legends set forth in the first five paragraphs of Section
2.2 may be omitted from Notes issued hereunder.

Notes offered and sold in
their initial distribution in reliance on Rule 144A or Regulation S shall
be Restricted Notes and shall be issued in the form of one or more Global Notes
(each, a “Restricted Global Note”), in fully-registered form without interest
coupons, substantially in the form of Note set forth in Sections 2.2 and
2.3, with such applicable legends as are provided for in Section 2.2,
except as otherwise permitted herein. 
Such Restricted Global Notes shall be registered in the name of the
Depositary or its nominee and deposited with the Trustee, at its New York
office, as custodian for the Depositary, duly executed by the Company and
authenticated by the Trustee as hereinafter provided.  The Restricted Global Notes and all other Notes evidencing the
debt, or any portion of the debt, initially evidenced by such Restricted Global
Notes, other than the Notes which are not required to bear the Restricted
Securities Legend, shall collectively be referred to herein as the “Restricted
Notes.”  Global Notes are Global
Securities as defined under the Existing Indenture and are subject to the
restrictions and provisions of the Indenture governing Global Securities in the
Existing Indenture, except as specifically provided in this Seventh
Supplemental Indenture.

The Notes will be issued
only in registered form.  The Notes will
be issued in minimum denominations of $1,000.

Section 2.2                                   Form of Face of the Notes

[INCLUDE IF NOTE IS A RESTRICTED NOTE — THIS SECURITY
(OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“SECURITIES ACT”), AND THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM.  EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON
THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED
BY RULE 144A THEREUNDER OR RULE 903 OR RULE 904 OF REGULATION S THEREUNDER.

 

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THE HOLDER OF THIS SECURITY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS SECURITY MAY BE OFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY, (II) INSIDE
THE U.S. TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL
BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE U.S. IN A TRANSACTION
COMPLYING WITH THE PROVISIONS OF RULE 904 UNDER THE SECURITIES ACT AND SUBJECT
TO THE COMPANY’S RIGHT PRIOR TO ANY SUCH REOFFER, RESALE OR TRANSFER TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION
REASONABLY SATISFACTORY TO IT THAT SUCH REOFFER, RESALE OR TRANSFER IS IN
COMPLIANCE WITH THE SECURITIES ACT AND OTHER APPLICABLE LAWS,
(IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 (IF AVAILABLE), (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR (VI) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN
OPINION OF COUNSEL ACCEPTABLE TO IT), AND IN EACH OF CASES (II) THROUGH (VI) IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.]

[INCLUDE IF NOTE IS A GLOBAL NOTE — THIS NOTE IS A
GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF.  THIS NOTE MAY NOT BE EXCHANGED IN WHOLE OR
IN PART FOR A NOTE REGISTERED, AND NO TRANSFER OF THIS NOTE 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.]

[INCLUDE IF NOTE IS A GLOBAL NOTE AND THE DEPOSITORY TRUST
COMPANY IS THE DEPOSITARY — UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY
(“DTC”), A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN
THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS 

 

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WRONGFUL INASMUCH AS THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

THIS SECURITY MAY NOT BE
EXCHANGEABLE 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.]

 

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TENET HEALTHCARE CORPORATION

9.875% SENIOR NOTES DUE 2014

	
  No. ______

  	
   

  
	
  CUSIP No.:

  	
  $__________

  

 

TENET HEALTHCARE
CORPORATION, a corporation duly organized and existing under the laws of Nevada
(herein called the “Company,” which term includes any successor Person under
the Indenture referred to on the reverse hereof), for value received, hereby
promises to pay to Cede & Co., or registered assigns, the principal sum of
__________ Dollars (U.S. $_____________), [include if Global Note — or such
other amount (not to exceed One Billion Dollars (U.S. $1,000,000,000) when
taken together with all of the Company’s 9.875% Senior Notes due 2014 issued
and outstanding in definitive certificated form or in the form of another
Global Note) as may from time to time represent the principal amount of the
Company’s 9.875% Senior Notes due 2014 in respect of which beneficial interests
are held through the Depositary in the form of a Global Note,] on July 1, 2014,
and to pay interest thereon from June 18, 2004, or from the most recent
Interest Payment Date (as defined below) to which interest has been paid or
duly provided for, semi-annually in arrears on January 1 and July 1 in each
year (each such date, an “Interest Payment Date”), commencing on January 1,
2005, until the principal hereof is paid or made available for payment.  The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on the Regular Record
Date for such interest, which shall be the December 15 or June 15 (whether or
not a Business Day), as the case may be, next preceding such Interest Payment
Date.  Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in
whose name this Note (or one or more Predecessor Notes) is registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders
of Notes not less than 10 days prior to such Special Record Date, or be paid at
any time in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, all as more fully provided in said
Indenture.

Interest shall be computed
on the basis of a 360-day year comprised of twelve 30-day months.

In the event that an
Interest Payment Date is not a Business Day, the Company shall pay interest on
the next day that is a Business Day, with the same force and effect as if made
on the Interest Payment Date, and without any interest or other payment with
respect to the delay.  If the Stated
Maturity or earlier Redemption Date falls on a day that is not a Business Day,
the payment of principal and interest, if any, need not be made on 

 

9

 

such date, but may be made
on the next succeeding Business Day, with the same force and effect as if made
on the Stated Maturity or earlier Redemption Date, provided that no interest
shall accrue for the period from and after such Stated Maturity or earlier
Redemption Date.

[Pursuant to the Exchange
and Registration Rights Agreement, dated as of June 18, 2004 (the “Registration
Rights Agreement”), by and among the Company and the Initial Purchasers, the
Company has agreed for the benefit of the Holders from time to time of the
Notes that they will (i) file under the Securities Act, no later than 30 days
after the date of filing of the Company’s Quarterly Report on Form 10-Q for the
quarterly period ended June 30, 2004, a registration statement (the “Exchange
Offer Registration Statement”) registering securities substantially identical
to the Notes (except that such securities will not contain terms with respect
to the Special Interest payments described below or transfer restrictions)
pursuant to an exchange offer (the “Exchange Offer”), (ii) use its commercially
reasonable efforts to cause the Exchange Registration Statement to become
effective under the Securities Act no later than 360 days following the date of
the Offering Memorandum (as defined in the Registration Rights Agreement), and
(iii) use its commercially reasonable efforts to cause the Exchange Offer to
remain open at least 20 business days and to commence and complete the Exchange
Offer no later than 30 business days after the Exchange Offer Registration Statement
has become effective; provided, however, that if (a) on or prior to the time
the Exchange Offer is completed, existing Commission (as defined in the
Indenture) interpretations are changed such that this Note is not or would not
be, upon receipt under the Exchange Offer, transferable by the Holder of this
Note without restriction under the Securities Act, (b) for any reason the
Exchange Offer is not commenced and completed by the applicable date or
(c) the Exchange Offer is not available to the Holder of this Note, the
Company agreed, in lieu of (or, in the case of clause (c), in addition to)
conducting the Exchange Offer, to file under the Securities Act no later than
the later of 30 days after the time such obligation to file arises, a “shelf” registration
statement providing for the registration of and the sale on a continuous or
delayed basis by the Holder of this Note (such registration statement, the
“Shelf Registration Statement”) and to use its commercially reasonable efforts
to cause the Shelf Registration Statement to become effective no later than 90
days after it is filed.

In the event that (i) the
Company has not filed the Exchange Offer Registration Statement or, if
applicable, the Shelf Registration Statement on or before the date on which such
registration statement is required to be filed in the respective time frames
provided above, or (ii) such Exchange Offer Registration Statement or, if
applicable, such Shelf Registration Statement has not become effective on or
before the date on which such registration statement is required to become
effective in the respective time frames provided above, or (iii) the Exchange
Offer has not been completed within 30 business days after the Exchange Offer
Registration Statement has become effective (if the Exchange Offer is then
required to be made) or (iv) the Exchange Offer Registration Statement or, if
applicable, the Shelf Registration Statement is filed and declared effective
but shall thereafter either be withdrawn by the Company or shall become subject
to an effective stop order issued pursuant to Section 8(d) of the Securities
Act 

 

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suspending the effectiveness
of such registration statement (except as specifically permitted in the
Indenture) without being succeeded immediately by an additional registration
statement filed and declared effective, in each case (i) through (iv) upon the
terms and conditions set forth in the Registration Rights Agreement (each such
event referred to in clauses (i) through (iv), a “Registration Default” and
each period during which a Registration Default has occurred and is continuing,
a “Registration Default Period”), then interest will accrue (in addition to any
stated interest on this Note) at a per annum rate of 0.25% for the first 90
days of the Registration Default Period (the “Step-Up”), at a per annum rate of
0.50% for the second 90 days of the Registration Default Period, at a per annum
rate of 0.75% for the third 90 days of the Registration Default Period and at a
per annum rate of 1.0% thereafter for the remaining portion of the Registration
Default Period (each such increase, a “Subsequent Step-Up”).  The Company shall not be required to pay
Special Interest for more than one Registration Default at any given time.  Interest accruing as a result of the Step-Up
or any Subsequent Step-Up (which shall be computed on the basis of a 360-day
year comprised of twelve 30-day months) is referred to herein as “Special
Interest,” and will be payable at such increased rate until such time as the
Registration Default Period is no longer continuing, after which such interest
rate will be restored to its initial rate (such event, a “Step-Down
Date”).  Accrued Special Interest, if
any, shall be paid in cash in arrears on each Interest Payment Date for the
Notes; and the amount of accrued Special Interest shall be determined on the
basis of the number of days actually elapsed. Any accrued and unpaid interest
(including Special Interest) on this Note upon the issuance of an Exchange Note
(as defined in the Indenture) in exchange for this Note shall cease to be
payable to the Holder hereof but such accrued and unpaid interest (including
Special Interest) shall be payable on the next Interest Payment Date for such
Exchange Note to the Holder thereof on the related Regular Record Date.]

Payment of the principal of
this Note, any premium and any interest due at Stated Maturity will be made in
immediately available funds upon surrender at the office or agency of the
Paying Agent, as defined on the reverse hereof, maintained for that purpose
within the City and State of New York, or at such other paying agency as the
Company may determine.  Payments of
interest, other than interest due at Stated Maturity, may at the Company’s
option be made by check mailed to the address of the Person entitled thereto as
such address shall appear in the Securities Register.  Holders who have given wire instructions to the Paying Agent will
be entitled to receive payments of interest, other than interest due at Stated
Maturity, by wire transfer of immediately available funds if appropriate wire
transfer instructions have been received by the Paying Agent in writing earlier
than the relevant Record Date.

Reference is hereby made to
the further provisions of this Note set forth on the reverse hereof, which
further provisions shall for all purposes have the same effect as if set forth
at this place.

Unless the certificate of
authentication hereon has been executed by the Trustee referred to on the
reverse hereof by the manual signature of one of its authorized 

 

11

 

signatories, this Note shall
not be entitled to any benefit under the Indenture or be valid or obligatory
for any purpose.

IN WITNESS WHEREOF, the Company
has caused this instrument to be duly executed.

Dated:

	
   

  	
  TENET
  HEALTHCARE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By

  	
   

  

 

 

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Section 2.3                                   Form of Reverse of the Notes

This Note is one of a duly
authorized issue of securities of the Company (herein called the “Notes”),
issued and to be issued in one or more series under an Indenture, dated as of
November 6, 2001, as supplemented by the Seventh Supplemental Indenture (the
“Seventh Supplemental Indenture”), dated as of June 18, 2004 (as so
supplemented, the “Indenture”, which term shall have the meaning assigned to it
in such instrument), between the Company and The Bank of New York, as Trustee
(herein called the “Trustee”, which term includes any successor trustee under
the Indenture), and reference is hereby made to the Indenture for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee and the Holders of the Notes and of the
terms upon which the Notes are, and are to be, authenticated and delivered.
This Note is one of the series designated on the face hereof.  The Company has appointed The Bank of New
York at its corporate trust office in New York, New York as the paying agent
(herein called the “Paying Agent”, which term includes any additional or
successor Paying Agent appointed by the Company) with respect to the Notes.

The Notes are subject to
redemption, in whole or in part, at any time, at the election 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 Notes
being redeemed and (ii) the sum of the present values of the remaining
scheduled payments of principal and interest thereon (excluding accrued and
unpaid interest to the Redemption Date) discounted to the Redemption Date on a
semiannual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Adjusted Treasury Rate (as defined herein) plus 0.50%, plus, in each of
cases (i) and (ii), accrued and unpaid interest thereon to the Redemption Date.

“Adjusted Treasury Rate”
means, with respect to any Redemption Date: (i) the yield, under the heading
that represents the average for the immediately preceding week, appearing in
the most recently published statistical release designated “H.15(519)” or any
successor publication that is published weekly by the Board of Governors of the
Federal Reserve System and that establishes yields on actively traded United
States Treasury securities adjusted to constant maturity under the caption
“Treasury Constant Maturities,” for the maturity corresponding to the
Comparable Treasury Issue (if no maturity is within three months before or
after the Remaining Life, yields for the two published maturities most closely
corresponding to the Comparable Treasury Issue shall be determined and the
adjusted Treasury Rate shall be interpolated or extrapolated from such yields
on a straight line basis, rounded to the nearest month); or (ii) if such
release (or any successor release) is not published during the week preceding
the calculation date or does not contain such yields, the rate per annum equal
to the semi-annual equivalent yield to maturity of the Comparable Treasury
Issue, calculated using a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury 

 

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Price for such Redemption
Date.  The Adjusted Treasury Rate shall
be calculated on the third business day preceding the Redemption Date.

“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 Notes 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 Notes (the “Remaining
Life”).

“Comparable Treasury Price”
means, with respect to any Redemption Date, (i) the average of the Reference
Treasury Dealer Quotations for such Redemption Date, after excluding the
highest and lowest Reference Treasury Dealer Quotations, or (ii) if the
Independent Investment Banker obtains fewer than five such Reference Treasury
Dealer Quotations, the average of all such quotations.

“Independent Investment
Banker” means one of the Reference Treasury Dealer appointed by the Company.

“Reference Treasury Dealer”
means (i) each of Citigroup Global Markets Inc., Banc of America Securities
LLC, Credit Suisse First Boston LLC and J.P. Morgan Securities Inc. and their
respective successors; provided that if any of the foregoing ceases to be a
primary U.S. Government securities dealer in New York City (a “Primary Treasury
Dealer”), the Company will substitute therefor another Primary Treasury Dealer,
and (ii) any other Primary Treasury Dealer selected by the Company.

“Reference Treasury Dealer
Quotations” means, with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Independent Investment
Banker, 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 Independent Investment Banker by such Reference Treasury Dealer
at 5:00 p.m., New York City time, on the third Business Day preceding such
Redemption Date.

In the event of redemption
of this Note in part only, a new Note or Notes of this series and of like tenor
for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.

This Note does not have the
benefit of any sinking fund obligations.

The Indenture contains provisions
for defeasance at any time of the entire indebtedness of this Note or certain
restrictive covenants and Events of Default with respect to this Note, in each
case upon compliance with certain conditions set forth in the Indenture.

 

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If an Event of Default with
respect to Notes of this series shall occur and be continuing, the principal of
the Notes of this series may be declared due and payable in the manner and with
the effect provided in the Indenture.

The Notes are entitled to
the benefits of the covenants of the Company set forth in Article Ten of
the Indenture and Article Three of the Seventh Supplemental Indenture.

This Note is a Global Note
and shall be exchangeable for Notes registered in the names of Persons other
than the Depositary or its nominee only if (i) the Depositary notifies the
Company that it is unwilling or unable to continue as Depositary for this
Global Note or if at any time such Depositary ceases to be a clearing agency
registered as such under the Securities Exchange Act of 1934, as amended, at a
time when such Depositary is required to be so registered in order to act as
Depositary, and the Company fails to appoint a successor Depositary under the
Indenture, (ii) the Company executes and delivers to the Trustee a Company
Order that the Global Note shall be so exchangeable, or (iii) there shall have
occurred and be continuing an Event of Default with respect to the Notes.  To the extent that the Global Note is
exchangeable pursuant to the preceding sentence, it shall be exchangeable for
Notes registered in such names as the Depositary may direct.  In the event of a deposit or withdrawal of
an interest in this Note (including upon an exchange, transfer, redemption or
repurchase of this Note in part only) effected in accordance with the
Applicable Procedures, the Security Registrar, upon receipt of notice of such
event from the Depositary’s custodian for this Note, shall make an adjustment
on its records to reflect an increase or decrease of the Outstanding principal
amount of Notes of this series resulting from such deposit or withdrawal, as
the case may be.

Unless the context otherwise
requires, the Original Notes (as defined in the Indenture) and the Exchange
Notes (as defined in the Indenture) shall constitute one series for all
purposes under the Indenture, including without limitation, amendments, waivers
and redemptions.

The Indenture permits, with
certain exceptions as therein provided, the amendment thereof and the modification
of the rights and obligations of the Company and the rights of the Holders of
the Securities of each series to be affected under the Indenture at any time by
the Company and the Trustee with the consent of the Holders of a majority in
principal amount of the Securities at the time Outstanding of each series to be
affected.  The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities at the time Outstanding, on behalf of the Holders of all Securities
of such series, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences.  Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Note.

 

15

 

As provided in and subject
to the provisions of the Indenture, the Holder of this Note shall not have the
right to institute any proceeding with respect to the Indenture or for the
appointment of a receiver or trustee or for any other remedy thereunder, unless
such Holder shall have previously given the Trustee written notice of a
continuing Event of Default with respect to the Notes of this series, the
Holders of not less than 25% in principal amount of the Notes of this series at
the time Outstanding shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default as Trustee and
offered the Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in principal amount of Notes of this
series at the time Outstanding a direction inconsistent with such request, and
shall have failed to institute any such proceeding, for 60 days after receipt
of such notice, request and offer of indemnity.  The foregoing shall not apply to any suit instituted by the
Holder of this Note for the enforcement of any payment of principal hereof or
any premium or interest hereon on or after the respective due dates expressed
herein.

No reference herein to the
Indenture and no provision of this Note or of the Indenture shall alter or
impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of (and premium, if any) and interest on this Note at the
times, place and rate, and in the coin or currency, herein prescribed.

As provided in the Indenture
and subject to certain limitations therein set forth, the transfer of this Note
is registrable in the Security Register, upon surrender of this Note for
registration of transfer at the office or agency of the Company in any place
where the principal of and any premium and interest on this Note are payable,
duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Notes of this series and of like tenor, of authorized denominations
and for the same aggregate principal amount, will be issued to the designated transferee
or transferees.

The Notes of this series are
issuable only in fully registered form without coupons in denominations of
$1,000 and any integral multiple thereof. 
As provided in the Indenture and subject to certain limitations therein
set forth, the Notes of this series are exchangeable for a like aggregate
principal amount of Notes of this series and of like tenor of a different
authorized denomination, as requested by the Holder surrendering the same.

No service charge shall be
made for any such registration of transfer or exchange, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith.

Prior to due presentment of
this Note for registration of transfer, the Company, the Trustee and any agent
of the Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note 

 

16

 

be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the
contrary.

All terms used in this Note
which are defined in the Indenture shall have the meanings assigned to them in
the Indenture.

The Indenture and this Note shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to conflicts of laws principles thereof.

Section 2.4                                   Form of Trustee’s Certificate of Authentication of the
Notes

The Trustee’s certificates
of authentication shall be in substantially the following form:

This is one of the Notes of
the series designated therein referred to in the within-mentioned Indenture.

Dated:

	
   

  	
  THE BANK OF NEW YORK, as
  Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Authorized Signatory

  

 

Section 2.5                                   Title and Terms

The Notes shall be issued in
one series and shall be known and designated as the “9.875% Senior Notes due
2014” of the Company.  The aggregate
principal amount of the Notes that may initially be authenticated and delivered
under this Seventh Supplemental Indenture is limited to $1,000,000,000, except
for Notes authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other Notes pursuant to Section 304, 305, 306 or
906 of the Existing Indenture or Article Two of this Seventh Supplemental
Indenture.  The Company may, without the
consent of the Holders of the Notes, issue additional notes having the same
ranking, interest rate, Stated Maturity, CUSIP number and terms as to status,
redemption or otherwise as the Notes, in which event such notes, the Original
Notes and the Exhange Notes shall constitute one series for all purposes under
the Indenture, including without limitation, amendments, waivers and
redemptions.

The Stated Maturity of the
Notes shall be July 1, 2014, and they shall bear interest and have such other
terms as are described in Sections 2.2 and 2.3 of this Seventh Supplemental
Indenture.

The Company shall have no
obligation to redeem or purchase the Notes pursuant to any sinking fund or
analogous provision, or at the option of a Holder thereof.  The 

 

17

 

Notes shall be redeemable at
the election of the Company, as a whole or from time to time in part at the
times and at the prices specified in the form of Note set forth in
Section 2.3 of this Seventh Supplemental Indenture.

The Notes shall be subject
to the defeasance and discharge provisions of Section 1302 of the Existing
Indenture and the defeasance of certain obligations and certain events of
default provisions of Section 1303 of the Existing Indenture.

Upon their original
issuance, the Notes shall be issued in the form of one or more Global Notes, as
provided in this Seventh Supplemental Indenture, registered in the name of The
Depository Trust Company, as Depositary, or its nominee and deposited with the
Trustee, as custodian for The Depository Trust Company, for credit by The
Depository Trust Company to the respective accounts of beneficial owners of the
Notes represented thereby (or such other accounts as they may direct).  The Global Notes shall bear the legends
provided for in the form of Note contained in Section 2.2 of this Seventh
Supplemental Indenture and may be exchanged in whole or in part for Notes
registered, and transfers of Global Notes in whole or in part may be
registered, in the name or names of Persons other than the Depositary only as
set forth herein and in the Indenture.

Subject to the limitations
set forth in this Indenture, the Company may, without the consent of the
Holders, issue additional Notes under this Indenture having the same terms in
all respects as such Notes or similar in all respects to such Notes except for
payment of interest (1) scheduled and paid prior to the date of issuance of
those additional Notes or (2) payable on the first interest payment date
following the date of their issuance. 
All Notes issued under this Indenture shall be treated as a single class
for all purposes hereunder.

The Notes shall have the
benefit of the covenants set forth in Article Three of this Seventh Supplemental
Indenture, in addition to the covenants set forth in Article Ten of the
Existing Indenture.  Unless the context
otherwise requires, the Original Notes and the Exchange Notes shall constitute
one series for all purposes under the Indenture, including without limitation,
amendments, waivers and redemptions.

The Notes shall be issuable
only in registered form without coupons and only in denominations of $1,000 and
integral multiples thereof.

The Notes shall be executed,
authenticated, delivered and dated in accordance with Section 303 of the
Existing Indenture.

Section 2.6                                   Restricted Securities Legend

(a)      Subject to the following clauses of this
Section 2.6, Restricted Notes and their respective Successor Securities
shall bear the legends required by Section 2.2 hereof (the “Restricted
Securities Legend”).  Registered Notes
shall not bear the legend required for Restricted Securities.  The Security Registrar shall distinguish
between Restricted Notes and Registered Notes in the Security Register.

 

18

 

(b)      At any time after a Restricted Note may be
freely transferred without registration under the Securities Act or without
being subject to transfer restrictions pursuant to the Securities Act, a new
Note which does not bear a Restricted Securities Legend may be issued in
exchange for or in lieu of such Note or any portion thereof if there is
delivered to the Company such satisfactory evidence, which may include an
opinion of independent counsel licensed to practice law in the State of New
York, as the Company may require in its sole discretion, or the Company
otherwise determines in its sole discretion that neither the Restricted
Securities Legend nor the restrictions on transfer set forth therein are required
to ensure that transfers of such Note will not violate the registration
requirements of the Securities Act.  The
Trustee, at the written direction of the Company, shall authenticate and
deliver in exchange for such Note another Note or Notes having an equal
aggregate principal amount that does not bear the Restricted Securities Legend
as provided in the Indenture.

(c)      Notwithstanding the foregoing provisions
of this Section 2.6, a Successor Security of a Note that does not bear a
Restricted Securities Legend shall not bear such legend unless the Company has
reasonable cause to believe that such Successor Security is a “restricted
security” within the meaning of Rule 144 under the Securities Act, in
which case the Trustee, at the written direction of the Company, shall
authenticate and deliver the Successor Security bearing a Restricted Securities
Legend as provide in this Indenture.

ARTICLE III

COVENANTS

Section 3.1                                   Limitations on Liens

Nothing in this Indenture or
in the Notes shall in any way restrict or prevent the Company or any Subsidiary
from incurring any debt; provided that the Company covenants and agrees that
neither it nor any Subsidiary will issue, incur, create, assume or guarantee
any debt secured by Liens upon any Principal Property, without effectively
providing that the Notes then Outstanding and thereafter created (together
with, if the Company so determines, any other debt then existing and any other
debt thereafter created ranking equally with the Notes) shall be secured
equally and ratably with, or prior to, such debt as long as such debt shall be
so secured, except that the foregoing provisions shall not apply to:

(a)           (i)            Liens
securing all or any part of the purchase price or the cost of construction of
property acquired or constructed by the Company or a Subsidiary, provided such
debt and related Lien are incurred within 12 months after acquisition, or
completion of construction and full operation, whichever is later;

 

19

 

(ii)           Liens on property owned by the
Company or a Subsidiary securing all or any part of the purchase price or the
cost of construction of additions, substantial repairs or alterations or
substantial improvements to such property, provided such debt and related Lien
are incurred within 12 months after the completion of such construction,
additions, repairs, alterations or improvements;

(b)           Liens existing on property at the
time of acquisition of such property by the Company or a Subsidiary or on the
property of an entity at the time of the acquisition of such entity by the
Company or a Subsidiary (including acquisitions through merger or
consolidation), provided that such Liens were in existence prior to the
closing of, and not incurred in contemplation of, such acquisition and, in the
case of the acquisition of an entity, the Liens do not extend to any assets
other than those of the entity acquired;

(c)           In the case of a Consolidated
Subsidiary, Liens in favor of the Company or another Consolidated Subsidiary;

(d)           Liens existing on the date of this
Seventh Supplemental Indenture;

(e)           Liens in favor of a government or
governmental entity that:

(i)            secure
debt that is guaranteed by the government or governmental entity, or

(ii)           secure
debt incurred to finance all or some of the purchase price or cost of
construction of goods, products or facilities produced under contract or
subcontract for the government or governmental entity;

(f)            Liens arising in connection with the
transfer of tax benefits in accordance with Section 168(f)(8) of the Code (or
any similar provision of law from time to time in effect); provided, that such
Liens (i) are incurred within 90 days (or any longer period, not in excess of
one year, as any such provision of law may from time to time permit) after the
acquisition of the property or equipment subject to said Lien, (ii) do not
extend to any other property or equipment, and (iii) are solely for the purpose
of said transfer of tax benefits or otherwise permitted by this Section 3.1;

(g)           Liens created in substitution of or
as replacements for any Liens permitted by clauses (a) to (f) set forth
herein, provided that, based on a good faith determination of the Board of
Directors of the Company, the property encumbered by any substitute or
replacement Lien is substantially similar in nature to and no greater in value
than the property encumbered by the otherwise permitted Lien that is being
replaced; and

(h)           Any extension, renewal or replacement
(or successive extensions, renewals or replacements), in whole or in part, of
any Lien referred to in the 

 

20

 

foregoing clauses (a) to (g) inclusive or of any debt
secured thereby; provided that the principal amount of debt secured thereby
shall not exceed the principal amount of debt so secured at the time of such
extension, renewal or replacement, and that such extension, renewal or
replacement Lien shall be limited to all or part of the same property that
secured the Lien extended, renewed or replaced (plus improvements on such
property).

Section 3.2                                   Limitations on Sale and Lease-Back Transactions

The Company covenants and
agrees that neither it nor any Subsidiary will enter into any arrangement with
any Person (other than the Company or a Subsidiary), or to which any such
Person is a party, providing for the leasing to the Company or a Subsidiary for
a period of more than three years of any Principal Property that has been or is
to be sold or transferred by the Company or such Subsidiary to such Person or
to any other Person (other than the Company or a Subsidiary), to which the
funds have been or are to be advanced by such Person on the security of the
leased property (herein referred to as “Sale and Lease-Back Transactions”)
unless either:

(i)            the
Company or such Subsidiary would be entitled, pursuant to Section 3.1, to
incur debt secured by a Lien on the property to be leased, without equally and
ratably securing the Notes, or

(ii)           the
Company (and in any such case the Company covenants and agrees that it will do
so) during or immediately after the expiration of 120 days after the effective
date of such Sale and Lease-Back Transaction (whether made by the Company or a
Subsidiary) applies an amount equal to the value of such Sale and Leaseback
Transaction to the acquisition, construction, addition, reparation, alteration
or improvement of a Principal Property and/or to the voluntary retirement of
any debt of the Company which would be defined as long-term debt on a balance
sheet prepared in accordance with generally accepted accounting principles.

For purposes of this Section
3.2, the term “value” shall mean, with respect to a Sale and Lease-Back
Transaction, as of any particular time, the amount equal to the net proceeds of
the sale or transfer of the property leased pursuant to such Sale and
Lease-Back Transaction divided first by the number of full years of the term of
the lease and then multiplied by the number of full years of such term
remaining at the time of determination, without regard to any renewal or
extension options contained in the lease.

Section 3.3                                   Exception to Limitations

Notwithstanding the
provisions of Sections 3.1 and 3.2, the Company and any Subsidiary may issue,
incur, create, assume or guarantee debt secured by Liens and enter into Sale
and Lease-Back Transactions that would otherwise be subject to the restrictions
in Sections 3.1 and 3.2, respectively, provided (a) the aggregate outstanding
principal amount of all other debt of the Company and its Subsidiaries that is
subject to the 

 

21

 

restrictions in Section 3.1
(not including debt permitted to be secured under clauses (a) to (f) inclusive
of Section 3.1), plus (b) the aggregate Attributable Debt in respect of the
Sale and Lease-Back Transactions in existence at such time (not including Sale
and Lease-Back Transactions permitted by Section 3.2(i) or (ii)), does not
exceed 15% of the Consolidated Net Tangible Assets.

Section 3.4                                   Waiver of Certain Covenants

The Company may, with
respect to the Notes, omit in any particular instance to comply with any term,
provision or condition set forth in any particular instance to comply with any
term, provision or condition set forth in any covenant in any of Sections 3.1
or 3.2, if before the time for such compliance the Holders of at least a
majority in principal amount of the Outstanding Notes shall, by Act of such
Holders, either waiver such compliance in such instance or generally waive
compliance with such term, provision or condition, but no such waiver shall extend
to or effect such term, provision or condition except to the extent so
expressly waived, and, until such waiver shall become effective, the
obligations of the Company and the duties of the Trustee in respect of any such
term, provision or condition shall remain in full force and effect.  No supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby, modify any of
the provisions of this Section 3.4, except to increase the percentage required
to waive compliance by the Company of the covenants referenced  here, provided, however, that this clause
shall not be deemed to require the consent of any Holder with respect to
changes in the references to “the Trustee” and concomitant changes in this
Section 3.4.

ARTICLE IV

MISCELLANEOUS

Section 4.1                                   Conditions Precedent

The effectiveness of this
Seventh Supplemental Indenture is conditioned upon the receipt by the Trustee
of the items specified in Section 903 of the Existing Indenture.

Section 4.2                                   Relationship to Existing Indenture

The Seventh Supplemental
Indenture is a supplemental indenture within the meaning of the Existing
Indenture. The Existing Indenture, as supplemented and amended by this Seventh
Supplemental Indenture, is in all respects ratified, confirmed and approved
and, with respect to the Notes, the Existing Indenture, as supplemented and
amended by this Seventh Supplemental Indenture, shall be read, taken and
construed as one and the same instrument.

 

22

 

Section 4.3                                   Modification of the Existing Indenture

Except as expressly modified
by this Seventh Supplemental Indenture, the provisions of the Existing
Indenture shall govern the terms and conditions of the Notes.

Section 4.4                                   Governing Law

This instrument shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to conflicts of laws principles thereof.

Section 4.5                                   Counterparts

This instrument may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an original, but all such counterparts shall together constitute
but one and the same instrument.

 

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IN WITNESS WHEREOF, the parties hereto have caused this
Seventh Supplemental Indenture to be duly executed all as of the day and year
first above written.

 

	
   

  	
  TENET
  HEALTHCARE CORPORATION

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:  Stephen D. Farber

  
	
   

  	
   

  	
  Title:  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  BANK OF NEW YORK, as Trustee

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

24

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