Document:

<PAGE>

                                                                  EXHIBIT 10.12

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

                              AMENDED AND RESTATED
                           LOAN AND SECURITY AGREEMENT

                                  STENTOR, INC.

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

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            Page
                                                                                            ----
<S>                                                                                         <C>
1    ACCOUNTING AND OTHER TERMS...........................................................    1

2    LOAN AND TERMS OF PAYMENT............................................................    1
     2.1      Credit Extensions...........................................................    1
     2.2      Interest Rate, Payments.....................................................    2
     2.3      Fees........................................................................    4

3    CONDITIONS OF LOANS..................................................................    4
     3.1      Conditions Precedent to Initial Credit Extension............................    4
     3.2      Conditions Precedent to all Credit Extensions...............................    4

4    CREATION OF SECURITY INTEREST........................................................    5
     4.1      Grant of Security Interest..................................................    5
     4.2      Authorization to File.......................................................    5

5    REPRESENTATIONS AND WARRANTIES.......................................................    5
     5.1      Due Organization and Authorization..........................................    5
     5.2      Collateral..................................................................    5
     5.3      Litigation..................................................................    6
     5.4      No Material Adverse Change in Financial Statements..........................    6
     5.5      Solvency....................................................................    6
     5.6      Regulatory Compliance.......................................................    6
     5.7      Subsidiaries................................................................    6
     5.8      Full Disclosure.............................................................    6

6    AFFIRMATIVE COVENANTS................................................................    7
     6.1      Government Compliance.......................................................    7
     6.2      Financial Statements, Reports, Certificates.................................    7
     6.3      Inventory; Returns..........................................................    8
     6.4      Taxes.......................................................................    8
     6.5      Insurance...................................................................    8
     6.6      Primary Accounts............................................................    8
     6.7      Financial Covenants.........................................................    8
     6.8      Further Assurances..........................................................    8

7    NEGATIVE COVENANTS...................................................................    9
     7.1      Dispositions................................................................    9
     7.2      Changes in Business, Ownership, Management or Business Locations............    9
     7.3      Mergers or Acquisitions.....................................................    9
     7.4      Indebtedness................................................................    9
     7.5      Encumbrance.................................................................    9
     7.6      Distributions; Investments..................................................    9
     7.7      Transactions with Affiliates................................................   10
     7.8      Subordinated Debt...........................................................   10
     7.9      Compliance..................................................................   10
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                         <C>
8    EVENTS OF DEFAULT....................................................................   10
     8.1      Payment Default.............................................................   10
     8.2      Covenant Default............................................................   10
     8.3      Material Adverse Change.....................................................   11
     8.4      Attachment..................................................................   11
     8.5      Insolvency..................................................................   11
     8.6      Other Agreements............................................................   11
     8.7      Judgments...................................................................   11
     8.8      Misrepresentations..........................................................   11

9    BANK'S RIGHTS AND REMEDIES...........................................................   11
     9.1      Rights and Remedies.........................................................   12
     9.2      Power of Attorney...........................................................   12
     9.3      Accounts Collection.........................................................   13
     9.4      Bank Expenses...............................................................   13
     9.5      Bank's Liability for Collateral.............................................   13
     9.6      Remedies Cumulative.........................................................   13
     9.7      Demand Waiver...............................................................   13

10   NOTICES..............................................................................   13

11   CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER...........................................   14

12   GENERAL PROVISIONS...................................................................   14
     12.1     Successors and Assigns......................................................   14
     12.2     Indemnification.............................................................   14
     12.3     Time of Essence.............................................................   14
     12.4     Severability of Provision...................................................   14
     12.5     Amendments in Writing, Integration..........................................   14
     12.6     Counterparts................................................................   15
     12.7     Survival....................................................................   15
     12.8     Confidentiality.............................................................   15
     12.9     Attorneys' Fees, Costs and Expenses.........................................   15

13   DEFINITIONS..........................................................................   15
     13.1     Definitions.................................................................   15
</TABLE>

                                       ii

<PAGE>

                                                                   EXHIBIT 10.12

      THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Agreement") dated
December 13, 2004, between SILICON VALLEY BANK ("Bank"), whose address is 3003
Tasman Drive, Santa Clara, California 95054 and STENTOR, INC. ("Borrower"),
whose address is 5000 Marina Blvd., Suite 100, Brisbane, California 94005-1811,
provides the terms on which Bank will lend to Borrower and Borrower will repay
Bank. This Agreement amends and restates in its entirety the Loan and Security
Agreement by and between the parties hereto dated January 10, 2001, as the same
has been modified from time to time (the "Original Loan Agreement"). The parties
agree as follows:

1     ACCOUNTING AND OTHER TERMS

      Accounting terms not defined in this Agreement will be construed following
GAAP. Calculations and determinations must be made following GAAP. The term
"financial statements" includes the notes and schedules. The terms "including"
and "includes" always mean "including (or includes) without limitation," in this
or any Loan Document.

2     LOAN AND TERMS OF PAYMENT

2.1   CREDIT EXTENSIONS.

      Borrower will pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.

2.1.1 EQUIPMENT FACILITY.

      (a)   Subject to the terms and conditions of this Agreement, Bank agrees
to lend to Borrower, from time to time prior to the Commitment Termination Date,
equipment advances (each an "Equipment Advance" and collectively the "Equipment
Advances") in an aggregate amount not to exceed the Committed Equipment Line.
When repaid, the Equipment Advances may not be re-borrowed. The proceeds of the
Equipment Advances will be used solely to reimburse Borrower for the purchase of
Eligible Equipment purchased within 120 days of the Equipment Advance. Each
Equipment Advance shall be considered a promissory note evidencing the amounts
due hereunder for all purposes. Bank's obligation to lend hereunder shall
terminate on the earlier of (i) the occurrence and continuance of an Event of
Default, or (ii) the Commitment Termination Date. For purposes of this Section,
there shall be no more than six (6) Equipment Advances, and the minimum amount
of each Equipment Advance is $200,000. Not more than $1,500,000 of the Equipment
Advances may be used to finance the purchase of Eligible Equipment which is not
located in the United States.

      (b)   To obtain an Equipment Advance, Borrower will deliver to Bank a
completed Loan Supplement signed by a Responsible Officer or his or her
designee, copies of invoices for the Financed Equipment and such additional
information as Bank may request at least five (5) Business Days before the
proposed Funding Date. On each Funding Date, Bank will specify in the Loan
Supplement for each Equipment Advance, the Basic Rate, the Loan Factor, and the
Payment Dates. If Borrower satisfies the conditions of each Equipment Advance
specified herein, Bank will disburse such Equipment Advance by internal transfer
to Borrower's deposit account with Bank. Each Equipment Advance may not exceed
100% of the Original Stated Cost.

<PAGE>

      (c)   Bank's obligation to lend the undisbursed portion of the Committed
Equipment Line will terminate if, in Bank's sole discretion, there has been a
material adverse change in the general affairs, management, results of
operation, condition (financial or otherwise) or the prospects of Borrower,
whether or not arising from transactions in the ordinary course of business, or
there has been any material adverse deviation by Borrower from the most recent
business plan of Borrower presented to and accepted by Bank prior to the
execution of this Agreement.

      (d)   Term loans previously advanced by Bank to Borrower pursuant to the
Original Loan Agreement are set forth on Schedule 2.1.1 attached hereto (the
"Existing Equipment Term Loans"). The Existing Equipment Term Loans, to the
extent currently outstanding, shall for all purposes of this Agreement, be
"Equipment Advances" hereunder and be governed by all the terms and conditions
of this Agreement, except that the principal and interest of the Existing
Equipment Term Loans shall continue to be payable in accordance with the
amortization schedule set forth on Schedule 2.1.1, and except that the Existing
Term Loans shall not reduce availability under the Committed Equipment Line.

2.1.2 REVOLVING ADVANCES.

(a)   Bank will make revolving advances ("Revolving Advances") not exceeding the
Committed Revolving Line. Amounts borrowed under this Section may be repaid and
reborrowed during the term of this Agreement. Amounts borrowed hereunder may be
prepaid at any time without penalty or premium.

(b)   To obtain a Revolving Advance, Borrower must notify Bank by facsimile or
telephone by 12:00 p.m. Pacific time on the Business Day the Revolving Advance
is to be made. Borrower must promptly confirm the notification by delivering to
Bank the Payment/Advance Form. Bank will credit Revolving Advances to Borrower's
deposit account. Bank may make Revolving Advances under this Agreement based on
instructions from a Responsible Officer or his or her designee or without
instructions if the Revolving Advances are necessary to meet Obligations which
have become due. Bank may rely on any telephone notice given by a person whom
Bank believes is a Responsible Officer or designee. Borrower will indemnify Bank
for any loss Bank suffers due to such reliance.

(c)   The Committed Revolving Line terminates on the Revolving Maturity Date,
when all Revolving Advances are immediately payable.

2.2   INTEREST RATE, PAYMENTS.

2.2.1 AS TO EQUIPMENT ADVANCES.

      (a)   Principal and Interest Payments On Payment Dates. Borrower will
repay the Equipment Advances on the terms provided in the applicable Loan
Supplement. Borrower will make payments monthly in advance of principal and
accrued interest for each Equipment Advance (collectively, "Scheduled
Payments"), on the first day of the month following the Funding Date (or
commencing on the Funding Date if the Funding Date is the first day of the
month) with respect to such Equipment Advance and continuing thereafter during
the Repayment Period on the first day of each calendar

                                       2
<PAGE>

month (each a "Payment Date"), in an amount equal to the Loan Factor multiplied
by the Loan Amount for such Equipment Advance as of such Payment Date. All
unpaid principal and accrued interest is due and payable in full on the last
Payment Date with respect to such Equipment Advance. Payments received after
12:00 noon Pacific time are considered received at the opening of business on
the next Business Day. An Equipment Advance may only be prepaid in accordance
with Section 2.2.1(f).

      (b)   Interest Rate. Borrower will pay interest on the Payment Dates (as
described above) at the per annum rate of interest equal to the Basic Rate
determined by Bank as of the Funding Date for each Equipment Advance in
accordance with the definition of the Basic Rate. Any amounts outstanding during
the continuance of an Event of Default shall bear interest at a per annum rate
equal to the Basic Rate plus four and one-half percent (4.5%). If any change in
the law increases Bank's expenses or decreases its return from the Equipment
Advances, Borrower will pay Bank upon request the amount of such increase or
decrease.

      (c)   Interim Payment. In addition to the Scheduled Payments, on the
Funding Date for each Equipment Advance (unless the Funding Date is the first
Business Day of the month) Borrower shall pay to Bank an amount (the "Interim
Payment") equal to (i) the initial Equipment Advance multiplied by (ii) the sum
of the Prime Rate plus 2 percentage points, divided by (iii) 360 days and then
multiplied by (iv) the number of days from the actual Funding Date of the
Equipment Advance until the first day of the month following such Equipment
Advance.

      (d)   Final Payment. On the Maturity Date with respect to each Equipment
Advance, Borrower will pay the unpaid principal and accrued interest and all
other amounts due on such date with respect to such Equipment Advance.

      (e)   Mandatory Prepayment Upon an Acceleration. If the Equipment Advances
are accelerated following the occurrence of an Event of Default or otherwise,
then Borrower will immediately pay to Bank (without duplication) (i) all due and
unpaid Scheduled Payments (including principal and interest) with respect to
each Equipment Advance, (ii) all remaining unpaid principal, (iii) all accrued
unpaid interest, including the default rate of interest, to the date of the
prepayment, and (iv) all other sums, if any, that shall have become due and
payable with respect to any Equipment Advance.

      (f)   Permitted Prepayment of Loans. Borrower shall have the option to
prepay all, but not less than all, of (x) the Existing Equipment Term Loans or
(y) the other Equipment Advances advanced by Bank under this Agreement, provided
Borrower (i) provides written notice to Bank of its election to prepay the
Existing Equipment Term Loans or the Equipment Advances at least three (3)
Business Days prior to such prepayment, and (ii) pays, on the date of the
prepayment (A) all unpaid principal with respect to such Equipment Advance; (B)
all unpaid accrued interest to the date of the prepayment; and (C) all other
sums, if any, that shall have become due and payable hereunder with respect to
this Agreement. Prepayments on the Equipment Advances may be made at any time
without penalty or premium.

2.2.2 AS TO REVOLVING ADVANCES.

      (a)   Interest Rate. Revolving Advances accrue interest on the outstanding
principal balance at a per annum rate equal to the greater of (X) one-half of
one

                                       3
<PAGE>

percentage point (.50%) above the Prime Rate; and (Y) four and three-quarters
percent (4.75%) After an Event of Default, Obligations accrue interest at 4.5
percent above the rate effective immediately before the Event of Default. The
interest rate increases or decreases when the Prime Rate changes. Interest is
computed on a 360 day year for the actual number of days elapsed.

      (b)   Payments. Interest due on the Committed Revolving Line is payable on
the 1st of each month. Payments received after 12:00 noon Pacific time are
considered received at the opening of business on the next Business Day. When a
payment is due on a day that is not a Business Day, the payment is due the next
Business Day and additional interest shall accrue.

2.2.3 REQUEST TO DEBIT ACCOUNTS.

      Bank may debit any of Borrower's deposit accounts, whether now or
hereafter existing, for principal and interest payments owing or any amounts
Borrower owes Bank. Bank will promptly notify Borrower when it debits Borrower's
accounts. These debits are not a set-off.

2.3   FEES.

      Borrower will pay:

(a)   Loan Fees. A fully earned, non-refundable Facility Fee of $22,500
(including documentation and other fees) due on the Closing Date, and an Advance
Fee of $2,500 per Revolving Advance (not to exceed $2,500 in any calendar
quarter) due and payable on the Funding Date of each Revolving Advance.

(b)   Bank Expenses. All Bank Expenses (including reasonable attorneys' fees and
reasonable expenses) incurred through and after the date of this Agreement, are
payable when due.

3     CONDITIONS OF LOANS

3.1   CONDITIONS PRECEDENT TO INITIAL CREDIT EXTENSION.

      Bank's obligation to make the initial Credit Extension is subject to the
condition precedent that it receive the agreements, documents and fees it
requires.

3.2   CONDITIONS PRECEDENT TO ALL CREDIT EXTENSIONS.

      Bank's obligations to make each Credit Extension, including the initial
Credit Extension, is subject to the following:

(a)   timely receipt of any Payment/Advance Form; and

(b)   the representations and warranties in Section 5 must be materially true on
the date of the Payment/Advance Form and on the effective date of each Credit
Extension and no Event of Default may have occurred and be continuing, or result
from the Credit Extension. Each Credit Extension is Borrower's representation
and warranty on that date that the representations and warranties of Section 5
remain true.

                                       4
<PAGE>

4     CREATION OF SECURITY INTEREST

4.1   GRANT OF SECURITY INTEREST.

      Borrower grants Bank a continuing security interest in all presently
existing and later acquired Collateral to secure all Obligations and performance
of each of Borrower's duties under the Loan Documents. Except for Permitted
Liens, any security interest will be a first priority security interest in the
Collateral. Bank may place a "hold" on any deposit account pledged as
Collateral. If the Agreement is terminated, Bank's lien and security interest in
the Collateral will continue until Borrower fully satisfies its Obligations.

4.2   AUTHORIZATION TO FILE.

      Borrower authorizes Bank to file financing statements without notice to
Borrower, with all appropriate jurisdictions, as Bank deems appropriate, in
order to perfect or protect Bank's interest in the Collateral.

5     REPRESENTATIONS AND WARRANTIES

      Borrower represents and warrants as follows:

5.1   DUE ORGANIZATION AND AUTHORIZATION.

      Borrower and each Subsidiary is duly existing and in good standing in its
state of formation and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of
property requires that it be qualified, except where the failure to do so could
not reasonably be expected to cause a Material Adverse Change.

      The execution, delivery and performance of the Loan Documents have been
duly authorized, and do not conflict with Borrower's formation documents, nor
constitute an event of default under any material agreement by which Borrower is
bound. Borrower is not in default under any agreement to which or by which it is
bound in which the default could reasonably be expected to cause a Material
Adverse Change.

5.2   COLLATERAL.

      Borrower has good title to the Collateral, free of Liens except Permitted
Liens. Borrower has no other deposit account, other than the deposit accounts
described in the Schedule. The Accounts are bona fide, existing obligations, and
the service or property has been performed or delivered to the account debtor or
its agent for immediate shipment to and unconditional acceptance by the account
debtor. The Collateral is not in the possession of any third party bailee (such
as at a warehouse). In the event that Borrower, after the date hereof, intends
to store or otherwise deliver the Collateral to such a bailee, then Borrower
will receive the prior written consent of Bank and such bailee must acknowledge
in writing that the bailee is holding such Collateral for the benefit of Bank.
All Inventory is in all material respects of good and marketable quality, free
from material defects.

                                       5
<PAGE>

5.3   LITIGATION.

      Except as shown in the Schedule, there are no actions or proceedings
pending or, to the knowledge of Borrower's Responsible Officers, threatened by
or against Borrower or any Subsidiary in which a likely adverse decision could
reasonably be expected to cause a Material Adverse Change.

5.4   NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.

      All consolidated financial statements for Borrower delivered to Bank
fairly present in all material respects Borrower's consolidated financial
condition and Borrower's consolidated results of operations. There has not been
any material deterioration in Borrower's consolidated financial condition since
the date of the most recent financial statements submitted to Bank.

5.5   SOLVENCY.

      The fair salable value of Borrower's assets (including goodwill minus
disposition costs) exceeds the fair value of its liabilities; the Borrower is
not left with unreasonably small capital after the transactions in this
Agreement; and Borrower is able to pay its debts (including trade debts) as they
mature.

5.6   REGULATORY COMPLIANCE.

      Borrower is not an "investment company" or a company "controlled" by an
"investment company" under the Investment Company Act. Borrower is not engaged
as one of its important activities in extending credit for margin stock (under
Regulations T and U of the Federal Reserve Board of Governors). Borrower has
complied in all material respects with the Federal Fair Labor Standards Act.
Borrower has not violated any laws, ordinances or rules, the violation of which
could reasonably be expected to cause a Material Adverse Change. None of
Borrower's or any Subsidiary's properties or assets has been used by Borrower or
any Subsidiary or, to the best of Borrower's knowledge, by previous Persons, in
disposing, producing, storing, treating, or transporting any hazardous substance
other than legally. Borrower and each Subsidiary has timely filed all required
tax returns and paid, or made adequate provision to pay, all material taxes,
except those being contested in good faith with adequate reserves under GAAP.
Borrower and each Subsidiary has obtained all consents, approvals and
authorizations of, made all declarations or filings with, and given all notices
to, all government authorities that are necessary to continue its business as
currently conducted, except where the failure to do so could not reasonably be
expected to cause a Material Adverse Change.

5.7   SUBSIDIARIES.

      Borrower does not own any stock, partnership interest or other equity
securities except for Permitted Investments.

5.8   FULL DISCLOSURE.

      No written representation, warranty or other statement of Borrower in any
certificate or written statement given to Bank (taken together with all such
written

                                       6
<PAGE>

certificates and written statements to Bank) contains any untrue statement of a
material fact or omits to state a material fact necessary to make the statements
contained in the certificates or statements not misleading, it being recognized
by Bank that the projections and forecasts provided by Borrower in good faith
and based upon reasonable assumptions are not viewed as facts and that actual
results during the period or periods covered by such projections and forecasts
may differ from the projected and forecasted results.

6     AFFIRMATIVE COVENANTS

      Borrower will do all of the following for so long as Bank has an
obligation to lend, or there are outstanding Obligations:

6.1   GOVERNMENT COMPLIANCE.

      Borrower will maintain its and all Subsidiaries' legal existence and good
standing in its jurisdiction of formation and maintain qualification in each
jurisdiction in which the failure to so qualify would reasonably be expected to
cause a material adverse effect on Borrower's business or operations. Borrower
will comply, and have each Subsidiary comply, with all laws, ordinances and
regulations to which it is subject, noncompliance with which could have a
material adverse effect on Borrower's business or operations or would reasonably
be expected to cause a Material Adverse Change.

6.2   FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.

(a)   Borrower will deliver to Bank: (i) as soon as available, but no later than
30 days after the last day of each month, a company prepared consolidated
balance sheet and income statement covering Borrower's consolidated operations
during the period certified by a Responsible Officer and in a form acceptable to
Bank; (ii) as soon as available, but no later than 120 days after the last day
of Borrower's fiscal year, audited consolidated financial statements prepared
under GAAP, consistently applied, together with an unqualified opinion on the
financial statements from an independent certified public accounting firm
reasonably acceptable to Bank; provided that the audited financial statements
for the fiscal year ending December 31, 2003 shall be delivered to Bank not
later than January 31, 2005; (iii) a prompt report of any legal actions pending
or threatened against Borrower or any Subsidiary that could result in damages or
costs to Borrower or any Subsidiary of $100,000 or more; and (iv) budgets, sales
projections, operating plans or other financial information Bank reasonably
requests.

(b)   Within 45 days after the last day of Borrower's fiscal year, Borrower will
deliver to Bank the annual financial projection.

(c)   Borrower will deliver to Bank a Compliance Certificate in the form of
Exhibit D hereto together with the financial statements delivered pursuant to
Section 6.2(a)(i) above.

(d)   Allow Bank to audit Borrower's Collateral at Borrower's expense. Such
audits will be conducted not more than once per calendar year so long as no
Event of Default has occurred and is continuing.

                                       7
<PAGE>

6.3   INVENTORY; RETURNS.

      Borrower will keep all Inventory in good and marketable condition, free
from material defects. Returns and allowances between Borrower and its account
debtors will follow Borrower's customary practices as they exist at execution of
this Agreement. Borrower must promptly notify Bank of all returns, recoveries,
disputes and claims, that involve more than $100,000.

6.4   TAXES.

      Borrower will make, and cause each Subsidiary to make, timely payment of
all material federal, state, and local taxes or assessments and will deliver to
Bank, on demand, appropriate certificates attesting to the payment.

6.5   INSURANCE.

      Borrower will keep its business and the Collateral insured for risks and
in amounts, as Bank may reasonably request. Insurance policies will be in a
form, with companies, and in amounts that are satisfactory to Bank in Bank's
reasonable discretion. All property policies will have a lender's loss payable
endorsement showing Bank as an additional loss payee and all liability policies
will show the Bank as an additional insured and provide that the insurer must
give Bank at least 20 days notice before canceling its policy. At Bank's
request, Borrower will deliver certified copies of policies and evidence of all
premium payments. Proceeds payable under any policy will, at Bank's option, be
payable to Bank on account of the Obligations.

6.6   PRIMARY ACCOUNTS.

      Borrower will maintain its primary depository and operating accounts with
Bank, and shall maintain at least 85% of its available investable funds with
Bank or an Affiliate of Bank at all times.

6.7   FINANCIAL COVENANTS.

      (a)   MINIMUM EBITDA. Borrower shall maintain as of the last day of each
fiscal quarter EBITDA of not less than $1,100,000 for the quarter ended June 30,
2004, $1,600,000 for the quarter ending September 30, 2004, and $2,190,000 for
the quarter ending December 31, 2004. The minimum EBITDA for fiscal years 2005
and thereafter will be mutually agreed to by Bank and Borrower on or before
January 31 of each year.

      (b)   MINIMUM LIQUIDITY. Borrower shall maintain as of the last day of
each month a ratio of (i) unrestricted cash and cash equivalents plus 60% of
Accounts to (ii) total outstanding Obligations of not less than 1.75 to 1.00.

6.8   FURTHER ASSURANCES.

      Borrower will execute any further instruments and take further action as
Bank reasonably requests to perfect or continue Bank's security interest in the
Collateral or to effect the purposes of this Agreement.

                                       8
<PAGE>

7     NEGATIVE COVENANTS

      Borrower will not do any of the following without Bank's prior written
consent, which will not be unreasonably withheld:

7.1   DISPOSITIONS.

      Convey, sell, lease, transfer or otherwise dispose of (collectively
"Transfer"), or permit any of its Subsidiaries to Transfer, all or any part of
its business or property, except for Transfers (i) of Inventory in the ordinary
course of business; (ii) of non-exclusive licenses and similar arrangements for
the use of the property of Borrower or its Subsidiaries in the ordinary course
of business; or (iii) of worn-out or obsolete Equipment.

7.2   CHANGES IN BUSINESS, OWNERSHIP, MANAGEMENT OR BUSINESS LOCATIONS.

      Engage in or permit any of its Subsidiaries to engage in any business
other than the businesses currently engaged in by Borrower or reasonably related
thereto or have a material change in its senior management or change in its
ownership of greater than 25% (other than by the sale of Borrower's equity
securities in a public offering or to venture capital investors approved by
Bank). Borrower will not, without at least 30 days prior written notice,
relocate its chief executive office or add any new offices or business
locations.

7.3   MERGERS OR ACQUISITIONS.

      Merge or consolidate, or permit any of its Subsidiaries to merge or
consolidate, with any other Person, or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person, except where (i) no Event of Default has occurred
and is continuing or would result from such action during the term of this
Agreement and (ii) such transaction would not result in a decrease of more than
25% of Tangible Net Worth. A Subsidiary may merge or consolidate into another
Subsidiary or into Borrower.

7.4   INDEBTEDNESS.

      Create, incur, assume, or be liable for any Indebtedness, or permit any
Subsidiary to do so, other than Permitted Indebtedness.

7.5   ENCUMBRANCE.

      Create, incur, or allow any Lien on any of its property, or assign or
convey any right to receive income, including the sale of any Accounts, or
permit any of its Subsidiaries to do so, except for Permitted Liens, or permit
any Collateral not to be subject to the first priority security interest granted
here, subject to Permitted Liens.

7.6   DISTRIBUTIONS; INVESTMENTS.

      Except as permitted by Section 7.3 above (i) directly or indirectly
acquire or own any Person, or make any Investment in any Person, other than
Permitted Investments,

                                       9
<PAGE>

or permit any of its Subsidiaries to do so, or (ii) pay any dividends or make
any distribution or payment or redeem, retire or purchase any capital stock,
other than for repurchases of stock in connection with the termination or other
departure of Borrower's employees, provided that the amount paid therefore shall
not exceed $150,000 in any fiscal year and no such payment may be made while a
Default or Event of Default has occurred and is continuing.

7.7   TRANSACTIONS WITH AFFILIATES.

      Directly or indirectly enter into or permit any material transaction with
any Affiliate except transactions that are in the ordinary course of Borrower's
business and on terms no less favorable to Borrower than would be obtained in an
arm's length transaction with a non-affiliated Person.

7.8   SUBORDINATED DEBT.

      Make or permit any payment on any Subordinated Debt, except under the
terms of the Subordinated Debt, or amend any provision in any document relating
to the Subordinated Debt without Bank's prior written consent.

7.9   COMPLIANCE.

      Become an "investment company" or a company controlled by an "investment
company," under the Investment Company Act of 1940 or undertake as one of its
important activities extending credit to purchase or carry margin stock, or use
the proceeds of any Credit Extension for that purpose; fail to meet the minimum
funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair
Labor Standards Act or violate any other law or regulation, if the violation
could reasonably be expected to have a material adverse effect on Borrower's
business or operations or would reasonably be expected to cause a Material
Adverse Change, or permit any of its Subsidiaries to do so.

8     EVENTS OF DEFAULT

      Any one of the following is an Event of Default:

8.1   PAYMENT DEFAULT.

      If Borrower fails to pay any of the Obligations within 3 days after their
due date. During the additional period the failure to cure the default is not an
Event of Default (but no Credit Extension will be made during the cure period);

8.2   COVENANT DEFAULT.

      If Borrower violates any financial covenant contained in Section 6.7 or
any covenant in Section 7 or does not perform or observe any other material
term, condition or covenant in this Agreement, any Loan Documents, or in any
agreement between Borrower and Bank and as to any default under a term,
condition or covenant that can be cured, has not cured the default within 10
days after it occurs, or if the default cannot be cured within 10 days or cannot
be cured after Borrower's attempts within 10 day period, and the default may be
cured within a reasonable time, then Borrower has an

                                       10
<PAGE>

additional period (of not more than 30 days) to attempt to cure the default.
During the additional time, the failure to cure the default is not an Event of
Default (but no Credit Extensions will be made during the cure period);

8.3   MATERIAL ADVERSE CHANGE.

      If there (i) occurs a material impairment in the perfection or priority of
the Bank's security interest in the Collateral or in the value of such
Collateral taken as a whole which is not covered by adequate insurance or (ii)
is a material impairment of the prospect of repayment of any portion of the
Obligations.

8.4   ATTACHMENT.

      If any material portion of Borrower's assets is attached, seized, levied
on, or comes into possession of a trustee or receiver and the attachment,
seizure or levy is not removed in 10 days, or if Borrower is enjoined,
restrained, or prevented by court order from conducting a material part of its
business or if a judgment or other claim becomes a Lien on a material portion of
Borrower's assets, or if a notice of lien, levy, or assessment is filed against
any of Borrower's assets by any government agency and not paid within 10 days
after Borrower receives notice. These are not Events of Default if stayed or if
a bond is posted pending contest by Borrower (but no Credit Extensions will be
made during the cure period);

8.5   INSOLVENCY.

      If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not
dismissed or stayed within 60 days (but no Credit Extensions will be made before
any Insolvency Proceeding is dismissed);

8.6   OTHER AGREEMENTS.

      If there is a default in any agreement between Borrower and a third party
that gives the third party the right to accelerate any Indebtedness exceeding
$100,000 or that could cause a Material Adverse Change;

8.7   JUDGMENTS.

      If a money judgment(s) in the aggregate of at least $100,000 is rendered
against Borrower and is unsatisfied and unstayed for 10 days (but no Credit
Extensions will be made before the judgment is stayed or satisfied); or

8.8   MISREPRESENTATIONS.

      If Borrower or any Person acting for Borrower makes any material
misrepresentation or material misstatement now or later in any warranty or
representation in this Agreement or in any writing delivered to Bank or to
induce Bank to enter this Agreement or any Loan Document.

9     BANK'S RIGHTS AND REMEDIES

                                       11
<PAGE>

9.1   RIGHTS AND REMEDIES.

      When an Event of Default occurs and continues Bank may, without notice or
demand, do any or all of the following:

(a)   Declare all Obligations immediately due and payable (but if an Event of
Default described in Section 8.5 occurs all Obligations are immediately due and
payable without any action by Bank);

(b)   Stop advancing money or extending credit for Borrower's benefit under this
Agreement or under any other agreement between Borrower and Bank;

(c)   Settle or adjust disputes and claims directly with account debtors for
amounts, on terms and in any order that Bank considers advisable;

(d)   Make any payments and do any acts it considers necessary or reasonable to
protect its security interest in the Collateral. Borrower will assemble the
Collateral if Bank requires and make it available as Bank designates. Bank may
enter premises where the Collateral is located, take and maintain possession of
any part of the Collateral, and pay, purchase, contest, or compromise any Lien
which appears to be prior or superior to its security interest and pay all
expenses incurred. Borrower grants Bank a license to enter and occupy any of its
premises, without charge, to exercise any of Bank's rights or remedies;

(e)   Apply to the Obligations any (i) balances and deposits of Borrower it
holds, or (ii) any amount held by Bank owing to or for the credit or the account
of Borrower;

(f)   Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale,
advertise for sale, and sell the Collateral; and

(g)   Dispose of the Collateral according to the Code.

9.2   POWER OF ATTORNEY.

      Effective only when an Event of Default occurs and continues, Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower's name
on any checks or other forms of payment or security; (ii) sign Borrower's name
on any invoice or bill of lading for any Account or drafts against account
debtors, (iii) make, settle, and adjust all claims under Borrower's insurance
policies; (iv) settle and adjust disputes and claims about the Accounts directly
with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the name of Bank or a third party as the Code
permits. Bank may exercise the power of attorney to sign Borrower's name on any
documents necessary to perfect or continue the perfection of any security
interest regardless of whether an Event of Default has occurred. Bank's
appointment as Borrower's attorney in fact, and all of Bank's rights and powers,
coupled with an interest, are irrevocable until all Obligations have been fully
repaid and performed and Bank's obligation to provide Credit Extensions
terminates.

                                       12
<PAGE>

9.3   ACCOUNTS COLLECTION.

      When an Event of Default occurs and continues, (i) Bank may notify any
Person owing Borrower money of Bank's security interest in the funds and verify
the amount of the Account, and (ii) Borrower must collect all payments in trust
for Bank and, if requested by Bank, immediately deliver the payments to Bank in
the form received from the account debtor, with proper endorsements for deposit.

9.4   BANK EXPENSES.

      If Borrower fails to pay any amount or furnish any required proof of
payment to third persons, Bank may make all or part of the payment or obtain
insurance policies required in Section 6.5, and take any action under the
policies Bank deems prudent. Any amounts paid by Bank are Bank Expenses and
immediately due and payable, bearing interest at the then applicable rate and
secured by the Collateral. No payments by Bank are deemed an agreement to make
similar payments in the future or Bank's waiver of any Event of Default.

9.5   BANK'S LIABILITY FOR COLLATERAL.

      If Bank complies with reasonable banking practices and Section 9-207 of
the Code, it is not liable for: (a) the safekeeping of the Collateral; (b) any
loss or damage to the Collateral; (c) any diminution in the value of the
Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or
other person. Borrower bears all risk of loss, damage or destruction of the
Collateral.

9.6   REMEDIES CUMULATIVE.

      Bank's rights and remedies under this Agreement, the Loan Documents, and
all other agreements are cumulative. Bank has all rights and remedies provided
under the Code, by law, or in equity. Bank's exercise of one right or remedy is
not an election, and Bank's waiver of any Event of Default is not a continuing
waiver. Bank's delay is not a waiver, election, or acquiescence. No waiver is
effective unless signed by Bank and then is only effective for the specific
instance and purpose for which it was given.

9.7   DEMAND WAIVER.

      Borrower waives demand, notice of default or dishonor, notice of payment
and nonpayment, notice of any default, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts, documents,
instruments, chattel paper, and guarantees held by Bank on which Borrower is
liable.

10    NOTICES

      All notices or demands by any party about this Agreement or any other
related agreement must be in writing and be personally delivered or sent by an
overnight delivery service, by certified mail, postage prepaid, return receipt
requested, or by telefacsimile to the addresses set forth at the beginning of
this Agreement. A party may change its notice address by giving the other party
written notice.

                                       13
<PAGE>

11    CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

      California law governs the Loan Documents without regard to principles of
conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of
the State and Federal courts in Santa Clara County, California.

BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS
WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT.
EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

12    GENERAL PROVISIONS

12.1  SUCCESSORS AND ASSIGNS.

      This Agreement binds and is for the benefit of the successors and
permitted assigns of each party. Borrower may not assign this Agreement or any
rights under it without Bank's prior written consent which may be granted or
withheld in Bank's discretion. Bank has the right, without the consent of or
notice to Borrower, to sell, transfer, negotiate, or grant participation in all
or any part of, or any interest in, Bank's obligations, rights and benefits
under this Agreement.

12.2  INDEMNIFICATION.

      Borrower will indemnify, defend and hold harmless Bank and its officers,
employees, and agents against: (a) all obligations, demands, claims, and
liabilities asserted by any other party in connection with the transactions
contemplated by the Loan Documents; and (b) all losses or Bank Expenses
incurred, or paid by Bank from, following, or consequential to transactions
between Bank and Borrower (including reasonable attorneys fees and expenses),
except for losses caused by Bank's gross negligence or willful misconduct.

12.3  TIME OF ESSENCE.

      Time is of the essence for the performance of all obligations in this
Agreement.

12.4  SEVERABILITY OF PROVISION.

      Each provision of this Agreement is severable from every other provision
in determining the enforceability of any provision.

12.5  AMENDMENTS IN WRITING, INTEGRATION.

      All amendments to this Agreement must be in writing and signed by Borrower
and Bank. This Agreement represents the entire agreement about this subject
matter, and supersedes prior negotiations or agreements. All prior agreements,
understandings, representations, warranties, and negotiations between the
parties about the subject matter of this Agreement merge into this Agreement and
the Loan Documents.

                                       14
<PAGE>

12.6  COUNTERPARTS.

      This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when executed and
delivered, are an original, and all taken together, constitute one Agreement.

12.7  SURVIVAL.

      All covenants, representations and warranties made in this Agreement
continue in full force while any Obligations remain outstanding. The obligations
of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of
limitations for actions that may be brought against Bank have run.

12.8  CONFIDENTIALITY.

      In handling any confidential information, Bank will exercise the same
degree of care that it exercises for its own proprietary information, but
disclosure of information may be made (i) to Bank's subsidiaries or affiliates
in connection with their business with Borrower, (ii) to prospective transferees
or purchasers of any interest in the loans, (iii) as required by law,
regulation, subpoena, or other order, (iv) as required in connection with Bank's
examination or audit and (v) as Bank considers appropriate in exercising
remedies under this Agreement. Confidential information does not include
information that either: (a) is in the public domain or in Bank's possession
when disclosed to Bank, or becomes part of the public domain after disclosure to
Bank; or (b) is disclosed to Bank by a third party, if Bank does not know that
the third party is prohibited from disclosing the information.

12.9  ATTORNEYS' FEES, COSTS AND EXPENSES.

      In any action or proceeding between Borrower and Bank arising out of the
Loan Documents, the prevailing party will be entitled to recover its reasonable
attorneys' fees and other reasonable costs and expenses incurred, in addition to
any other relief to which it may be entitled.

13    DEFINITIONS

13.1  DEFINITIONS.

      In this Agreement:

      "ACCOUNTS" are all existing and later arising accounts, contract rights,
and other obligations owed Borrower in connection with its sale or lease of
goods (including licensing software and other technology) or provision of
services, all credit insurance, guaranties, other security and all merchandise
returned or reclaimed by Borrower and Borrower's Books relating to any of the
foregoing.

         "AFFILIATE" of a Person is a Person that owns or controls directly or
indirectly the Person, any Person that controls or is controlled by or is under
common control with the Person, and each of that Person's senior executive
officers, directors, partners and, for any Person that is a limited liability
company, that Person's managers and members.

                                       15
<PAGE>

      "BANK EXPENSES" are all audit fees and expenses and reasonable costs and
expenses (including reasonable attorneys' fees and expenses) for preparing,
negotiating, administering, defending and enforcing the Loan Documents
(including appeals or Insolvency Proceedings).

      "BASIC RATE" is, as of the Funding Date, the per annum rate of interest
(based on a year of 360 days) equal to the sum of (a) the U.S. Treasury note
yield to maturity for a term equal to the Treasury Note Maturity as quoted in
The Wall Street Journal on the day the Loan Supplement is prepared, plus (b) the
Loan Margin.

      "BORROWER'S BOOKS" are all Borrower's books and records including ledgers,
records regarding Borrower's assets or liabilities, the Collateral, business
operations or financial condition and all computer programs or discs or any
equipment containing the information.

      "BUSINESS DAY" is any day that is not a Saturday, Sunday or a day on which
the Bank is closed.

      "CLOSING DATE" is the date of this Agreement.

      "CODE" is the California Uniform Commercial Code.

      "COLLATERAL" is the property described on Exhibit A.

      "COMMITMENT TERMINATION DATE" is the date 12 months from the date hereof.

      "COMMITTED EQUIPMENT LINE" is a Credit Extension of up to $5,000,000.

      "COMMITTED REVOLVING LINE" is an Advance of up to $10,000,000.

      "CONTINGENT OBLIGATION" is, for any Person, any direct or indirect
liability, contingent or not, of that Person for (i) any indebtedness, lease,
dividend, letter of credit or other obligation of another such as an obligation
directly or indirectly guaranteed, endorsed, co-made, discounted or sold with
recourse by that Person, or for which that Person is directly or indirectly
liable; (ii) any obligations for undrawn letters of credit for the account of
that Person; and (iii) all obligations from any interest rate, currency or
commodity swap agreement, interest rate cap or collar agreement, or other
agreement or arrangement designated to protect a Person against fluctuation in
interest rates, currency exchange rates or commodity prices; but "Contingent
Obligation" does not include endorsements in the ordinary course of business.
The amount of a Contingent Obligation is the stated or determined amount of the
primary obligation for which the Contingent Obligation is made or, if not
determinable, the maximum reasonably anticipated liability for it determined by
the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.

      "CREDIT EXTENSION" is each Revolving Advance, Equipment Advance or any
other extension of credit by Bank for Borrower's benefit.

                                       16
<PAGE>

      "EBITDA" is Borrower's consolidated earnings before interest expense,
income taxes, depreciation, amortization of intangible assets and other non-cash
charges made to Borrower's income.

      "ELIGIBLE EQUIPMENT" is general purpose computer equipment, office
equipment, engineering, test and laboratory equipment, furnishings, and, subject
to the limitations set forth below, Other Equipment that complies with all of
Borrower's representations and warranties to Bank and which is acceptable to
Bank in all respects. Equipment financed with the proceeds of Equipment Advances
may be new or used.

      "EQUIPMENT" is all present and future machinery, equipment, tenant
improvements, furniture, fixtures, vehicles, tools, parts and attachments in
which Borrower has any interest.

      "EQUIPMENT ADVANCE" is defined in Section 2.1.1.

      "ERISA" is the Employment Retirement Income Security Act of 1974, and its
regulations.

      "FINANCED EQUIPMENT" is defined in the Loan Supplement.

      "FUNDING DATE" is any date on which an Equipment Advance or Revolving
Advance is made to or on account of Borrower.

      "GAAP" is generally accepted accounting principles.

      "INDEBTEDNESS" is (a) indebtedness for borrowed money or the deferred
price of property or services, such as reimbursement and other obligations for
surety bonds and letters of credit, (b) obligations evidenced by notes, bonds,
debentures or similar instruments, (c) capital lease obligations and (d)
Contingent Obligations.

      "INSOLVENCY PROCEEDING" are proceedings by or against any Person under the
United States Bankruptcy Code, or any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, compositions, extensions
generally with its creditors, or proceedings seeking reorganization,
arrangement, or other relief.

      "INVENTORY" is present and future inventory in which Borrower has any
interest, including merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products intended for sale or
lease or to be furnished under a contract of service, of every kind and
description now or later owned by or in the custody or possession, actual or
constructive, of Borrower, including inventory temporarily out of its custody or
possession or in transit and including returns on any accounts or other proceeds
(including insurance proceeds) from the sale or disposition of any of the
foregoing and any documents of title.

      "INVESTMENT" is any beneficial ownership of (including stock, partnership
interest or other securities) any Person, or any loan, advance or capital
contribution to any Person.

      "LIEN" is a mortgage, lien, deed of trust, charge, pledge, security
interest or other encumbrance.

                                       17
<PAGE>

      "LOAN AMOUNT" is, with respect to any Equipment Advance, the amount of
such Equipment Advance.

      "LOAN DOCUMENTS" are, collectively, this Agreement, any note, or notes or
guaranties executed by Borrower or any guarantor, and any other present or
future agreement between Borrower and/or for the benefit of Bank in connection
with this Agreement, all as amended, extended or restated.

      "LOAN FACTOR" is the percentage which results from amortizing the
Equipment Advance over the Repayment Period, using the Basic Rate as the
interest rate.

      "LOAN MARGIN" is 450 basis points.

      "LOAN SUPPLEMENT" is attached as Exhibit B.

      "MATERIAL ADVERSE CHANGE" is defined in Section 8.3.

      "MATURITY DATE" is, with respect to each Equipment Advance, the last day
of the Repayment Period for such Equipment Advance, or if earlier, the date of
acceleration of such Equipment Advance by Bank following an Event of Default.

      "OBLIGATIONS" are debts, principal, interest, Bank Expenses and other
amounts Borrower owes Bank now or later, including cash management services,
letters of credit and foreign exchange contracts, if any and including interest
accruing after Insolvency Proceedings begin and debts, liabilities, or
obligations of Borrower assigned to Bank.

      "ORIGINAL STATED COST" is (i), the original cost to the Borrower of the
item of new Eligible Equipment (including, to the extent permitted hereunder,
any and all freight, installation, and tax) or (ii) the fair market value
assigned to such item of used Eligible Equipment by mutual agreement of Borrower
and Bank at the time of making of the Equipment Advance.

      "OTHER EQUIPMENT" is leasehold improvements, sales tax, freight and
installation expenses, intangible property such as computer software and
software licenses, equipment specifically designed or manufactured for Borrower,
other intangible property, limited use property and other similar property.
Unless otherwise agreed to by Bank not more than 35% of the Equipment financed
with the proceeds of Equipment Advances shall consist of Other Equipment.

     "PAYMENT/ADVANCE FORM" is a Loan Payment/Advance Request Form in the form
of Exhibit C attached to this Agreement.

      "PERMITTED INDEBTEDNESS" is:

      (a)   Borrower's indebtedness to Bank under this Agreement or the Loan
            Documents;

      (b)   Indebtedness existing on the Closing Date and shown on the Schedule;

      (c)   Subordinated Debt;

                                       18
<PAGE>

      (d)   Indebtedness to trade creditors and with respect to surety bonds and
            similar obligations incurred in the ordinary course of business;

      (e)   Indebtedness secured by Permitted Liens;

      (f)   other Indebtedness of Borrower not exceeding $100,000 in the
            aggregate outstanding at any time;

      (g)   Indebtedness with respect to capital lease obligations not to exceed
            $1,000,000 in the aggregate outstanding at any time; and

      (h)   extensions, renewals, refundings, refinancings, modifications,
            amendments and restatements of any of the Indebtedness in (a)
            through (g) above, provided that the principal amount thereof is not
            increased and the terms thereof are not modified to impose more
            burdensome terms upon Borrower.

      "PERMITTED INVESTMENTS" are:

      (a)   Investments shown on the Schedule and existing on the Closing Date;

      (b)   (i) marketable direct obligations issued or unconditionally
            guaranteed by the United States or its agency or any State maturing
            within 1 year from its acquisition, (ii) commercial paper maturing
            no more than 1 year after its creation and having the highest rating
            from either Standard & Poor's Corporation or Moody's Investors
            Service, Inc., (iii) Bank's certificates of deposit issued maturing
            no more than 1 year after issue;

      (c)   Investments consisting of the endorsement of negotiable instruments
            for deposit or collection or similar transactions in the ordinary
            course of Borrower's business;

      (d)   Investments consisting of (i) travel advances and employee
            relocation loans and other employee loans in the ordinary course of
            business not to exceed $100,000 in the aggregate at any time, and
            (ii) loans to employees, officers or directors relating to the
            purchase of equity securities of Borrower or its subsidiaries
            pursuant to employee stock purchase plans or agreements approved by
            Borrower's board of directors in an aggregate amount not at anytime
            to exceed $100,000;

      (e)   Investments consisting of notes receivable or prepaid royalties and
            other credit extensions, to customers and suppliers who are not
            Affiliates, in the ordinary course of business in an aggregate
            amount not to exceed $100,000;

      (f)   Investments in Subsidiaries not to exceed $1,500,000 in the
            aggregate in any fiscal year of Borrower; and

      (g)   other Investments aggregating not in excess of $500,000 at any time.

                                       19
<PAGE>

      "PERMITTED LIENS" are:

      (a)   Liens existing on the Closing Date and shown on the Schedule or
            arising under this Agreement or other Loan Documents;

      (b)   Liens for taxes, fees, assessments or other government charges or
            levies, either not delinquent or being contested in good faith and
            for which Borrower maintains adequate reserves on Borrower's Books,
            if they have no priority over any of Bank's security interests;

      (c)   Purchase money Liens (i) on Equipment acquired or held by Borrower
            or its Subsidiaries incurred for financing the acquisition of the
            Equipment, or (ii) existing on equipment when acquired, if the Lien
            is confined to the property and improvements and the proceeds of the
            equipment;

      (d)   Licenses or sublicenses granted in the ordinary course of Borrower's
            business and any interest or title of a licensor or under any
            license or sublicense, if the licenses and sublicenses permit
            granting Bank a security interest;

      (e)   Leases or subleases and licenses or sublicenses granted in the
            ordinary course of Borrower's business, if the leases, subleases,
            licenses and sublicenses permit granting Bank a security interest

      (f)   Liens to secure payment of worker's compensation, employment
            insurance, old age pensions or other social security obligations of
            Borrower in the ordinary course of business of Borrower; and

      (g)   Liens incurred in the extension, renewal or refinancing of the
            indebtedness secured by Liens described in (a) through (c), but any
            extension, renewal or replacement Lien must be limited to the
            property encumbered by the existing Lien and the principal amount of
            the indebtedness may not increase.

      "PERSON" is any individual, sole proprietorship, partnership, limited
liability company, joint venture, company association, trust, unincorporated
organization, association, corporation, institution, public benefit corporation,
firm, joint stock company, estate, entity or government agency.

      "PRIME RATE" is Bank's most recently announced "prime rate," even if it is
not Bank's lowest rate.

      "REPAYMENT PERIOD" as to the Equipment Advances, is 36 months.

      "RESPONSIBLE OFFICER" is each of the Chief Executive Officer, the
President, the Chief Financial Officer and the Controller of Borrower.

      "REVOLVING ADVANCE" is defined in Section 2.1.2.

      "REVOLVING MATURITY DATE" is the date 24 months from the date hereof.

                                       20
<PAGE>

      "SCHEDULE" is any attached schedule of exceptions.

      "SUBORDINATED DEBT" is debt incurred by Borrower subordinated to
Borrower's indebtedness owed to Bank and which is reflected in a written
agreement in a manner and form acceptable to Bank and approved by Bank in
writing.

      "SUBSIDIARY" is for any Person, or any other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled,
directly or indirectly, by the Person or one or more Affiliates of the Person.

      "TANGIBLE NET WORTH" is, on any date, the consolidated total assets of
Borrower and its Subsidiaries minus, (i) any amounts attributable to (a)
goodwill, (b) intangible items such as unamortized debt discount and expense,
patents, trade and service marks and names, copyrights and research and
development expenses except prepaid expenses, and (c) reserves not already
deducted from assets, and (ii) Total Liabilities.

      "TOTAL LIABILITIES" is on any day, obligations that should, under GAAP, be
classified as liabilities on Borrower's consolidated balance sheet, including
all Indebtedness, and current portion Subordinated Debt allowed to be paid, but
excluding all other Subordinated Debt.

      "TREASURY NOTE MATURITY" is 36 months.

                                       21
<PAGE>

This Amended and Restated Loan and Security Agreement is executed as of the date
first written above.

BORROWER:

STENTOR, INC.

By: [Signature by Authorized Agent]

Title: ______________________________

BANK:

SILICON VALLEY BANK

By: [Signature by Authorized Agent]

Title: ______________________________

                                       22
<PAGE>

                                                                   EXHIBIT 10.12

                                    EXHIBIT A

      The Collateral consists of all of Borrower's right, title and interest in
and to the following:

      All goods and equipment now owned or hereafter acquired, including,
without limitation, all machinery, fixtures, vehicles (including motor vehicles
and trailers), and any interest in any of the foregoing, and all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, wherever located;

      All inventory, now owned or hereafter acquired, including, without
limitation, all merchandise, raw materials, parts, supplies, packing and
shipping materials, work in process and finished products including such
inventory as is temporarily out of Borrower's custody or possession or in
transit and including any returns upon any accounts or other proceeds, including
insurance proceeds, resulting from the sale or disposition of any of the
foregoing and any documents of title representing any of the above;

      All contract rights and general intangibles now owned or hereafter
acquired, including, without limitation, goodwill, trademarks, servicemarks,
trade styles, trade names, patents, patent applications, leases, license
agreements, franchise agreements, blueprints, drawings, purchase orders,
customer lists, route lists, infringements, claims, computer programs, computer
discs, computer tapes, literature, reports, catalogs, design rights, income tax
refunds, payments of insurance and rights to payment of any kind;

      All now existing and hereafter arising accounts, contract rights,
royalties, license rights and all other forms of obligations owing to Borrower
arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by Borrower, whether or not earned by performance, and any
and all credit insurance, guaranties, and other security therefor, as well as
all merchandise returned to or reclaimed by Borrower;

      All documents, cash, deposit accounts, securities, securities
entitlements, securities accounts, investment property, financial assets,
letters of credit, certificates of deposit, instruments and chattel paper now
owned or hereafter acquired and Borrower's Books relating to the foregoing;

      All copyright rights, copyright applications, copyright registrations and
like protections in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; all trade secret
rights, including all rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the
protection of semiconductor chips, now owned or hereafter acquired; all claims
for damages by way of any past, present and future infringement of any of the
foregoing; and

      All Borrower's Books relating to the foregoing and any and all claims,
rights and interests in any of the above and all substitutions for, additions
and accessions to and proceeds thereof.

<PAGE>

      Notwithstanding the foregoing, the Collateral shall not be deemed to
include any copyrights, copyright applications, copyright registration and like
protection in each work of authorship and derivative work thereof, whether
published or unpublished, now owned or hereafter acquired; any patents, patent
applications and like protections including without limitation improvements,
divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same, trademarks, servicemarks and applications
therefor, whether registered or not, and the goodwill of the business of
Borrower connected with and symbolized by such trademarks, any trade secret
rights, including any rights to unpatented inventions, know-how, operating
manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; or any claims for damage by way of any past, present and
future infringement of any of the foregoing (collectively, the "Intellectual
Property"), except that the Collateral shall include the proceeds of all the
Intellectual Property that are accounts, (i.e. accounts receivable) of Borrower,
or general intangibles consisting of rights to payment, if a judicial authority
(including a U.S. Bankruptcy Court) holds that a security interest in the
underlying Intellectual Property is necessary to have a security interest in
such accounts and general intangibles of Borrower that are proceeds of the
Intellectual Property, then the Collateral shall automatically, and effective as
of the Closing Date, include the Intellectual Property to the extent necessary
to permit perfection of Bank's security interest in such accounts and general
intangibles of Borrower that are proceeds of the Intellectual Property.

      Borrower and Bank are parties to that certain Negative Pledge Agreement,
whereby Borrower, in connection with Bank's loan or loans to Borrower, has
agreed, among other things, not to sell, transfer, assign, mortgage, pledge,
lease, grant a security interest in, or encumber any of Borrower's Intellectual
Property, without Bank's consent.

                                       2
<PAGE>

                                                                   EXHIBIT 10.12

                                    EXHIBIT B

                        FORM OF LOAN AGREEMENT SUPPLEMENT

                        LOAN AGREEMENT SUPPLEMENT No. [ ]

LOAN AGREEMENT SUPPLEMENT No. [ ], dated______ , 200_ ("Supplement"), to the
Amended and Restated Loan and Security Agreement dated as of December __, 2004
(the "Loan Agreement) by and between the undersigned ("Borrower"), and Silicon
Valley Bank ("Bank"). Capitalized terms used herein but not otherwise defined
herein are used with the respective meanings given to such terms in the Loan
Agreement.

To secure the prompt payment by Borrower of all amounts from time to time
outstanding under the Loan Agreement, and the performance by Borrower of all the
terms contained in the Loan Agreement, Borrower grants Bank, a first priority
security interest in each item of equipment and other property described in
Annex A hereto, which equipment and other property shall be deemed to be
additional Financed Equipment and Collateral. The Loan Agreement is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.

Annex A (Equipment Schedule) and Annex B (Loan Terms Schedule) are attached
hereto.

The proceeds of the Loan should be transferred to Borrower's account with Bank
set forth below:

                  Bank Name:   Silicon Valley Bank
                  Account No.: ____________________

Borrower hereby certifies that (a) the foregoing information is true and correct
and authorizes Bank to endorse in its respective books and records, the Basic
Rate applicable to the Funding Date of the Loan contemplated in this Loan
Agreement Supplement and the principal amount set forth in the Loan Terms
Schedule; (b) the representations and warranties made by Borrower in the Loan
Agreement are true and correct on the date hereof and will be true and correct
on such Funding Date. No Event of Default has occurred and is continuing under
the Loan Agreement. This Supplement may be executed by Borrower and Bank in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.

This Supplement is delivered as of this day and year first above written.

SILICON VALLEY BANK                     STENTOR, INC.

By:___________________________________  By:___________________________________
   Name:______________________________     Name:______________________________
   Title:_____________________________     Title:_____________________________

Annex A - Description of Financed Equipment
Annex B - Loan Terms Schedule

<PAGE>

                              Annex A to Exhibit B

The Equipment being financed with the Equipment Advance which this Loan
Agreement Supplement is being executed is listed below (the "Financed
Equipment"). Upon the funding of such Equipment Advance, the Financed Equipment
listed on this schedule automatically shall be deemed to be a part of the
Collateral.

Description of Equipment:       Make      Model      Serial #      Invoice #

<PAGE>

                              Annex B to Exhibit B

                          LOAN TERMS SCHEDULE #________

Loan Funding Date: ____________, 200_

Original Loan Amount: $____________

Basic Rate:___________%

Loan Factor:___________%

Scheduled Payment Dates and Amounts*:

    One (1) payment of $______ due _____________
    ______ payment of $______ due monthly in advance from _____ through _______.
    One (1) payment of $_______ due ______________

Maturity Date:___________

Payment No.                 Payment Date
  1
  2
  3
  4
.. . .
 35
[36]
.. . .

*/    The amount of each Scheduled Payment will change as the Loan Amount
      changes.

December 13, 2004 // N

<PAGE>

                                                                   EXHIBIT 10.12

                                    EXHIBIT C

LOAN PAYMENT/ADVANCE REQUEST FORM
DEADLINE FOR SAME DAY PROCESSING IS 12:00 P.S.T.
FAX TO:                                                      DATE:______________

[ ] LOAN PAYMENT:

                            STENTOR, INC. (Borrower)

    From Account #____________________    To Account #____________________
                   (Deposit Account #)                  (Loan Account #)

    Principal $____________________and/or Interest $______________________

    All Borrower's representation and warranties in the Amended and Restated
    Loan and Security Agreement are true, correct and complete in all material
    respects up to and including the date of the transfer request for a loan
    payment, but those representations and warranties expressly referring to
    another date shall be true, correct and complete in all material respects as
    of that date:

    AUTHORIZED SIGNATURE:_________________________Phone Number:_________________

[ ] LOAN ADVANCE:

    COMPLETE OUTGOING WIRE REQUEST SECTION BELOW IF ALL OR A PORTION OF THE
    FUNDS FROM THIS LOAN ADVANCE ARE FOR AN OUTGOING WIRE.

    From Account #____________________    To Account #____________________
                    (Loan Account #)                   (Deposit Account #)

    Amount of Advance $_______________

    All Borrower's representation and warranties in the Amended and Restated
    Loan and Security Agreement are true, correct and complete in all material
    respects up to and including the date of the transfer request for an
    advance, but those representations and warranties expressly referring to
    another date shall be true, correct and complete in all material respects as
    of that date:

    AUTHORIZED SIGNATURE: ________________________Phone Number:_________________

    OUTGOING WIRE REQUEST

    COMPLETE ONLY IF ALL OR A PORTION OF FUNDS FROM THE LOAN ADVANCE ABOVE ARE
    TO BE WIRED.

    Deadline for same day processing is 12:00pm, P.S.T.

    Beneficiary Name:_________________    Amount of Wire: $_____________________

    Beneficiary Bank:_________________    Account Number:_______________________

    City and State:_______________________

    Beneficiary Bank Transit (ABA) #: __ __ __ __ Beneficiary Bank Code (Swift,
                                                  Sort, Chip, etc.):____________
                          (FOR INTERNATIONAL WIRE ONLY)

    Intermediary Bank:________________    Transit (ABA) #:______________________

    For Further Credit to:______________________________________________________

    Special Instruction:________________________________________________________

    By signing below, I (we) acknowledge and agree that my (our) funds transfer
    request shall be processed in accordance with and subject to the terms and
    conditions set forth in the agreements(s) covering funds transfer
    service(s), which agreements(s) were previously received and executed by me
    (us).

    Authorized Signature:____________   2nd Signature (If Required):____________

    Print Name/Title:________________   Print Name/Title:_______________________

    Telephone #______________________   Telephone #_____________________________

December 13, 2004 // N

<PAGE>

                                                                   EXHIBIT 10.12

                                   EXHIBIT D
                             COMPLIANCE CERTIFICATE

TO:     SILICON VALLEY BANK
        3003 Tasman Drive
        Santa Clara, CA 95054

FROM:   STENTOR, INC.

      The undersigned Responsible Officer of Stentor, Inc. ("Borrower")
certifies that under the terms and conditions of the Amended and Restated Loan
and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower
is in complete compliance for the period ending _______________ with all
required covenants except as noted below and (ii) all representations and
warranties in the Agreement are true and correct in all material respects on
this date. Attached are the required documents supporting the certification. The
Officer certifies that these are prepared in accordance with Generally Accepted
Accounting Principles (GAAP) consistently applied from one period to the next
except as explained in an accompanying letter or footnotes. The Responsible
Officer acknowledges that no borrowings may be requested at any time or date of
determination that Borrower is not in compliance with any of the terms of the
Agreement, and that compliance is determined not just at the date this
certificate is delivered.

  PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.

<TABLE>
<CAPTION>
REPORTING COVENANT                     REQUIRED                     COMPLIES
------------------                     --------                     --------
<S>                                    <C>                          <C>
Monthly financial statements + CC      Monthly within 30 days       Yes   No
Annual (Audited)                       FYE within 120 days          Yes   No
Annual projected financial statements  Annually within 45 days      Yes   No
</TABLE>

<TABLE>
<CAPTION>
FINANCIAL COVENANT                     REQUIRED            ACTUAL      COMPLIES
------------------                     --------            ------      --------
<S>                                    <C>                 <C>         <C>
Maintain on a Monthly Basis:
 Minimum Liquidity                     1.75:1.00           ____:1.00   Yes   No

Maintain on a Quarterly Basis:
 Minimum EBITDA                        $1,100,000 (Q2/04)  $_______    Yes   No
                                       $1,600,000 (Q3/04)
                                       $2,190,000 (Q4/04)
</TABLE>

Have there been updates to Borrower's intellectual property?            Yes / No

Borrower only has deposit accounts located at the following institutions:______.

COMMENTS REGARDING EXCEPTIONS:  See Attached.

                                                     BANK USE ONLY

                                        Received by:____________________________
                                                         AUTHORIZED SIGNER

                                        Date:___________________________________

                                        Verified:_______________________________
                                                        AUTHORIZED SIGNER

                                        Date:___________________________________

                                        Compliance Status:             Yes    No

<PAGE>

Sincerely,

STENTOR, INC.

________________________________________
SIGNATURE

________________________________________
TITLE

________________________________________
DATE

December 13, 2004 // N

<PAGE>

                         CORPORATE BORROWING RESOLUTION

BORROWER: STENTOR, INC.                       BANK: SILICON VALLEY BANK
          5000 MARINA BLVD., SUITE 100              3003 TASMAN DRIVE
          BRISBANE, CA 94005                        SANTA CLARA, CA 95054-1191

I, THE SECRETARY OR ASSISTANT SECRETARY OF STENTOR, INC. ("BORROWER"), CERTIFY
that Borrower is a corporation existing under the laws of the State of Delaware.

I certify that at a meeting of Borrower's Directors (or by other authorized
corporate action) duly held the following resolutions were adopted.

It is resolved that ANY ONE of the following officers of Borrower, whose name,
title and signature is below:

<TABLE>
<CAPTION>
      NAMES                 POSITIONS       ACTUAL SIGNATURES
      -----                 ---------       -----------------
<S>                   <C>                   <C>
___________________   ___________________   ___________________
___________________   ___________________   ___________________
___________________   ___________________   ___________________
___________________   ___________________   ___________________
</TABLE>

may act for Borrower and:

      BORROW MONEY. Borrow money from Silicon Valley Bank ("Bank").

      EXECUTE LOAN DOCUMENTS. Execute any loan documents Bank requires.

      GRANT SECURITY. Grant Bank a security interest in any of Borrower's
      assets.

      NEGOTIATE ITEMS. Negotiate or discount all drafts, trade acceptances,
      promissory notes, or other indebtedness in which Borrower has an interest
      and receive cash or otherwise use the proceeds.

      LETTERS OF CREDIT. Apply for letters of credit from Bank.

      FOREIGN EXCHANGE CONTRACTS. Execute spot or forward foreign exchange
      contracts.

      ISSUE WARRANTS. Issue warrants for Borrower's stock.

      FURTHER ACTS. Designate other individuals to request advances, pay fees
      and costs and execute other documents or agreements (including documents
      or agreement that waive Borrowers right to a jury trial) they think
      necessary to effectuate these Resolutions.

Further resolved that all acts authorized by these Resolutions and performed
before they were adopted are ratified. These Resolutions remain in effect and
Bank may rely on them until Bank receives written notice of their revocation.

I certify that the persons listed above are Borrower's officers with the titles
and signatures shown following their names and that these resolutions have not
been modified are currently effective.

<PAGE>

CERTIFIED TO AND ATTESTED BY:

X ______________________________________________
   *Secretary or Assistant Secretary

X ______________________________________________

*NOTE: In case the Secretary or other certifying officer is designated by the
foregoing resolutions as one of the signing officers, this resolution should
also be signed by a second Officer or Director of Borrower.

December 13, 2004 // <<MY Initials>>

                                        2<PAGE>

                                                                    EXHIBIT 10.1

                                CREDIT AGREEMENT

      THIS CREDIT AGREEMENT ("Agreement") is entered into as of October 26,
2004, by and between UNIVERSAL TECHNICAL INSTITUTE, INC., a Delaware corporation
("Borrower"), dba UNIVERSAL TECHNICAL INSTITUTE OF DELAWARE, and WELLS FARGO
BANK, NATIONAL ASSOCIATION ("Bank").

                                    RECITALS

      Borrower has requested that Bank extend or continue credit to Borrower as
described below, and Bank has agreed to provide such credit to Borrower on the
terms and conditions contained herein.

      NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Bank and Borrower hereby agree as follows:

                                   ARTICLE I.
                                  CREDIT TERMS

      SECTION 1.1 LINE OF CREDIT.

            (a) Line of Credit. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time
under a line of credit ("Line of Credit"), up to and including the Line of
Credit Maturity Date, not to exceed at any time the aggregate principal amount
of the Line of Credit Commitment, the proceeds of which shall be used for
working capital and other general corporate purposes. Borrower's obligation to
repay advances under the Line of Credit shall be evidenced by a promissory note
substantially in the form of Exhibit "B" attached hereto ("Line of Credit
Note"), all terms of which are incorporated herein by this reference.

            (b) Limitation on Borrowings. Outstanding borrowings under the Line
of Credit shall not at any time exceed an aggregate of the Line of Credit
Commitment.

            (c) Letter of Credit Subfeature. As a subfeature under the Line of
Credit, Bank agrees from time to time during the term thereof up to and
including the Line of Credit Maturity Date to issue or cause an affiliate to
issue standby letters of credit for the account of Borrower to finance its
operating and business requirements or those of its Subsidiaries (each, a
"Letter of Credit" and collectively, "Letters of Credit"); provided, however,
that the aggregate undrawn amount of all outstanding Letters of Credit shall not
at any time exceed the amount of the Line of Credit Commitment. The form and
substance of each Letter of Credit shall be subject to approval by Bank, in its
sole discretion. Each Letter of Credit shall be issued for a term not to exceed
three hundred sixty-five (365) days, as designated by Borrower and, if no Event
of Default has occurred and is continuing, Bank agrees to extend the term of any
Letter of Credit for up to another three hundred sixty-five (365) days upon
receipt from Borrower of a written request to do so not later than thirty (30)
days before the expiration date; provided, however, that no Letter of Credit
shall have an expiration date subsequent to the Line of Credit Maturity Date.
The undrawn amount of all Letters of Credit shall be reserved under the Line of

<PAGE>

Credit and shall not be available for borrowings thereunder. Each Letter of
Credit shall be subject to the additional terms and conditions of the Letter of
Credit agreements, applications and any related documents required by Bank in
connection with the issuance thereof. Each draft paid under a Letter of Credit
shall be deemed an advance under the Line of Credit and shall be repaid by
Borrower in accordance with the terms and conditions of this Agreement
applicable to such advances; provided, however, that if advances under the Line
of Credit are not available, for any reason, at the time any draft is paid, then
Borrower shall immediately pay to Bank the full amount of such draft, together
with interest thereon from the date such draft is paid to the date such amount
is fully repaid by Borrower, at the rate of interest applicable to advances
under the Line of Credit. In such event Borrower agrees that Bank, in its sole
discretion, may debit any account maintained by Borrower with Bank (other than
any financial aid trust account maintained by Borrower with Bank) for the amount
of any such draft; at the time of said debit, Bank agrees to notify Borrower of
said debit.

            (d) Borrowing and Repayment. Borrower may from time to time during
the term of the Line of Credit borrow, partially or wholly repay its outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided, however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above. If at any time the total outstanding borrowings under the Line of Credit
exceed the Line of Credit Commitment, such excess shall be immediately due and
payable.

      SECTION 1.2 STANDBY LETTER OF CREDIT.

            (a) Standby Letter of Credit. Subject to the terms and conditions of
this Agreement, in addition to any Letter of Credit issued pursuant to Section
1.1(c) hereof, Bank hereby agrees up to and including the Line of Credit
Maturity Date to issue or cause an affiliate to issue one or more standby
letters of credit for the account of Borrower to finance any corporate purpose
(collectively, as amended, modified and/or supplemented from time to time, the
"Standby Letter of Credit") in the aggregate principal amount not to exceed
TWENTY MILLION AND NO/100 DOLLARS ($20,000,000.00). The form and substance of
each Standby Letter of Credit shall be subject to approval by Bank, in its sole
discretion. Each Standby Letter of Credit shall be issued for a term not to
exceed three hundred sixty-five (365) days, as designated by Borrower and, if no
Event of Default has occurred and is continuing, Bank agrees to extend the term
of any Standby Letter of Credit for up to another three hundred sixty-five (365)
days upon receipt from Borrower of a written request to do so not later than
thirty (30) days before the expiration date; provided, however, that no Standby
Letter of Credit shall have an expiration date subsequent to the Line of Credit
Maturity Date. Each Standby Letter of Credit shall be subject to the additional
terms of the Letter of Credit agreement, application and any related documents
required by Bank in connection with the issuance thereof (the "Standby Letter of
Credit Agreement").

            (b) Repayment of Drafts. Each drawing paid under the Standby Letter
of Credit shall be repaid by Borrower in accordance with the provisions of the
Standby Letter of Credit Agreement.

                                       -2-
<PAGE>

      SECTION 1.3 INTEREST/FEES.

            (a) Interest. The outstanding principal balance of the Line of
Credit shall bear interest, and the amount of each drawing paid under any Letter
of Credit shall bear interest from the date such drawing is paid to the date
such amount is fully repaid by Borrower, at the rate of interest set forth in
the Line of Credit Note or other instrument or document executed in connection
therewith. The amount of each drawing paid under the Standby Letter of Credit
shall bear interest from the date such delivery is paid to the date such amount
is fully repaid by Borrower at a rate per annum provided in the Standby Letter
of Credit Agreement.

            (b) Prime Rate. The term "Prime Rate" shall mean at any time the
rate of interest most recently announced within Bank at its principal office as
its Prime Rate, with the understanding that the Prime Rate is one of Bank's base
rates and serves as the basis upon which effective rates of interest are
calculated for those loans making reference thereto, and is evidenced by the
recording thereof in such internal publication or publications as Bank may
designate. Each change in the rate of interest shall become effective on the
date each Prime Rate change is announced within Bank.

            (c) Computation and Payment. Interest shall be computed on the basis
of a 360-day year, actual days elapsed. Interest shall be payable at the times
and place set forth in each promissory note or other instrument required hereby.

            (d) Standby Letter of Credit Fee. Borrower shall pay to Bank
quarterly in advance a non-refundable fee for each Standby Letter of Credit
equal to three-eighths percent (0.375%) per annum of the face amount thereof,
which fee shall be due and payable quarterly in advance.

            (e) Unused Commitment Fee. Borrower shall pay to Bank a fee equal to
one-eighth percent (0.125%) per annum (computed on the basis of a 360-day year,
actual days elapsed) on the average daily unused amount of the Line of Credit,
and shall be due and payable by Borrower in arrears on the last day of the
pertinent quarter by a debit to the Borrower's deposit account. For purposes of
the fee calculation, Letters of Credit issued under the Line of Credit shall be
considered outstanding.

            (f) Letter of Credit Fees. Borrower shall pay to Bank (i) fees for
each Letter of Credit equal to five-eighths percent (0.625%) per annum (computed
on the basis of a 360-day year, actual days elapsed) of the face amount thereof
quarterly in advance and, upon any increase in the amount of a Letter of Credit,
a fee equal to five-eighths percent (0.625%) per annum on the amount of such
increase, and (ii) fees upon the payment or negotiation of each draft under any
Letter of Credit and fees upon the occurrence of any other activity with respect
to any Letter of Credit (including without limitation, the transfer, amendment
or cancellation of any Letter of Credit) determined in accordance with Bank's
standard fees and charges then in effect for such activity.

      SECTION 1.4 COLLECTION OF PAYMENTS. Borrower authorizes Bank to collect
all principal, interest and fees due under each credit subject hereto by
charging Borrower's deposit account number 4121052344 with Bank, or any other
deposit account maintained by

                                      -3-
<PAGE>

Borrower with Bank (other than any financial aid trust account maintained by
Borrower with Bank), for the full amount thereof. Should there be insufficient
funds in any such deposit account to pay all such sums when due, the full amount
of such deficiency shall be immediately due and payable by Borrower.

      SECTION 1.5 COLLATERAL. As security for all indebtedness of Borrower to
Bank under the Standby Letter of Credit issued pursuant to Section 1.2(a),
Borrower hereby grants to Bank security interests of first priority in that
certain L/C Collateral Account No. 1281-1865 account maintained by Borrower (the
"Collateral Account") with Bank acting through Wells Fargo Brokerage Services,
LLC. All amounts held therein shall be valued periodically by Bank (the
"Collateral Value") based on the Advance Rates that are generally in effect
within the Bank from time to time. At no time shall the Collateral Value of the
Collateral Account be less than the aggregate face amount of the Standby Letter
of Credit.

All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements and other documents as Bank shall
reasonably require, all in form and substance satisfactory to Bank. Borrower
shall reimburse Bank immediately upon demand for all costs and expenses incurred
by Bank in connection with any of the foregoing security, including without
limitation, filing and recording fees and costs of appraisals and audits.

      SECTION 1.6 GUARANTIES. All indebtedness of Borrower to Bank under the
Loans shall be guaranteed jointly and severally by the Guarantors, as evidenced
by and subject to the terms of guaranties in form and substance satisfactory to
Bank.

                                  ARTICLE II.
                         REPRESENTATIONS AND WARRANTIES

      Borrower makes the following representations and warranties to Bank, which
representations and warranties shall survive the execution of this Agreement and
shall continue in full force and effect until the full and final payment, and
satisfaction and discharge, of all obligations of Borrower to Bank subject to
this Agreement.

      SECTION 2.1 LEGAL STATUS. Borrower is a corporation, duly organized and
existing and in good standing under the laws of the State of Delaware, and is
qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.

      SECTION 2.2 AUTHORIZATION AND VALIDITY. This Agreement and each promissory
note, contract, instrument and other document required hereby or at any time
hereafter delivered to Bank in connection herewith (collectively, the "Loan
Documents") have been duly authorized, and upon their execution and delivery in
accordance with the provisions hereof will constitute legal, valid and binding
agreements and obligations of Borrower or the party which executes the same,
enforceable in accordance with their respective terms.

      SECTION 2.3 NO VIOLATION. The execution, delivery and performance by
Borrower of each of the Loan Documents do not violate any provision of any law
or regulation, or contravene any provision of the Certificate of Incorporation
or By-Laws of Borrower, or result in

                                      -4-
<PAGE>

any breach of or default under any contract, obligation, indenture or other
instrument to which Borrower is a party or by which Borrower may be bound.

      SECTION 2.4 LITIGATION. There are no pending, or to the best of Borrower's
knowledge threatened, actions, claims, investigations, suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which could have a material adverse effect on the financial condition or
operation of Borrower other than those disclosed by Borrower to Bank in writing
prior to the date hereof.

      SECTION 2.5 CORRECTNESS OF FINANCIAL STATEMENT. The financial statement of
Borrower dated June 30, 2004, a true copy of which has been delivered by
Borrower to Bank prior to the date hereof, (a) has been prepared in accordance
with generally accepted accounting principles consistently applied and presents
fairly the financial condition of Borrower, and (b) discloses all liabilities of
Borrower that are required to be reflected or reserved against under generally
accepted accounting principles, whether liquidated or unliquidated, fixed or
contingent. Since the date of such financial statements there has been no
material adverse change in the financial condition of Borrower, nor has Borrower
mortgaged, pledged, granted a security interest in or otherwise encumbered any
of its assets or properties except in favor of Bank, or as disclosed to Bank, or
as permitted pursuant to Section 5.9, or as otherwise permitted by Bank in
writing.

      SECTION 2.6 INCOME TAX RETURNS. Borrower has no knowledge of any pending
material assessments or adjustments of its income tax payable with respect to
any year.

      SECTION 2.7 NO SUBORDINATION. There is no agreement, indenture, contract
or instrument to which Borrower is a party or by which Borrower may be bound
that requires the subordination in right of payment of any of Borrower's
obligations subject to this Agreement to any other obligation of Borrower.

      SECTION 2.8 PERMITS, FRANCHISES. Borrower possesses, and will hereafter
possess, all material permits, consents, approvals, franchises and licenses
required and rights to all trademarks, trade names, patents, and fictitious
names, if any, necessary to enable it to conduct the business in which it is now
engaged in compliance with applicable law.

      SECTION 2.9 ERISA. Borrower is in compliance in all material respects with
all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time ("ERISA"); Borrower has not
violated any provision of any defined employee pension benefit plan (as defined
in ERISA) maintained or contributed to by Borrower (each, a "Plan"); no
Reportable Event as defined in ERISA has occurred and is continuing with respect
to any Plan initiated by Borrower; Borrower has met its minimum funding
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit obligations as they come due in accordance with the Plan
documents and under generally accepted accounting principles.

      SECTION 2.10 OTHER OBLIGATIONS. Borrower is not in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.

                                      -5-
<PAGE>

      SECTION 2.11 ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to
Bank in writing prior to the date hereof, Borrower is in compliance in all
material respects with all applicable federal or state environmental, hazardous
waste, health and safety statutes, and any rules or regulations adopted pursuant
thereto, which govern or affect any of Borrower's operations and/or properties,
including without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendments and
Reauthorization Act of 1986, the Federal Resource Conservation and Recovery Act
of 1976, and the Federal Toxic Substances Control Act, as any of the same may be
amended, modified or supplemented from time to time. None of the operations of
Borrower is the subject of any federal or state investigation evaluating whether
any remedial action involving a material expenditure is needed to respond to a
release of any toxic or hazardous waste or substance into the environment.
Borrower has no material contingent liability in connection with any release of
any toxic or hazardous waste or substance into the environment.

      SECTION 2.12 SUBSIDIARIES. Attached as Exhibit "C" hereto is a complete
list of all Subsidiaries of Borrower.

                                  ARTICLE III.
                                   CONDITIONS

      SECTION 3.1 CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of
Bank to extend any credit contemplated by this Agreement is subject to the
fulfillment to Bank's satisfaction of all of the following conditions:

            (a)   Approval of Bank Counsel. All legal matters incidental to the
extension of credit by Bank shall be satisfactory to Bank's counsel.

            (b)   Documentation. Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed:

                  (i)   This Agreement.

                  (ii)  The Line of Credit Note.

                  (iii) With respect to the Standby Letter of Credit issued
      pursuant to Section 1.2(a) hereof, Security Agreement: Securities Account,
      Securities Account Control Agreement and UCC-1 Financing Statement as to
      the Collateral Account.

                  (iv)  The Guaranties executed by the Guarantors.

                  (v)   Authorizations as to the Loan Documents for Borrower and
      Guarantors to the extent required by Bank.

                  (vi)  A completed compliance certificate as of June 30, 2004.

                  (vii) Evidence that the loan from GE to Borrower has been
      fully paid and terminated and all UCC financing statements for the benefit
      of GE have

                                      -6-
<PAGE>

      been released, other than with respect to the outstanding letter of credit
      issued by GE for the account of UTI Holdings, Inc.

                  (viii) Such other documents as Bank may require under any
      other Section of this Agreement.

            (c) Financial Condition. There shall have been no material adverse
change, as determined by Bank, in the financial condition or business of
Borrower or any Guarantor, nor any material decline, as determined by Bank, in
the market value of any collateral required hereunder or a substantial or
material portion of the assets of Borrower or any such guarantor.

            (d) Insurance. Borrower shall have delivered to Bank evidence of
insurance coverage on all Borrower's property, in form, substance, amounts,
covering risks and issued by companies satisfactory to Bank.

            (e) Legal Opinions. A legal opinion from counsel to Borrower and
each Guarantor delivered to Bank in such form as reasonably requested by Bank.

      SECTION 3.2 CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank
to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the following
conditions:

            (a) Compliance. The representations and warranties contained herein
and in each of the other Loan Documents shall be true on and as of the date of
the signing of this Agreement and on the date of each extension of credit by
Bank pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
Event of Default as defined herein, and no condition, event or act which with
the giving of notice or the passage of time or both would constitute such an
Event of Default, shall have occurred and be continuing or shall exist.

            (b) Documentation. Bank shall have received all additional documents
which may be required in connection with such extension of credit.

                                  ARTICLE IV.
                              AFFIRMATIVE COVENANTS

      Borrower covenants that so long as Bank remains committed to extend credit
to Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, Borrower shall, unless Bank otherwise consents in writing:

      SECTION 4.1 PUNCTUAL PAYMENTS. Punctually pay all principal, interest,
fees or other liabilities due under any of the Loan Documents at the times and
place and in the manner specified therein, and immediately upon demand by Bank,
the amount by which the outstanding principal balance of any credit subject
hereto at any time exceeds any limitation on borrowings applicable thereto.

                                      -7-
<PAGE>

      SECTION 4.2 ACCOUNTING RECORDS. Maintain adequate books and records in
accordance with generally accepted accounting principles consistently applied,
and permit any representative of Bank, at any reasonable time after a two week
notice, to inspect, audit and examine such books and records, to make copies of
the same, and to inspect the properties of Borrower.

      SECTION 4.3 FINANCIAL STATEMENTS. Provide to Bank all of the following:

            (a) not later than one hundred twenty (120) days after and as of the
end of each fiscal year, a copy of Borrower's annual 10K as filed with the SEC;

            (b) not later than forty-five (45) days after and as of the end of
each fiscal quarter, a copy of Borrower's 10Q as filed with the SEC;

            (c) contemporaneously with each annual and quarterly financial
statement of Borrower required hereby, a compliance certificate (substantially
in the form of Exhibit "D") of the chief financial officer of Borrower,
certifying that said financial statements are accurate and have been prepared in
accordance with generally accepted accounting principles and that there exists
no Event of Default nor any condition, act or event which with the giving of
notice or the passage of time or both would constitute an Event of Default and
showing Borrower's compliance with Section 4.9; and

            (d) from time to time such other information as Bank may reasonably
request.

      SECTION 4.4 COMPLIANCE. Preserve and maintain all material licenses,
permits, governmental approvals, rights, privileges and franchises necessary for
the conduct of its business; cause its Subsidiaries to retain their state
accreditations and their qualifications for Title IV Programs; and comply with
the provisions of all documents pursuant to which Borrower is organized and/or
which govern Borrower's continued existence and with the requirements of all
laws, rules, regulations and orders of any governmental authority applicable to
Borrower and/or its business.

      SECTION 4.5 INSURANCE. Maintain and keep in force insurance of the types
and in amounts customarily carried in lines of business similar to that of
Borrower, including but not limited to fire, extended coverage, public
liability, flood, property damage and workers' compensation, with all such
insurance carried with companies and in amounts customarily carried in lines of
business similar to that of Borrower, and deliver to Bank from time to time at
Bank's request schedules setting forth all insurance then in effect.

      SECTION 4.6 FACILITIES. Keep all properties useful or necessary to
Borrower's business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be reasonably preserved and maintained.

      SECTION 4.7 TAXES AND OTHER LIABILITIES. Pay and discharge when due any
and all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except such (a) as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, consistent with generally accepted

                                      -8-
<PAGE>

accounting principles, for eventual payment thereof in the event Borrower is
obligated to make such payment.

      SECTION 4.8 LITIGATION. Promptly give notice in writing to Bank of any
litigation pending against Borrower with a claim in excess of $2,500,000.00 that
is not covered by insurance.

      SECTION 4.9 FINANCIAL CONDITION. Maintain Borrower's financial condition
at the end of each fiscal quarter as follows using generally accepted accounting
principles consistently applied and used consistently with prior practices
(except to the extent modified by the definitions herein), with compliance
determined commencing with Borrower's financial statements for the period ending
June 30, 2004:

            (a) Net income after taxes determined for any fiscal quarter of not
less than $3,500,000.00 for such quarter.

            (b) Total Liabilities divided by Tangible Net Worth determined for
any fiscal quarter of not greater than the DNW Ratio, with "Total Liabilities"
defined as the aggregate of current liabilities and non-current liabilities
excluding EITF 97-10 Liabilities up to $30,000,000.00 less subordinated debt,
with "Tangible Net Worth" defined as total assets less Total Liabilities and
less any intangible assets, and with "DNW Ratio" defined as 3.50 to 1.00 on
December 31, 2004 to June 30, 2005, as 2.00 to 1.00 on September 30, 2005 to
June 30, 2006, and as 1.50 to 1.00 on September 30, 2006 and thereafter.

            (c) Current Ratio determined for any fiscal quarter of less than the
CR Requirement. "Current Ratio" is defined as total current assets (excluding
any cash in the Collateral Account and any cash of Borrower held by GE in a
controlled account) divided by total current liabilities which shall include
without limitation any outstanding balance on the Line of Credit, outstanding
surety bonds and any outstanding Letters of Credit under the Line of Credit
Commitment), with "CR Requirement" defined as 0.40 to 1.0 on December 31, 2004
to June 30, 2005, 0.50 to 1.00 on September 30, 2005 to June 30, 2006, and 0.60
to 1.0 on September 30, 2006 and thereafter.

            (d) Tangible Net Worth (as defined in Paragraph (b) above)
determined as of any fiscal quarter of not less than the greater of (i) Tangible
Net Worth as of September 30, 2004, as published in Borrower's 10K as filed with
the SEC, or (ii) $33,000,000.00.

      SECTION 4.10 NOTICE TO BANK. Promptly (but in no event more than five (5)
days after the occurrence of each such event or matter) give written notice to
Bank in reasonable detail of: (a) the occurrence of any Event of Default, or any
condition, event or act which with the giving of notice or the passage of time
or both would constitute an Event of Default; (b) any change in the name or the
entity structure of Borrower; (c) the occurrence and nature of any Reportable
Event or Prohibited Transaction, each as defined in ERISA, or any funding
deficiency with respect to any Plan; or (d) any termination or cancellation of
any insurance policy which Borrower is required to maintain.

      SECTION 4.11 TITLE IV PROGRAMS. Cause all Subsidiaries eligible for Title
IV Programs to maintain as to themselves and their operating institutions any
and all state

                                       -9-
<PAGE>

accreditations and all other requirements necessary to maintain their
eligibility for Title IV Programs; provided that if any operating institution is
a new campus intended to participate in Title IV Programs, this requirement
shall not be applicable for the first twelve (12) months of its operation.

      SECTION 4.12 FUTURE SUBSIDIARIES. Cause any Subsidiary not a Guarantor to
execute and deliver, within thirty (30) days of its becoming a Subsidiary, to
Bank a Guaranty together with such organizational documents and resolutions as
Bank may reasonably request.

      SECTION 4.13 OPERATING ACCOUNTS. Maintain, no later than ninety (90) days
after the Closing Date and thereafter, its primary operating accounts with the
Bank.

                                   ARTICLE V.
                               NEGATIVE COVENANTS

      Borrower further covenants that so long as Bank remains committed to
extend credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not, and will not allow any Guarantor,
without Bank's prior written consent:

      SECTION 5.1 USE OF FUNDS. Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article I hereof.

      SECTION 5.2 [Intentionally left blank].

      SECTION 5.3 NEGATIVE PLEDGE AGREEMENT. Covenant with another creditor not
to pledge any portion of its assets to Bank.

      SECTION 5.4 OTHER INDEBTEDNESS. Create, incur, assume or permit to exist
any indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Bank, (b) purchase
money obligations up to $10,000,000.00, (c) EITF 97-10 Liabilities up to
$30,000,000.00, and (d) any other material liabilities of Borrower existing as
of, and disclosed to, and deemed acceptable by, Bank prior to, the Closing Date
hereof.

      SECTION 5.5 MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or
consolidate with, or be totally acquired by, any other entity that is not a
Subsidiary of Borrower or a Guarantor; make any substantial change in the nature
of Borrower's business as conducted as of the date hereof; acquire all or
substantially all of the assets of any other entity except as permitted pursuant
to Section 5.7 hereof; nor sell, lease, transfer or otherwise dispose of all or
a substantial or material portion of Borrower's assets except in the ordinary
course of its business.

      SECTION 5.6 GUARANTIES. Guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security for,
any liabilities or obligations of any other

                                      -10-
<PAGE>

person or entity, except for guaranties of operating leases, guaranties for
liabilities or obligations of a Subsidiary, guaranties to bonding agents as
required to obtain the necessary surety bonds to license Borrower's sales
representatives, or guaranties of student loans up to $4,000,000.00 to Sallie
Mae.

      SECTION 5.7 LOANS, ADVANCES, INVESTMENTS, ACQUISITIONS. Make any loans or
advances to or investments in any person or entity, except for (i) any of the
foregoing existing as of, and disclosed to, and deemed acceptable to, Bank prior
to the Closing Date, (ii) acquisitions not exceeding $10,000,000.00 in any
fiscal year, (iii) any investment in a joint venture not exceeding
$10,000,000.00 in cash and/or non-cash value, but without limit as to the amount
of any intellectual property owned and contributed to the joint venture by
Borrower (which property may be licensed to such joint venture without
transferring Borrower's ownership rights thereto), (iv) loans or advances to
employees in the ordinary course of business, and (v) loans to students not
exceeding $23,000,000.00 in the aggregate outstanding at any time.

      SECTION 5.8 PLEDGE OF ASSETS. Mortgage, pledge, grant or permit to exist a
security interest in, or lien upon, all or any material portion of Borrower's
assets now owned or hereafter acquired, except for Permitted Liens.

                                  ARTICLE VI.
                                EVENTS OF DEFAULT

      SECTION 6.1 EVENTS OF DEFAULT. The occurrence of any of the following
shall constitute an "Event of Default" under this Agreement:

            (a) Borrower shall fail to pay when due any principal, interest,
fees or other amounts payable under any of the Loan Documents and such failure
shall continue for a period of five (5) Business Days from its occurrence.

            (b) Any financial statement or certificate furnished to Bank in
connection with, or any representation or warranty made by Borrower or any other
party under this Agreement or any other Loan Document shall prove to be
incorrect, false or misleading in any material respect when furnished or made.

            (c) Any default in the performance of or compliance with any
obligation, agreement or other provision contained herein or in any other Loan
Document (other than those referred to in other subsections of this Section
6.1), and with respect to any such default which by its nature can be cured,
such default shall continue for a period of thirty (30) days from its
occurrence.

            (d) A default or event of default shall occur (and continue beyond
any applicable grace period) under any note, agreement or instrument evidencing
any other indebtedness of the Borrower or any of its Subsidiaries, which default
or event of default permits the acceleration of its maturity, provided that the
aggregate principal amount of all such indebtedness for which the default or
event of default has occurred exceeds $750,000.00.

            (e) The filing of a notice of judgment lien against Borrower or any
guarantor hereunder; or the recording of any abstract of judgment against
Borrower or any guarantor

                                      -11-
<PAGE>

hereunder in any county in which Borrower or such guarantor has an interest in
real property; or the service of a notice of levy and/or of a writ of attachment
or execution, or other like process, against the assets of Borrower or any
guarantor hereunder; or the entry of a judgment against Borrower or any
guarantor hereunder; in each case for an amount in excess of $750,000.00 and
that is not dismissed or stayed within thirty (30) days.

            (f) Borrower or any guarantor hereunder shall become insolvent, or
shall suffer or consent to or apply for the appointment of a receiver, trustee,
custodian or liquidator of itself or any of its property, or shall generally
fail to pay its debts as they become due, or shall make a general assignment for
the benefit of creditors; Borrower or any guarantor hereunder shall file a
voluntary petition in bankruptcy, or seeking reorganization, in order to effect
a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time ("Bankruptcy Code"), or under any state or federal
law granting relief to debtors, whether now or hereafter in effect; or any
involuntary petition or proceeding pursuant to the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors is filed or commenced against Borrower or any guarantor
hereunder that is not dismissed within sixty (60) days of its institution, or
Borrower or any such guarantor shall file an answer admitting the jurisdiction
of the court and the material allegations of any involuntary petition; or
Borrower or any such guarantor shall be adjudicated a bankrupt, or an order for
relief shall be entered against Borrower or any such guarantor by any court of
competent jurisdiction under the Bankruptcy Code or any other applicable state
or federal law relating to bankruptcy, reorganization or other relief for
debtors.

            (g) The occurrence of any adverse change in the financial condition
of Borrower that Bank, in its reasonable discretion, deems material.

            (h) The dissolution or liquidation of Borrower or, without the
consent of Bank, any Guarantor or Borrower or any such guarantor, or any of
their directors, stockholders or members, shall take action seeking to effect
the dissolution or liquidation of Borrower or such guarantor.

            (i) Borrower shall fail to comply with the financial covenants in
Section 4.9.

            (j) Borrower shall fail to maintain the Collateral Value equal to or
greater than the face amount of the Standby Letter of Credit in accordance with
Section 1.5 and such failure shall continue for a period of five (5) Business
Days from its occurrence.

            (k) Borrower shall fail to maintain its primary operating accounts
with Bank in accordance with Section 4.13.

            (l) Borrower or any Guarantor shall fail to comply with Section 4.11
hereof.

      SECTION 6.2 REMEDIES. Upon the occurrence of any Event of Default: (a) all
indebtedness of Borrower under each of the Loan Documents, any term thereof to
the contrary notwithstanding, shall at Bank's option and without notice become
immediately due and payable without presentment, demand, protest or notice of
dishonor, all of which are hereby expressly waived by each Borrower; (b) the
obligation, if any, of Bank to extend any further credit under

                                      -12-
<PAGE>

any of the Loan Documents shall immediately cease and terminate; and (c) Bank
shall have all rights, powers and remedies available under each of the Loan
Documents, or accorded by law, including without limitation the right to resort
to any or all security for any credit subject hereto and to exercise any or all
of the rights of a beneficiary or secured party pursuant to applicable law. All
rights, powers and remedies of Bank may be exercised at any time by Bank and
from time to time after the occurrence of an Event of Default, are cumulative
and not exclusive, and shall be in addition to any other rights, powers or
remedies provided by law or equity.

                                  ARTICLE VII.
                                  MISCELLANEOUS

      SECTION 7.1 NO WAIVER. No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy. Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.

      SECTION 7.2 NOTICES. All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:

                  BORROWER: UNIVERSAL TECHNICAL INSTITUTE, INC.
                            20410 North 19th Avenue, Suite 200
                            Phoenix, Arizona  85027
                            Attention: Chief Financial Officer
                                       Fax #: 623/445-9403
                            Attention: Vice President - Corporate Legal Counsel
                                       Fax #: 623/445-9389

                  BANK:     WELLS FARGO BANK, NATIONAL ASSOCIATION
                            Commercial Banking
                            MAC S4101-251, 100 West Washington
                            Phoenix, Arizona  85003

or to such other address as any party may designate by written notice to all
other parties. Each such notice, request and demand shall be deemed given or
made as follows: (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the date of receipt as evidenced by U.S. mail return receipt; and (c)
if sent by telecopy, upon receipt (with confirmation to be sent by U.S. mail,
first class).

      SECTION 7.3 COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower shall pay to
Bank immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and, except for the initial negotiation and preparation of this
Agreement and the other Loan Documents, all allocated costs of Bank's in-house
counsel), expended or incurred by Bank in connection with (a) the

                                      -13-
<PAGE>

initial negotiation and preparation of this Agreement and the other Loan
Documents in excess of $10,000.00, Bank's continued administration hereof and
thereof, and the preparation of any amendments and waivers hereto and thereto,
(b) the enforcement of Bank's rights and/or the collection of any amounts which
become due to Bank under any of the Loan Documents, and (c) the prosecution or
defense of any action in any way related to any of the Loan Documents, including
without limitation, any action for declaratory relief, whether incurred at the
trial or appellate level, in an arbitration proceeding or otherwise, and
including any of the foregoing incurred in connection with any bankruptcy
proceeding (including without limitation, any adversary proceeding, contested
matter or motion brought by Bank or any other person) relating to any Borrower
or any other person or entity.

      SECTION 7.4 SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided, however, that
Borrower may not assign or transfer its interest hereunder without Bank's prior
written consent. Bank reserves the right to sell, assign, transfer, negotiate or
grant participations in all or any part of, or any interest in, Bank's rights
and benefits under each of the Loan Documents. In connection therewith, Bank may
disclose all documents and information which Bank now has or may hereafter
acquire relating to any credit subject hereto, Borrower or its business, any
guarantor hereunder or the business of such guarantor, or any collateral
required hereunder.

      SECTION 7.5 ENTIRE AGREEMENT; AMENDMENT; DEFINITIONS.

            (a) This Agreement and the other Loan Documents constitute the
entire agreement between Borrower and Bank with respect to each credit subject
hereto and supersede all prior negotiations, communications, discussions and
correspondence concerning the subject matter hereof. This Agreement may be
amended or modified only in writing signed by each party hereto.

            (b) All defined terms shall have the meaning given them in Exhibit
"A" attached hereto.

      SECTION 7.6 REDUCTION; TERMINATION.

            (a) Borrower may permanently reduce the Line of Credit Commitment in
whole or in part in integral multiples of $500,000.00 upon at least five (5)
business days written notice to Bank which notice shall specify the amount of
any such reduction; provided, however, that the amount of the Letter of Credit
Commitment may not be reduced below the aggregate amount of advances and Letters
of Credit outstanding thereunder.

            (b) This Agreement shall terminate upon full payment by Borrower of
all obligations owed to Bank hereunder.

      SECTION 7.7 NO THIRD PARTY BENEFICIARIES. This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.

                                      -14-
<PAGE>

      SECTION 7.8 TIME. Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.

      SECTION 7.9 SEVERABILITY OF PROVISIONS. If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

      SECTION 7.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be an
original, and all of which when taken together shall constitute one and the same
Agreement.

      SECTION 7.11 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona.

      SECTION 7.12 ARBITRATION.

            (a) Arbitration. The parties hereto agree, upon demand by any party,
to submit to binding arbitration all claims, disputes and controversies between
or among them (and their respective employees, officers, directors, attorneys,
and other agents), whether in tort, contract or otherwise arising out of or
relating to in any way (i) the loan and related Loan Documents which are the
subject of this Agreement and its negotiation, execution, collateralization,
administration, repayment, modification, extension, substitution, formation,
inducement, enforcement, default or termination; or (ii) requests for additional
credit.

            (b) Governing Rules. Any arbitration proceeding will (i) proceed in
a location in Arizona selected by the American Arbitration Association ("AAA");
(ii) be governed by the Federal Arbitration Act (Title 9 of the United States
Code), notwithstanding any conflicting choice of law provision in any of the
documents between the parties; and (iii) be conducted by the AAA, or such other
administrator as the parties shall mutually agree upon, in accordance with the
AAA's commercial dispute resolution procedures, unless the claim or counterclaim
is at least $1,000,000.00 exclusive of claimed interest, arbitration fees and
costs in which case the arbitration shall be conducted in accordance with the
AAA's optional procedures for large, complex commercial disputes (the commercial
dispute resolution procedures or the optional procedures for large, complex
commercial disputes to be referred to, as applicable, as the "Rules"). If there
is any inconsistency between the terms hereof and the Rules, the terms and
procedures set forth herein shall control. Any party who fails or refuses to
submit to arbitration following a demand by any other party shall bear all costs
and expenses incurred by such other party in compelling arbitration of any
dispute. Nothing contained herein shall be deemed to be a waiver by any party
that is a bank of the protections afforded to it under 12 U.S.C. Section.91 or
any similar applicable state law.

            (c) No Waiver of Provisional Remedies, Self-Help and Foreclosure.
The arbitration requirement does not limit the right of any party to (i)
foreclose against real or personal property collateral; (ii) exercise self-help
remedies relating to collateral or proceeds of collateral such as setoff or
repossession; or (iii) obtain provisional or ancillary remedies such as
replevin, injunctive relief, attachment or the appointment of a receiver, before
during or after the

                                      -15-
<PAGE>

pendency of any arbitration proceeding. This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.

            (d) Arbitrator Qualifications and Powers. Any arbitration proceeding
in which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00. Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided, however, that all three arbitrators must
actively participate in all hearings and deliberations. The arbitrator will be a
neutral attorney licensed in the State of Arizona or a neutral retired judge of
the state or federal judiciary of Arizona, in either case with a minimum of ten
years experience in the substantive law applicable to the subject matter of the
dispute to be arbitrated. The arbitrator will determine whether or not an issue
is arbitratable and will give effect to the statutes of limitation in
determining any claim. In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication. The arbitrator shall resolve all
disputes in accordance with the substantive law of Arizona and may grant any
remedy or relief that a court of such state could order or grant within the
scope hereof and such ancillary relief as is necessary to make effective any
award. The arbitrator shall also have the power to award recovery of all costs
and fees, to impose sanctions and to take such other action as the arbitrator
deems necessary to the same extent a judge could pursuant to the Federal Rules
of Civil Procedure, the Arizona Rules of Civil Procedure or other applicable
law. Judgment upon the award rendered by the arbitrator may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.

            (e) Discovery. In any arbitration proceeding discovery will be
permitted in accordance with the Rules. All discovery shall be expressly limited
to matters directly relevant to the dispute being arbitrated and must be
completed no later than twenty (20) days before the hearing date and within one
hundred eighty (180) days of the filing of the dispute with the AAA. Any
requests for an extension of the discovery periods, or any discovery disputes,
will be subject to final determination by the arbitrator upon a showing that the
request for discovery is essential for the party's presentation and that no
alternative means for obtaining information is available.

            (f) Class Proceedings and Consolidations. The resolution of any
dispute arising pursuant to the terms of this Agreement shall be determined by a
separate arbitration proceeding and such dispute shall not be consolidated with
other disputes or included in any class proceeding.

            (g) Payment Of Arbitration Costs And Fees. The arbitrator shall
award all costs and expenses of the arbitration proceeding.

                                      -16-
<PAGE>

            (h) Miscellaneous. To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within one hundred eighty (180) days of the filing of the
dispute with the AAA. No arbitrator or other party to an arbitration proceeding
may disclose the existence, content or results thereof, except for disclosures
of information by a party required in the ordinary course of its business or by
applicable law or regulation. If more than one agreement for arbitration by or
between the parties potentially applies to a dispute, the arbitration provision
most directly related to the Loan Documents or the subject matter of the dispute
shall control. This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.

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

                               BORROWER:

                               UNIVERSAL TECHNICAL INSTITUTE, INC., a
                               Delaware corporation, dba UNIVERSAL
                               TECHNICAL INSTITUTE OF DELAWARE

                               By: _____________________________________________
                               Name:  Jennifer L. Haslip
                               Title: Chief Financial Officer

                               BANK:

                               WELLS FARGO BANK, NATIONAL
                               ASSOCIATION

                               By: _____________________________________________
                               Name: Keri Tignini
                               Title: Vice President

                                      -17-
<PAGE>

                                   EXHIBIT "A"

                                   DEFINITIONS

      "Advance Rate" means those Advance Rates that are generally in effect as
to marketable securities within the Bank from time to time pursuant to its
Commercial Banking Credit Policies, copies of which current Advance Rates may be
obtained upon request from the Bank.

      "Agreement" means this Credit Agreement.

      "Bank" means WELLS FARGO BANK, NATIONAL ASSOCIATION.

      "Borrower" means UNIVERSAL TECHNICAL INSTITUTE, INC., a Delaware
corporation.

      "Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions are generally authorized or obligated by law or
executive order to close in Phoenix, Arizona.

      "Closing Date" means the date this Agreement is executed and delivered by
Borrower to Bank.

      "Collateral Account": See Section 1.5.

      "Collateral Account Agreement" means that Investment Account Agreement
dated September 24, 2004 between Borrower and Wells Fargo Brokerage Services,
LLC.

      "Collateral Value: See Section 1.5.

      "EITF 97-10 Liabilities" means those liabilities subject to the Financial
Accounting Standards Board (FASB) Emerging Issues Task Force 97-10 rule.

      "Excess Collateral" means the amount by which the Collateral Value of the
Collateral Account exceeds the aggregate face amount of the Standby Letter of
Credit.

      "GAAP" means accounting principles generally accepted in the United
States.

      "GE" means HELLER FINANCIAL, INC., as agent and lender.

      "Guaranties," each a "Guaranty," means those guaranties delivered to Bank
by the Guarantors.

      "Guarantors," each a Guarantor, means all Subsidiaries of Borrower and
their Subsidiaries.

      "Letter of Credit": See Section 1.1(c).

<PAGE>

      "Line of Credit Commitment" means THIRTY MILLION AND NO/100 DOLLARS
($30,000,000.00).

      "Line of Credit Maturity Date" means October 26, 2007.

      "Line of Credit Note": See Section 1.1(a).

      "Loan Documents": See Section 2.2.

      "Loans," each a "Loan," means the Line of Credit and the Standby Letter of
Credit.

      "Permitted Liens" means the following types of liens:

                  (1)   any liens in favor of Bank;

                  (2)   liens existing as of and disclosed to Bank in writing
      prior to, the Closing Date;

                  (3)   cash held by GE for collateral on the existing GE letter
      of credit issued for the benefit of the Department of Education;

                  (4)   liens for taxes, assessments or governmental charges or
      claims either (1) not delinquent or (b) contested in good faith by
      appropriate proceedings and as to which the Borrower or its Subsidiaries
      shall have set aside on its books such reserves as may be required
      pursuant to GAAP;

                  (5)   statutory liens of landlords and liens of carriers,
      warehousemen, mechanics, suppliers, materialmen, repairmen and other liens
      imposed by law incurred in the ordinary course of business for sums not
      yet delinquent or being contested in good faith, if such reserve or other
      appropriate provision, if any, as shall be required by GAAP shall have
      been made in respect thereof;

                  (6)   liens incurred or deposits made in the ordinary course
      of business in connection with workers' compensation, unemployment
      insurance and other types of social security, or to secure the performance
      of tenders, statutory obligations, surety and appeal bonds, bids, leases,
      government contracts, performance and return-of-money bonds and other
      similar obligations (exclusive of obligations for the payment of borrowed
      money);

                  (7)   judgment liens not giving rise to an Event of Default so
      long as such lien is adequately bonded and any appropriate legal
      proceedings which may have been duly initiated for the review of such
      judgment shall not have been finally terminated or the period within which
      such proceedings may be initiated shall not have expired;

                  (8)   liens securing purchase money indebtedness incurred or
      in the ordinary course of business, provided, however, that such purchase
      money

                                      -2-

<PAGE>

      indebtedness shall not exceed $10,000,000 in the aggregate at any time
      outstanding;

                  (9)   banker's liens, rights of setoff and similar liens with
      respect to cash and cash equivalents on deposit in one or more bank
      accounts in the ordinary course of business; and

                  (10)  extensions and renewals of any of the foregoing so long
      as the aggregate amount of extended or renewed liens are not increased and
      are on terms and conditions no more restrictive than the terms and
      conditions of the liens extended or renewed.

      "Prime Rate": See Section 1.3(b).

      "Sallie Mae" means Student Loan Marketing Association.

      "SEC" means the Securities and Exchange Commission.

      "Standby Letter of Credit": See Section 1.2(a).

      "Standby Letter of Credit Agreement: See Section 1.2(a).

      "Subsidiary" of an entity means (i) any corporation more than 50% of the
outstanding securities having ordinary voting power of which shall at the time
be owned or controlled, directly or indirectly, by such Entity or by one or more
of its Subsidiaries or by such Entity and one or more of its Subsidiaries, or
(ii) any partnership, limited liability company, association, joint venture or
similar business organization more than 50% of the ownership interests having
ordinary voting power of which shall at the time be so owned or controlled.

      "Tangible Net Worth": See Section 4.9(b).

      "Title IV Programs" means the programs administered by the U.S. Department
of Education under Title IV of the Higher Education Act of 1965, as amended.

                                      -3-

<PAGE>

                                   EXHIBIT "B"

                                      NOTE

                          REVOLVING LINE OF CREDIT NOTE

$30,000,000.00                                                  Phoenix, Arizona
                                                              ____________, 2004

      FOR VALUE RECEIVED, the undersigned UNIVERSAL TECHNICAL INSTITUTE, INC., a
Delaware corporation ("Borrower"), promises to pay to the order of WELLS FARGO
BANK, NATIONAL ASSOCIATION ("Bank") at its office at MAC S4101-251, 100 West
Washington, Phoenix, Arizona 85003, or at such other place as the holder hereof
may designate, in lawful money of the United States of America and in
immediately available funds, the principal sum of THIRTY MILLION AND NO/100
DOLLARS ($30,000,000.00), or so much thereof as may be advanced and be
outstanding, with interest thereon, to be computed on each advance from the date
of its disbursement as set forth herein.

1. DEFINITIONS:

      As used herein, the following terms shall have the meanings set forth
after each, and any other term defined in this Note shall have the meaning set
forth at the place defined:

      (a) "Business Day" means any day except a Saturday, Sunday or any other
day on which commercial banks in Arizona are authorized or required by law to
close.

      (b) "Fixed Rate Term" means a period commencing on a Business Day and
continuing for one (1), two (2), three (3) or six (6) months, as designated by
Borrower, during which all or a portion of the outstanding principal balance of
this Note bears interest determined in relation to LIBOR; provided, however,
that no Fixed Rate Term may be selected for a principal amount less than Five
Hundred Thousand Dollars ($500,000.00) and provided further that no Fixed Rate
Term shall extend beyond the scheduled maturity date hereof. If any Fixed Rate
Term would end on a day which is not a Business Day, then such Fixed Rate Term
shall be extended to the next succeeding Business Day.

      (c) "LIBOR" means the rate per annum (rounded upward, if necessary, to the
nearest whole 1/8 of 1%) and determined pursuant to the following formula:

      LIBOR =            Base LIBOR
              -------------------------------
              100% - LIBOR Reserve Percentage

            (i)   "Base LIBOR" means the rate per annum for United States dollar
      deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
      understanding that such rate is quoted by Bank for the purpose of
      calculating effective rates of interest for loans making reference
      thereto, on the first day of a Fixed Rate Term for delivery of funds on
      said date for a period of time

<PAGE>

      approximately equal to the number of days in such Fixed Rate Term and in
      an amount approximately equal to the principal amount to which such Fixed
      Rate Term applies. Borrower understands and agrees that Bank may base its
      quotation of the Inter-Bank Market Offered Rate upon such offers or other
      market indicators of the Inter-Bank Market as Bank in its discretion deems
      appropriate including, but not limited to, the rate offered for U.S.
      dollar deposits on the London Inter-Bank Market.

            (ii)  "LIBOR Reserve Percentage" means the reserve percentage
      prescribed by the Board of Governors of the Federal Reserve System (or any
      successor) for "Eurocurrency Liabilities" (as defined in Regulation D of
      the Federal Reserve Board, as amended), adjusted by Bank for expected
      changes in such reserve percentage during the applicable Fixed Rate Term.

      (d) "Loan Documents" means this Note and each other contract, instrument
or document required hereby or now or hereafter executed in connection with or
delivered to Bank pursuant to the terms of this Note by any person or entity.

      (e) "Prime Rate" means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.

      (f) "Third Party Obligor" means any person or entity, other than Borrower,
obligated to Bank under any of the Loan Documents, including without limitation,
any guarantor hereof, any trustor of any Borrower which is a trust, or any
general partner or joint venturer in any Borrower which is a partnership or a
joint venture.

2. INTEREST:

      (a) Interest. The outstanding principal balance of this Note shall bear
interest (computed on the basis of a 360-day year, actual days elapsed) either
(i) at a fluctuating rate per annum one-half percent (0.5%) below the Prime Rate
in effect from time to time, or (ii) at a fixed rate per annum determined by
Bank to be five-eighths percent (0.625%) above LIBOR in effect on the first day
of the applicable Fixed Rate Term. When interest is determined in relation to
the Prime Rate, each change in the rate of interest hereunder shall become
effective on the date each Prime Rate change is announced within Bank. With
respect to each LIBOR selection hereunder, Bank is hereby authorized to note the
date, principal amount, interest rate and Fixed Rate Term applicable thereto and
any payments made thereon on Bank's books and records (either manually or by
electronic entry) and/or on any schedule attached to this Note, which notations
shall be prima facie evidence of the accuracy of the information noted.

      (b) Selection of Interest Rate Options. At any time any portion of this
Note bears interest determined in relation to LIBOR, it may be continued by
Borrower at the end of the Fixed Rate Term applicable hereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower. At

                                      -2-

<PAGE>

any time any portion of this Note bears interest determined in relation to the
Prime Rate, Borrower may convert all or a portion thereof so that it bears
interest determined in relation to LIBOR for a Fixed Rate Term designated by
Borrower. At such time as Borrower requests an advance hereunder or wishes to
select a LIBOR option for all or a portion of the outstanding principal balance
hereof, and at the end of each Fixed Rate Term, Borrower shall give Bank notice
specifying: (i) the interest rate option selected by Borrower; (ii) the
principal amount subject thereto; and (iii) for each LIBOR selection, the length
of the applicable Fixed Rate Term. Any such notice may be given by telephone so
long as, with respect to each LIBOR selection, (A) Bank receives written
confirmation from Borrower not later than three (3) Business Days after such
telephone notice is given, and (B) such notice is given to Bank prior to 10:00
a.m., California time, on the first day of the Fixed Rate Term. For each LIBOR
option requested hereunder, Bank will quote the applicable fixed rate to
Borrower at approximately 10:00 a.m., California time, on the first day of the
Fixed Rate Term. If Borrower does not immediately accept the rate quoted by
Bank, any subsequent acceptance by Borrower shall be subject to a
redetermination by Bank of the applicable fixed rate; provided however, that if
Borrower fails to accept any such rate by 11:00 a.m., California time, on the
Business Day such quotation is given, then the quoted rate shall expire and Bank
shall have no obligation to permit a LIBOR option to be selected on such day. If
no specific designation of interest is made at the time any advance is requested
hereunder or at the end of any Fixed Rate Term, Borrower shall be deemed to have
made a Prime Rate interest selection for such advance or the principal amount to
which such Fixed Rate Term applied. At no time shall more than five (5) advances
bear interest determined in relation to LIBOR.

      (c) Additional LIBOR Provisions.

            (i)   If Bank at any time shall determine that for any reason
      adequate and reasonable means do not exist for ascertaining LIBOR, then
      Bank shall promptly give notice thereof to Borrower. If such notice is
      given and until such notice has been withdrawn by Bank, then (A) no new
      LIBOR option may be selected by Borrower, and (B) any portion of the
      outstanding principal balance hereof which bears interest determined in
      relation to LIBOR, subsequent to the end of the Fixed Rate Term applicable
      thereto, shall bear interest determined in relation to the Prime Rate.

            (ii)  If any law, treaty, rule, regulation or determination of a
      court or governmental authority or any change therein or in the
      interpretation or application thereof (each, a "Change in Law") shall make
      it unlawful for Bank (A) to make LIBOR options available hereunder, or (B)
      to maintain interest rates based on LIBOR, then in the former event, any
      obligation of Bank to make available such unlawful LIBOR options shall
      immediately be cancelled, and in the latter event, any such unlawful
      LIBOR-based interest rates then outstanding shall be converted, at Bank's
      option, so that interest on the portion of the outstanding principal
      balance subject thereto is determined in relation to the Prime Rate;
      provided however, that if any such Change in Law shall permit any
      LIBOR-based interest rates to remain in effect until the expiration of the
      Fixed Rate Term applicable thereto, then such permitted LIBOR-based
      interest rates shall continue in effect until the expiration of such Fixed
      Rate Term. Upon the occurrence of

                                       -3-

<PAGE>

      any of the foregoing events, Borrower shall pay to Bank immediately upon
      demand such amounts as may be necessary to compensate Bank for any fines,
      fees, charges, penalties or other costs incurred or payable by Bank as a
      result thereof and which are attributable to any LIBOR options made
      available to Borrower hereunder, and any reasonable allocation made by
      Bank among its operations shall be conclusive and binding upon Borrower.

            (iii) If any Change in Law or compliance by Bank with any request or
      directive (whether or not having the force of law) from any central bank
      or other governmental authority shall:

                  (A)   subject Bank to any tax, duty or other charge with
            respect to any LIBOR options, or change the basis of taxation of
            payments to Bank of principal, interest, fees or any other amount
            payable hereunder (except for changes in the rate of tax on the
            overall net income of Bank); or

                  (B)   impose, modify or hold applicable any reserve, special
            deposit, compulsory loan or similar requirement against assets held
            by, deposits or other liabilities in or for the account of, advances
            or loans by, or any other acquisition of funds by any office of
            Bank; or

                  (C)   impose on Bank any other condition;

and the result of any of the foregoing is to increase the cost to Bank of
making, renewing or maintaining any LIBOR options hereunder and/or to reduce any
amount receivable by Bank in connection therewith, then in any such case,
Borrower shall pay to Bank immediately upon demand such amounts as may be
necessary to compensate Bank for any additional costs incurred by Bank and/or
reductions in amounts received by Bank which are attributable to such LIBOR
options. In determining which costs incurred by Bank and/or reductions in
amounts received by Bank are attributable to any LIBOR options made available to
Borrower hereunder, any reasonable allocation made by Bank among its operations
shall be conclusive and binding upon Borrower.

      (d) Payment of Interest. Interest accrued on this Note shall be payable on
the 1st day of each calendar quarter, commencing January 1, 2005.

      (e) Default Interest. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to four percent (4%) above
the rate of interest from time to time applicable to this Note.

3. BORROWING AND REPAYMENT:

      (a) Borrowing and Repayment. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to

                                      -4-

<PAGE>

all of the limitations, terms and conditions of this Note and each other Loan
Document; provided however, that the total outstanding borrowings under this
Note shall not at any time exceed the principal amount set forth above or such
lesser amount as shall at any time be available hereunder. The unpaid principal
balance of this obligation at any time shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made hereon
by or for Borrower, which balance may be endorsed hereon from time to time by
the holder. The outstanding principal balance of this Note shall be due and
payable in full on the Line of Credit Maturity Date (as defined in the Credit
Agreement).

      (b) Advances. Advances hereunder, to the total amount of the principal sum
stated above, may be made by the holder at the oral or written request of anyone
acting alone who is authorized to request advances, written notice of which
authorization has been provided by Borrower to the holder, and direct the
disposition of any advances until written notice of the revocation of such
authority is received by the holder at the office designated above.

      (c) Application of Payments. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Prime Rate, if any, and second, to the outstanding
principal balance of this Note which bears interest determined in relation to
LIBOR, with such payments applied to the oldest Fixed Rate Term first.

4. PREPAYMENT:

      (a) Prime Rate. Borrower may prepay principal on any portion of this Note
which bears interest determined in relation to the Prime Rate at any time, in
any amount and without penalty.

      (b) LIBOR. Borrower may prepay principal on any portion of this Note which
bears interest determined in relation to LIBOR at any time and in the minimum
amount of ONE HUNDRED THOUSAND AND NO/100 DOLLARS ($100,000.00); provided,
however, that if the outstanding principal balance of such portion of this Note
is less than said amount, the minimum prepayment amount shall be the entire
outstanding principal balance thereof. In consideration of Bank providing this
prepayment option to Borrower, or if any such portion of this Note shall become
due and payable at any time prior to the last day of the Fixed Rate Term
applicable thereto by acceleration or otherwise, Borrower shall pay to Bank
immediately upon demand a fee which is the sum of the discounted monthly
differences for each month from the month of prepayment through the month in
which such Fixed Rate Term matures, calculated as follows for each such month:

            (i)   Determine the amount of interest which would have accrued each
      month on the amount prepaid at the interest rate applicable to such amount
      had it remained outstanding until the last day of the Fixed Rate Term
      applicable thereto.

            (ii)  Subtract from the amount determined in (i) above the amount of
      interest which would have accrued for the same month on the amount prepaid
      for the remaining term of such Fixed Rate Term at LIBOR in effect on the
      date of

                                      -5-

<PAGE>

      prepayment for new loans made for such term and in a principal amount
      equal to the amount prepaid.

            (iii) If the result obtained in (ii) for any month is greater than
      zero, discount that difference by LIBOR used in (ii) above.

Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Borrower, therefore, agrees to pay the above-described prepayment
fee and agrees that said amount represents a reasonable estimate of the
prepayment costs, expenses and/or liabilities of Bank. If Borrower fails to pay
any prepayment fee when due, the amount of such prepayment fee shall thereafter
bear interest until paid at a rate per annum four percent (4%) above the Prime
Rate in effect from time to time (computed on the basis of a 360-day year,
actual days elapsed). Each change in the rate of interest on any such past due
prepayment fee shall become effective on the date each Prime Rate change is
announced within Bank.

5. EVENTS OF DEFAULT:

      This Note is made pursuant to and is subject to the terms and conditions
of that certain Credit Agreement between Borrower and Bank dated as of October
26, 2004, as amended from time to time (the "Credit Agreement"). Any default in
the payment or performance of any obligation under this Note, or any defined
event of default under the Credit Agreement, shall constitute an "Event of
Default" under this Note.

6. MISCELLANEOUS:

      (a) Remedies. Upon the occurrence of any Event of Default, the holder of
this Note, at the holder's option, may declare all sums of principal and
interest outstanding hereunder to be immediately due and payable without
presentment, demand, notice of nonperformance, notice of protest, protest or
notice of dishonor, all of which are expressly waived by each Borrower, and the
obligation, if any, of the holder to extend any further credit hereunder shall
immediately cease and terminate. Borrower shall pay to the holder immediately
upon demand the full amount of all payments, advances, charges, costs and
expenses, including reasonable attorneys' fees (to include outside counsel fees
and all allocated costs of the holder's in-house counsel), expended or incurred
by the holder in connection with the enforcement of the holder's rights and/or
the collection of any amounts which become due to the holder under this Note,
and the prosecution or defense of any action in any way related to this Note,
including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower or any other person or entity.

      (b) Obligations Joint and Several. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.

      (c) Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of Arizona.

                                       -6-

<PAGE>

      IN WITNESS WHEREOF, the undersigned has executed this Note as of the date
first written above.

                                         UNIVERSAL TECHNICAL INSTITUTE, INC., a
                                         Delaware corporation

                                         By: _______________________________
                                         Name: _____________________________
                                         Title: ____________________________

                                      -7-

<PAGE>

                                   EXHIBIT "C"

                                  SUBSIDIARIES

1.    UTI Holdings, Inc. (AZ)

2.    Universal Technical Institute of Arizona, Inc. (DE) [AZ, NC]

3.    U.T.I. of Illinois, Inc. (IL) [NC]

4.    Universal Technical Institute of California, Inc. (CA) [NC]

5.    Universal Technical Institute of North Carolina, Inc. (DE) d/b/a: NASCAR
      Technical Institute [IL, MS, NC, LA]

6.    Universal Technical Institute of Texas, Inc. (TX) [FL, IL, WV]

7.    Universal Technical Institute of Pennsylvania, Inc. (DE) [AZ, PA]

8.    Universal Technical Institute of Massachusetts, Inc. (DE) [AZ, PA]

9.    The Clinton Harley Corporation (DE) d/b/a: Clinton Technical Institute;
      Motorcycle/ Marine Mechanics Institute [AZ, FL, IL, MS, NJ, WA]

10.   Clinton Education Group, Inc. (DE) Inactive Entity [AZ]

11.   Custom Training Group, Inc. (CA)

<PAGE>

                                   EXHIBIT "D"

                           COMPLIANCE CERTIFICATE FOR
                                  PERIOD ENDING
                              _____________, 20___
                              ("REPORTING PERIOD")

Wells Fargo Bank, National Association
MAC S4101-251
100 West Washington
Phoenix, Arizona  85004

                             Date: ____________ (1)

Dear Ladies and Gentlemen:

      This Compliance Certificate refers to the Credit Agreement dated as of
October 26, 2004 (as it may hereafter be amended, modified, extended or restated
from time to time, the "Credit Agreement"), between Universal Technical
Institute, Inc., a Delaware corporation ("Borrower"), and Wells Fargo Bank,
National Association ("Bank"). Capitalized terms used and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.

      Pursuant to Section 4.3(c) of the Credit Agreement, the undersigned, the
chief financial officer of Borrower, hereby certifies that:

      Enclosed are the required financial statements for the [fiscal quarter]
[fiscal year] ending for the Borrower as required under Section 4.3 of the
Credit Agreement, which fairly and accurately present in all material respects
the financial condition and results of the operation of the Borrower.

      To the best of the undersigned's knowledge, no "Event of Default" and/or
other event that with the passing of time or the giving of notice or both would
become an Event of Default has occurred [or if so, specifying the nature and
extent thereof and any corrective actions taken or to be taken].

      As of the last day of the Reporting Period, the computations below were
true and correct:

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

(1)   To be submitted within forty-five (45) days after the end of each fiscal
quarter (120 days after the end of each fiscal year).

<PAGE>

<TABLE>
<S>                                                                 <C>
I.    Section 4.9(a) - NET INCOME AFTER TAXES

      Net Income After Taxes                                        $__________

      Net Income After Taxes Minimum Requirement                    $ 3,500,000

II.   Section 4.9(b) - TOTAL LIABILITIES TO TANGIBLE NET WORTH

      Liabilities:

         Current Liabilities                                        $__________

         Plus: Noncurrent Liabilities                               $__________

         Less: EITF 97-10 Liabilities up to $30,000,000            ($__________)

         Less: Subordinated Debt                                   ($__________)

         Equals: Total Liabilities                                  $__________A

      Tangible Net Worth:

         Total Assets                                               $__________

         Less: Total Liabilities                                   ($__________)

         Less: Intangible Assets                                   ($__________)

         Equals: Tangible Net Worth                                 $__________B

      DNW Ratio (A divided by B) Equals                                    :1.00

      DNW Ratio Maximum Requirement

         December 31, 2004
         to June 30, 2005                       3.50:1.00

         September 30, 2005
         to June 30, 2006                       2.00:1.00

         September 30, 2006
          and thereafter                        1.50:1.00
</TABLE>

                                      -2-

<PAGE>

<TABLE>
<S>                                                                 <C>
III.  Section 4.9(c) - CURRENT RATIO

         Numerator: Current Assets (excluding cash                  $_________A
                    in the Collateral Account and
                    cash controlled by GE)

                                    divided by

         Denominator: Current Liabilities (including                $_________B
                      Line of Credit balance
                      outstanding surety bonds and
                      outstanding Letters of Credit under
                      The Line of Credit Commitment)

Current Ratio         equals                                        _________A/B

Current Ratio Minimum Requirement

         December 31, 2004
         to June 30, 2005                     0.40:1.00

         September 30, 2005
         to June 30, 2006                     0.50:1.00

         September 30, 2006
          and thereafter                      0.60:1.00

IV.   Section 4.9(d) - TANGIBLE NET WORTH

         Amount                                                     $__________

         Minimum Requirement                                        $__________
</TABLE>

                                       UNIVERSAL TECHNICAL INSTITUTE, INC., a
                                       Delaware corporation

                                       By: _____________________________________
                                       Name: ___________________________________
                                       Title: __________________________________

                                       -3-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00076-of-00352.parquet"}]]