S-4

     AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 29, 2002
                                                      REGISTRATION NO. 333-
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- --------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ---------------------

                                    FORM S-4
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             ---------------------
                                RADIOLOGIX, INC.
             (Exact name of registrant as specified in its charter)

                                                                        
               DELAWARE                                 8099                                75-2648089
   (State or other jurisdiction of          (Primary Standard Industrial                 (I.R.S. Employer
    incorporation or organization)          Classification Code Number)                Identification No.)



    3600 JP MORGAN CHASE TOWER, 2200 ROSS AVENUE, DALLAS, TEXAS 75201, (214)
                                    303-2776
    (Address, including zip code, and telephone number, including area code,
                 of registrant's principal executive officers)

                              PAUL M. JOLAS, ESQ.
            EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
                                RADIOLOGIX, INC.
                           3600 JP MORGAN CHASE TOWER
                                2200 ROSS AVENUE
                              DALLAS, TEXAS 75201
                                 (214) 303-2776
           (Name, address, including zip code, and telephone number,
                   including area code, of agent for service)
                             ---------------------
                                    COPY TO:

                              WILLIAM R. HAYS, III
                             HAYNES AND BOONE, LLP
                          901 MAIN STREET, SUITE 3100
                            DALLAS, TEXAS 75202-3789
                                 (214) 651-5000
                             ---------------------
    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS SOON AS
PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.

    If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.  [ ]

    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.  [ ]

    If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.  [ ]
                             ---------------------
                        CALCULATION OF REGISTRATION FEE



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                                                               PROPOSED MAXIMUM     PROPOSED MAXIMUM
        TITLE OF EACH CLASS OF              AMOUNT TO BE      OFFERING PRICE PER   AGGREGATE OFFERING       AMOUNT OF
      SECURITIES TO BE REGISTERED            REGISTERED             SHARE               PRICE(1)         REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                           
10 1/2% Series B Senior Notes due
  2008.................................     $160,000,000             100%             $160,000,000           $14,720
Guarantees of 10 1/2% Series B Senior
  Notes due 2008(2)....................          --                   --                   --                None(3)
- ---------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------


(1) Estimated solely for the purpose of calculating the registration fee
    pursuant to Rule 457(f) under the Securities Act.

(2) The 10 1/2% Series B Senior Notes due 2008 are guaranteed by each of the
    entities listed in the Table of Additional Registrants.

(3) Pursuant to Rule 457(n), no registration fee is required with respect to the
    guarantees of the notes registered hereby.

    THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------


                        TABLE OF ADDITIONAL REGISTRANTS



                                                       STATE OR OTHER JURISDICTION
                                                           OF INCORPORATION OR          I.R.S. EMPLOYER
NAME, ADDRESS AND TELEPHONE                                   ORGANIZATION           IDENTIFICATION NUMBER
- ---------------------------                            ---------------------------   ---------------------
                                                                               
IDE Imaging Partners, Inc.(1)........................       Delaware                      16-1536314
Pacific Imaging Partners, Inc.(1)....................      California                     94-2509195
WB&A Imaging Partners, Inc.(1).......................       Delaware                      52-2119156
Treasure Coast Imaging Partners, Inc.(1).............       Delaware                      65-0825197
Radiologix Services, Inc.(1).........................       Delaware                      52-2120892
Advanced Imaging Partners, Inc.(1)...................       Delaware                      52-2055550
Mid Rockland Imaging Partners, Inc.(1)...............       Delaware                      13-3967044
Radiology and Nuclear Medicine Imaging Partners,
  Inc.(1)............................................       Delaware                      74-2851827
Community Imaging Partners, Inc.(1)..................       Delaware                      52-2076917
Valley Imaging Partners, Inc.(1).....................      California                     94-1704799
Advanced Radiology, LLC(1)...........................       Maryland                      52-1891450
Advanced Medical Imaging, Inc.(1)....................       Maryland                      52-1881998
M&S Imaging Partners I, Inc.(1)......................       Delaware                      74-2851828
M&S Imaging Investments, Inc.(2).....................       Delaware                      52-2068949
M&S Imaging Partners, L.P.(1)........................       Delaware                      74-2860076
Questar Cleveland, Inc.(3)...........................       Florida                       59-3578139
Questar Tampa, Inc.(3)...............................       Florida                       59-3406647
Questar Orlando, Inc.(3).............................       Florida                       59-3457479
Rocky Mountain OpenScan MRI, LLC(3)..................       Colorado                      84-1349368
Premier Advanced Imaging Network, Ltd.(3)............       Florida                       59-3457481
Questar Kansas, Inc.(3)..............................       Florida                       59-3466223
Questar PVH, Inc.(3).................................       Florida                       59-3357556
Questar San Francisco, Inc.(3).......................       Florida                       59-3520531
Questar Henderson, Inc.(3)...........................       Florida                       59-3527959
Questar TriStates, Inc.(3)...........................       Florida                       59-3540520
Questar Imaging, Inc.(3).............................       Florida                       59-3315849
Questar Duluth, Inc.(3)..............................       Florida                       59-3540519
Questar Lincoln, Inc.(3).............................       Florida                       59-3555014
Questar Palm Springs, Inc.(3)........................       Florida                       59-3540523
Questar Lower Bucks, Inc.(3).........................       Florida                       59-3520451
Questar Toledo, Inc.(3)..............................       Florida                       59-3520536
Questar Los Alamitos, Inc.(3)........................       Florida                       59-3578133
Questar Victorville, Inc.(3).........................       Florida                       59-3578129
Questar Columbus, Inc.(3)............................       Florida                       59-3578138
Questar Naperville, Inc.(3)..........................       Florida                       59-3578132
Questar Quakertown, Inc.(3)..........................       Florida                       59-3520532
Questar Tucson, Inc.(3)..............................       Florida                       59-3578130


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

(1) The address of each of these additional registrants is: 3600 JP Morgan Chase
    Tower, 2200 Ross Avenue, Dallas, TX 75201. The telephone number of each is
    214.303.2776.

(2) The address for M&S Imaging Investments, Inc. is: 300 Delaware Avenue, Suite
    1704, Wilmington, DE 19801. The telephone number is 302.427.5800.

(3) The address of each of these additional registrants is: 3650 JP Morgan Chase
    Tower, 2200 Ross Avenue, Dallas, TX 75201. The telephone number of each is
    214.303.2776.


The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

                  SUBJECT TO COMPLETION, DATED MARCH 29, 2002

PROSPECTUS

                                RADIOLOGIX, INC.
                            OFFER TO EXCHANGE UP TO

              $160,000,000 10 1/2% SERIES A SENIOR NOTES DUE 2008

                                      FOR

              $160,000,000 10 1/2% SERIES B SENIOR NOTES DUE 2008
           THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
                             ---------------------
     Upon the terms and subject to the conditions set forth in this prospectus
and the accompanying letter of transmittal, we are offering to exchange up to
$160,000,000 of our 10 1/2% Series B Senior Notes due 2008 (the "New Notes"),
which are registered under the Securities Act of 1933, as amended, for up to
$160,000,000 of our outstanding 10 1/2% Series A Senior notes due 2008 (the "Old
Notes"). We are offering to issue the New Notes to satisfy our obligations
contained in the registration rights agreement we entered into when we sold the
Old Notes. We will not receive any proceeds from the exchange offer.

     The terms of the New Notes are identical in all material respects to the
terms of the Old Notes, except that the transfer restrictions, registration
rights and liquidated damages provisions of the Old Notes do not apply to the
New Notes. The New Notes will evidence the same debt as the Old Notes and will
be governed by, and entitled to the benefits of, the same indenture under which
we issued the Old Notes.

     We will exchange all outstanding Old Notes that you validly tender and do
not withdraw before the exchange offer expires for an equal principal amount of
New Notes. You may withdraw tendered Old Notes at any time prior to the
expiration of the exchange offer.

     THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
          , 2002, UNLESS EXTENDED.

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

     To exchange your Old Notes for New Notes:

     - you must complete and send the letter of transmittal that accompanies
       this prospectus to the exchange agent so that the exchange agent receives
       the letter of transmittal before 5:00 p.m., New York city time, on
                 , 2002; or

     - if your Old Notes are held in book-entry form at The Depository Trust
       Company, you must instruct The Depository Trust Company, through your
       signed letter of transmittal, that you wish to exchange your Old Notes
       for New Notes. When the exchange offer closes, your account at The
       Depository Trust Company will be changed to reflect your exchange of Old
       Notes for New Notes.

     You should read the section called "The Exchange Offer" for additional
information on how to exchange your Old Notes for New Notes.

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

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

                The date of this prospectus is           , 2002


                              NOTICE TO INVESTORS

     Except as described below, based on interpretations of the SEC staff set
forth in no-action letters issued to third parties, we believe that the New
Notes issued in exchange for Old Notes may be offered for resale, resold, and
otherwise transferred by a holder without further registration under the
Securities Act and without delivering a prospectus in connection with any resale
of the New Notes, provided that the holder:

     - is acquiring the New Notes in the ordinary course of its business;

     - is not participating, and has no arrangement or understanding with any
       person to participate, in a distribution of the New Notes;

     - is not an "affiliate" of Radiologix within the meaning of Rule 405 under
       the Securities Act; and

     - is not a broker-dealer who holds Old Notes acquired for its own account
       as a result of market-making or other trading activities.

     Holders wishing to tender their Old Notes in the exchange offer must
represent to us that these conditions have been met. See "The Exchange
Offer -- Procedures for Tendering Old Notes."

     Any holder who tenders in the exchange offer for the purpose of
participating in a distribution of the New Notes cannot rely on these
interpretations by the SEC staff and must comply with the registration and
prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Unless an exemption from registration is otherwise
available, any secondary resale by a holder intending to distribute New Notes
should be covered by an effective registration statement under the Securities
Act containing the selling security holder information required by Item 507 of
Registration S-K under the Securities Act.

     Each broker-dealer who holds Old Notes acquired for its own account as a
result of market-making or other trading activities may exchange the Old Notes
pursuant to the exchange offer. However, the broker-dealer may be deemed to be
an "underwriter" within the meaning of the Securities Act and must, therefore,
deliver a prospectus meeting the requirements of the Securities Act in
connection with its initial resale of each New Note received in the exchange
offer. The letter of transmittal states that by acknowledging and delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

     For so long as the registration statement of which this prospectus is a
part is effective under the Securities Act, a broker-dealer may use this
prospectus, as it may be amended or supplemented from time to time, in
connection with its resales of New Notes received for its account in exchange
for Old Notes that were acquired by the broker-dealer as a result of
market-making or other trading activities. For a period of up to 180 days after
the expiration date of the exchange offer, we expect to keep the registration
statement effective under the Securities Act for, and to make this prospectus
available to, broker-dealers who request in the letter of transmittal to use it
in connection with those resales.

     The Old Notes and the New Notes constitute new issues of securities with no
established public trading market. We do not intend to apply for listing of the
Old Notes or the New Notes on any securities exchange or for inclusion of the
Old Notes or the New Notes in any automated quotation system. We cannot assure
you that:

     - an active public market for the New Notes will develop;

     - any market that may develop for the New Notes will be liquid; or

     - holders will be able to sell the New Notes at all or at favorable prices.

     Future trading prices of the New Notes will depend on many factors,
including among other things, prevailing interest rates, our operating results,
our credit rating and the market for similar securities.

                                        i


     Any Old Notes not tendered or accepted in the exchange offer will remain
outstanding. To the extent that Old Notes are tendered and accepted in the
exchange offer, your ability to sell untendered, and tendered but unaccepted,
Old Notes could be adversely affected. Following consummation of the exchange
offer, the holders of Old Notes will continue to be subject to the existing
restrictions on transfer of the Old Notes, and we will have no further
obligation to those holders, under the registration rights agreement, to
register the Old Notes under the Securities Act. There may be no trading market
for the Old Notes.

     We will not receive any proceeds from the exchange offer and have agreed to
bear the full expenses of the exchange offer. No underwriter is being used in
connection with the exchange offer.

     THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL WE ACCEPT SURRENDERS FOR
EXCHANGE FROM, HOLDERS OF OLD NOTES IN ANY JURISDICTION IN WHICH THE EXCHANGE
OFFER OR THE ACCEPTANCE THEREOF WOULD VIOLATE THE SECURITIES OR BLUE SKY LAWS OF
THAT JURISDICTION.

                                        ii


                                    SUMMARY

     The following summary contains basic information about this exchange offer.
It may not contain all the information that is important to you in making your
investment decision. More detailed information appears elsewhere in this
prospectus and in our consolidated financial statements and accompanying notes
that we incorporate by reference. "The Exchange Offer" and the "Description of
New Notes" sections of this prospectus contain more detailed information
regarding the terms and conditions of the exchange offer and the New Notes.
Except in the "Description of New Notes" section and unless the context clearly
implies otherwise, the words "Radiologix," "company," "we," "our," "ours," and
"us" refer to Radiologix, Inc. and its subsidiaries.

                                  OUR COMPANY

     We are a leading national provider of diagnostic imaging services through
our ownership and operation of free-standing, outpatient diagnostic imaging
centers.

     Our principal offices are located at 3600 JP Morgan Chase Tower, 2200 Ross
Avenue, Dallas, Texas 75201. Our telephone number is 214.303.2776.

                               THE EXCHANGE OFFER

     On December 12, 2001, we completed a private offering of the Old Notes. At
the time of the private offering we entered into a registration rights agreement
in which we agreed to deliver to you this prospectus and to use our best efforts
to cause the registration statement to be declared effective no later than June
10, 2002.

New Notes.....................   $160 million in principal amount of our 10 1/2%
                                 series B senior notes due 2008.

Exchange Offer................   We are offering to issue the New Notes in
                                 exchange for a like principal amount of
                                 outstanding Old Notes that we issued on
                                 December 12, 2001. In general, the Old Notes
                                 are subject to transfer restrictions that will
                                 not apply to the New Notes, so long as:

                                 - you are acquiring the New Notes in the
                                   ordinary course of your business;

                                 - you are not participating, nor have any
                                   arrangement or understanding with any person
                                   to participate, in a distribution of the New
                                   Notes;

                                 - you are not an affiliate of ours; and

                                 - you are not a broker-dealer who holds Old
                                   Notes acquired for its own account as a
                                   result of market-making or other trading
                                   activities.

Expiration Date...............   The exchange offer will expire at 5:00 p.m. New
                                 York City time, on           , 2002, unless we
                                 decide to extend it.

Purpose of Exchange Offer.....   We are making this exchange offer solely to
                                 satisfy our obligations under the registration
                                 rights agreement entered into in connection
                                 with sale of the Old Notes. The issuance of the
                                 New Notes will not provide us with any new
                                 proceeds.

Conditions to the Exchange
Offer.........................   The registration rights agreement does not
                                 require us to accept Old Notes for exchange if
                                 the exchange offer or the exchange of

                                        1


                                 the Old Notes would violate any applicable law
                                 or interpretation of the staff of the SEC. The
                                 exchange offer is not conditioned on the tender
                                 of a minimum aggregate principal amount of Old
                                 Notes.

Procedures for Tendering Old
Notes.........................   To participate in the exchange offer, you must
                                 complete, sign and date the letter of
                                 transmittal, or a facsimile of the letter of
                                 transmittal, and transmit it together with all
                                 other documents required by the letter of
                                 transmittal to U.S. Bank National Association,
                                 as exchange agent, at the address indicated on
                                 the cover page of the letter of transmittal. In
                                 the alternative, you can tender your Old Notes
                                 by following the procedures for book-entry
                                 transfer described in this prospectus.

                                 If your Old Notes are held through The
                                 Depository Trust Company and you wish to
                                 participate in the exchange offer, you may do
                                 so through the automated tender offer program
                                 of The Depository Trust Company. If you tender
                                 under this program, you will agree to be bound
                                 by the letter of transmittal that we are
                                 providing with this prospectus as though you
                                 had signed the letter of transmittal.

                                 If a broker, dealer, commercial bank, trust
                                 company or other nominee is the registered
                                 holder of your Old Notes, we urge you to
                                 contact that person promptly to tender your Old
                                 Notes in the exchange offer.

                                 All documents must be received by the exchange
                                 agent prior to the expiration of the exchange
                                 offer.

Guaranteed Delivery
Procedures....................   If you wish to tender your Old Notes and you
                                 cannot get your required documents to the
                                 exchange agent on time, you may tender your Old
                                 Notes according to the guaranteed delivery
                                 procedures described in "The Exchange
                                 Offer -- Guaranteed Delivery Procedures."

Withdrawal of Tenders.........   You may withdraw your tender of Old Notes at
                                 any time prior to the expiration of the
                                 exchange offer. To withdraw, you must deliver a
                                 written or facsimile transmission notice of
                                 withdrawal to the exchange agent at its address
                                 indicated on the cover page of the letter of
                                 transmittal before the expiration of the
                                 exchange offer.

Acceptance of Old Notes and
Delivery of New Notes.........   We intend to accept any and all Old Notes that
                                 you properly tender in the exchange offer prior
                                 to the expiration of the exchange offer. We
                                 will return any Old Notes that we do not accept
                                 for exchange to you without expense as promptly
                                 as practicable after the expiration of the
                                 exchange offer. We will deliver the New Notes
                                 as promptly as practicable after the expiration
                                 of the exchange offer and acceptance of the Old
                                 Notes for exchange.

Fees and Expenses.............   In general, we will bear all expenses related
                                 to the exchange offer.

                                        2


Consequences of Failure to
Exchange Old Notes............   If you do not exchange your Old Notes in this
                                 exchange offer, you will no longer have any
                                 further rights under the registration rights
                                 agreement, including any right to require us to
                                 register your Old Notes or to pay any
                                 liquidated damages. In addition, you will not
                                 be able to resell, offer to resell or otherwise
                                 transfer the Old Notes unless we have
                                 registered the Old Notes under the Securities
                                 Act, or unless you resell, offer to resell or
                                 otherwise transfer them under an exemption from
                                 the registration requirements of, or in a
                                 transaction not subject to, the Securities Act.

                                 To the extent that Old Notes are tendered and
                                 accepted in the exchange offer, your ability to
                                 sell untendered, and tendered but unaccepted,
                                 Old Notes could be adversely affected. There
                                 may be no trading market for the Old Notes.

U.S. Federal Income Tax
Considerations................   The exchange of Old Notes for New Notes in the
                                 exchange offer will not be a taxable event for
                                 U.S. federal income tax purposes.

Exchange Agent................   We have appointed U.S. Bank National
                                 Association, as exchange agent for the exchange
                                 offer. You should direct questions and requests
                                 for assistance, requests for additional copies
                                 of this prospectus or the letter of transmittal
                                 and requests for the notice of guaranteed
                                 delivery to the exchange agent addressed as
                                 follows: U.S. Bank National Association, 180
                                 East Fifth Street, St. Paul, Minnesota 55101;
                                 Attention: Specialized Finance Department,
                                 Corporate Trust Services. Eligible institutions
                                 may make requests by facsimile at (651)
                                 244-1537.

                                 THE NEW NOTES

     The terms of the New Notes are identical in all material respects to the
terms of the Old Notes, except that the transfer restrictions, registration
rights and liquidated damages provisions do not apply to the New Notes. The New
Notes will evidence the same debt as the Old Notes, and the same indenture will
govern the New Notes and the Old Notes.

     The following summary contains basic information about the New Notes and
may not contain all the information that is important to you. For a more
complete description of the New Notes, please refer to the section of this
prospectus entitled "Description of New Notes."

Issuer........................   Radiologix, Inc.

New Notes.....................   $160 million aggregate principal amount of
                                 10 1/2% series B senior notes due 2008.

Maturity Date.................   December 15, 2008.

Interest Rate and Payment
Dates.........................   The New Notes will bear interest at an annual
                                 rate of 10 1/2%, payable semiannually in
                                 arrears on June 15 and December 15 of each
                                 year, commencing June 15, 2002.

Ranking.......................   The New Notes will be our senior unsecured
                                 obligations, will rank senior in right of
                                 payment to all of our subordinated indebtedness
                                 and equal in right of payment with all of our
                                 other senior indebtedness.

                                        3


Guarantees....................   The New Notes will be unconditionally
                                 guaranteed on a senior unsecured basis by our
                                 existing and future subsidiaries that are not
                                 unrestricted subsidiaries.

Optional Redemption...........   On or after December 15, 2005, we will have the
                                 right to redeem all or some of the New Notes
                                 from time to time at the following redemption
                                 prices, plus accrued and unpaid interest to the
                                 date of redemption



                                          FOR THE PERIOD                           PERCENTAGE
                                          --------------                           ----------
                                                                                
                                          On or after December 15, 2005..........   105.250%
                                          On or after December 15, 2006..........   102.625%
                                          December 15, 2007 and thereafter.......   100.000%


                                 On or prior to December 15, 2004, we may, at
                                 out option, redeem up to 35% of the original
                                 principal amount of the New Notes with the net
                                 proceeds from certain public equity offerings
                                 at a price equal to 110.500% of the principal
                                 amount, plus accrued and unpaid interest to the
                                 date of redemption, provided at least 65% of
                                 the original principal amount of the New Notes
                                 remains outstanding.

Change of Control.............   Upon the occurrence of a change of control,
                                 each holder of New Notes will have the right to
                                 require us to purchase all or any part of such
                                 holder's New Notes at an offer price in cash
                                 equal to 101% of the aggregate principal amount
                                 thereof, plus accrued and unpaid interest
                                 thereon to the date of purchase.

Asset Sale Offer..............   If we sell assets, we may have to use the net
                                 proceeds to offer to purchase the New Notes at
                                 a price equal to 100% of the principal amount,
                                 plus accrued and unpaid interest thereon to the
                                 date of purchase.

Certain Covenants.............   We will issue the New Notes under an indenture
                                 that, among other things, restricts our ability
                                 and the ability of our subsidiaries that are
                                 not unrestricted subsidiaries to:

                                 - borrow money;

                                 - pay dividends on or redeem or repurchase our
                                   stock;

                                 - make investments;

                                 - create liens;

                                 - sell certain assets or merge with or into
                                   other companies;

                                 - enter into certain transactions with
                                   affiliates;

                                 - sell stock in our subsidiaries; and

                                 - restrict dividends, distributions or other
                                   payments from our subsidiaries.

                                        4


                                  RISK FACTORS

     There are many risks that may affect your investment in the New Notes. Some
of these risks, but not all of them, are listed below. You should carefully
consider these risks as well as the other information included or incorporated
by reference in this prospectus before investing in the New Notes.

RISKS RELATING TO THE EXCHANGE OFFER

     If you do not exchange the Old Notes for New Notes under the exchange
offer, then you will continue to be subject to the existing transfer
restrictions on the Old Notes. In general, the Old Notes may not be offered or
sold unless they are registered or exempt from registration under the Securities
Act of 1933 and applicable state securities laws. Except as required by the
registration rights agreement, we do not intend to register resales of the Old
Notes.

     The tender of Old Notes under the exchange offer will reduce the aggregate
principal amount of the Old Notes. This may have an adverse effect upon, and
increase the volatility of, the market price of any Old Notes that you continue
to hold due to the reduction in liquidity.

RISKS RELATED TO OUR INDEBTEDNESS AND TO THE NEW NOTES

     The risks described in this section that apply to the New Notes also apply
to any Old Notes not tendered for New Notes in the exchange offer.

  OUR SUBSTANTIAL LEVEL OF INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL
  CONDITION AND PREVENT US FROM FULFILLING OUR OBLIGATIONS ON THE NEW NOTES.

     We will have substantial indebtedness after this offering. As of December
31, 2001, we had approximately $197.2 million of indebtedness. In addition, we
have the ability to borrow up to $35 million under our new senior credit
facility. Also, subject to restrictions in the indenture relating to the New
Notes and the new senior credit facility, we may incur additional indebtedness.

     Our high level of indebtedness could have important consequences to you,
including the following:

     - our ability to obtain additional financing for working capital, capital
       expenditures, acquisitions or general corporate purposes may be impaired;

     - we must use a substantial portion of our cash flow from operations to pay
       interest on the New Notes and our other indebtedness, which will reduce
       the funds available to us for other purposes;

     - all of the indebtedness outstanding under the new senior credit facility
       will be secured by substantially all of our assets and will mature prior
       to the New Notes;

     - our high level of indebtedness could place us at a competitive
       disadvantage compared to our competitors that have less debt;

     - some of our debt has a variable rate of interest, which exposes us to the
       risk of increased interest rates; and

     - our high level of indebtedness makes us more vulnerable to economic
       downturns and adverse developments in our business.

     We expect to obtain the money to pay our expenses and to pay the amounts
due under the New Notes, the new senior credit facility and other debt from our
operations and from borrowings under the new senior credit facility. Our ability
to meet our expenses thus depends on our future performance, which will be
affected by financial, business, economic and other factors. We will not be able
to control many of these factors, such as economic conditions in the markets
where we operate and pressure from competitors. Our business may not generate
sufficient cash flow from operations in the future, our currently anticipated
growth in revenue and cash flow may not be realized on schedule and future
borrowings may not be available to us under the new senior credit facility in an
amount sufficient to enable us to repay

                                        5


indebtedness, including the New Notes, or to fund other liquidity needs. If we
do not have enough money, we may be required to refinance all or part of our
then existing debt (including the New Notes), sell assets or borrow more money.
We cannot guarantee that we will be able to do so on terms acceptable to us, or
at all. In addition, the terms of existing or future debt agreements, including
the new senior credit facility and the indenture relating to the New Notes, may
restrict us from adopting any of these alternatives. The failure to generate
sufficient cash flow or to achieve such alternatives could significantly
adversely affect the value of the New Notes and our ability to pay the amounts
due under the New Notes.

  BECAUSE THE NEW NOTES ARE UNSECURED, YOUR RIGHT TO ENFORCE REMEDIES IS LIMITED
  BY THE RIGHTS OF HOLDERS OF SECURED DEBT.

     The New Notes will not be secured. Our new senior credit facility is
secured by substantially all of our assets and a pledge of the capital stock of
all of our wholly owned subsidiaries. If we become insolvent or are liquidated,
or if payment under the new senior credit facility is accelerated, our lenders
would be entitled to exercise the remedies available to a secured lender under
applicable law and will have a claim on those assets before the holders of the
New Notes. The liquidation value of our assets may not be sufficient to repay in
full the indebtedness under the new senior credit facility, as well as our other
indebtedness, including the New Notes.

  OUR ABILITY TO REPAY THE NEW NOTES AND OUR OTHER DEBT DEPENDS ON CASH FLOW
  FROM OUR SUBSIDIARIES, SOME OF WHICH ARE NOT OBLIGATED TO MAKE FUNDS AVAILABLE
  TO MAKE PAYMENTS ON THE NEW NOTES.

     We are a holding company. Our only material assets are our ownership
interests in our subsidiaries. Consequently, we depend on distributions or other
intercompany transfers of funds from our subsidiaries to meet our debt service
and other obligations, including with respect to the New Notes. Our
non-guarantor subsidiaries are not obligated to make funds available to us for
payment on the New Notes. Only our subsidiaries that are not unrestricted
subsidiaries will guarantee the New Notes. The historical consolidated financial
statements incorporated by reference in this prospectus are presented on a
consolidated basis, including all of our subsidiaries. The aggregate service fee
revenue and EBITDA for the year ended December 31, 2001 of our subsidiaries that
will not be guarantors of the New Notes were $20.4 million and $5.7 million,
respectively, or 7.4% and 8.5%, respectively, of our total service fee revenue
and EBITDA for the year ended December 31, 2001. The aggregate total assets at
December 31, 2001 of our subsidiaries that will not be guarantors of the New
Notes were $10.8 million, or 3.8% of our total assets at December 31, 2001. The
operating results of our guarantor subsidiaries may not be sufficient to enable
us to make payments on the New Notes. In addition, our rights and the rights of
our creditors, including holders of the New Notes, to participate in the assets
of any of our non-guarantor subsidiaries upon their liquidation or
recapitalization will generally be subject to the prior claims of those
subsidiaries' creditors. As a result, the New Notes are effectively subordinated
to the indebtedness of the non-guarantor subsidiaries. As of December 31, 2001,
the total liabilities of our non-guarantor subsidiaries, excluding intercompany
liabilities, were $4.8 million.

  THE INDENTURE FOR THE NEW NOTES AND OUR NEW SENIOR CREDIT FACILITY IMPOSE
  SIGNIFICANT OPERATING AND FINANCIAL RESTRICTIONS, WHICH MAY PREVENT US FROM
  PURSUING CERTAIN BUSINESS OPPORTUNITIES AND TAKING CERTAIN ACTIONS.

     The indenture for the New Notes and our new senior credit facility impose
significant operating and financial restrictions on us. These restrictions will
limit our ability to, among other things:

     - borrow money;

     - pay dividends on or redeem or repurchase our stock;

     - make investments;

     - create liens;

     - sell certain assets or merge with or into other companies;
                                        6


     - enter into certain transaction with affiliates;

     - sell stock in our subsidiaries; and

     - restrict dividends, distributions or other payments from our
       subsidiaries.

     In addition, our new senior credit facility requires us to maintain
specified financial ratios. These covenants could adversely affect our ability
to finance our future operations or capital needs and pursue available business
opportunities. A breach of any of these covenants or our inability to maintain
the required financial ratios could result in a default in respect of the
related indebtedness. If a default occurs, the relevant lenders could elect to
declare the indebtedness, together with accrued interest and other fees, to be
immediately due and payable and proceed against any collateral securing that
indebtedness. Acceleration of our other indebtedness could result in a default
under the terms of the indenture governing the New Notes and our assets may not
be sufficient to satisfy our obligations under our indebtedness, including the
New Notes.

  A COURT COULD CANCEL THE GUARANTEES UNDER CERTAIN CIRCUMSTANCES.

     Each of our subsidiaries that is not an unrestricted subsidiary will
guarantee the New Notes. If, however, a guarantor becomes a debtor in a case
under the United States Bankruptcy Code or encounters other financial
difficulty, under federal or state fraudulent conveyance laws a court might
avoid (that is, cancel) its guarantee. The court might do so if it found that,
when the guarantor entered into its guarantee or, in some states, when payments
became due under its guarantee, it (i) received less than reasonably equivalent
value or fair consideration for the guarantee and (ii) either (a) was or was
rendered insolvent, (b) was left with inadequate capital to conduct its
business, or (c) believed or should have believed that it would incur debts
beyond its ability to pay. The court might also avoid a guarantee, without
regard to the above factors, if it found that the guarantor entered into its
guarantee with actual intent to hinder, delay, or defraud its creditors.

     A court would likely find that a guarantor did not receive reasonably
equivalent value or fair consideration for its guarantee unless it benefited
directly or indirectly from the issuance of the New Notes. If a court avoided a
guarantee, you would no longer have a claim against the guarantor. In addition,
the court might direct you to repay any amounts already received from the
guarantor. If the court were to avoid any guarantor's guarantee, we cannot
assure you that funds would be available to pay the New Notes from another
guarantor or from any other source.

     The test for determining solvency for purposes of the foregoing will depend
on the law of the jurisdiction being applied. In general, a court would consider
an entity insolvent either if the sum of its existing debts exceeds the fair
value of all its property, or if the present fair saleable value of its assets
is less than the amount required to pay the probable liability on its existing
debts as they become due. For this analysis, "debts" includes contingent and
unliquidated debts.

     The indenture states that the liability of each guarantor on its guarantee
is limited to the maximum amount that the subsidiary can incur without risk that
the guarantee will be subject to avoidance as a fraudulent conveyance. This
limitation may not protect the guarantees from a fraudulent conveyance attack
or, if it does, that the guarantees will be in amounts sufficient, if necessary,
to pay obligations under the New Notes when due.

  WE MAY NOT BE ABLE TO SATISFY OUR OBLIGATIONS TO HOLDERS OF THE NEW NOTES UPON
  A CHANGE OF CONTROL.

     Upon the occurrence of a "change of control," as defined in the indenture,
you will have the right to require us to purchase the New Notes at a price equal
to 101% of the principal amount, together with any accrued and unpaid interest
and liquidated damages, if any, to the date of purchase. Our failure to
purchase, or give notice of purchase of, the New Notes would be a default under
the indenture, which would in turn be a default under the new senior credit
facility. Moreover, our failure to repay all amounts outstanding under the new
senior credit facility upon a default would also be a default under the
indenture.

                                        7


     In addition, a change of control may constitute an event of default under
the new senior credit facility. A default under the new senior credit facility
will result in an event of default under the indenture if the lenders accelerate
the debt under the new senior credit facility.

     If a change of control occurs, we may not have enough assets to satisfy all
obligations under the new senior credit facility and the indenture related to
the New Notes. Upon the occurrence of a change of control, we could seek to
refinance the indebtedness under the new senior credit facility and the New
Notes or obtain a waiver from the lenders or you as a holder of the New Notes.
We may not be able to obtain a waiver or refinance our indebtedness on
commercially reasonable terms, if at all.

  THERE IS NO ESTABLISHED TRADING MARKET FOR THE NEW NOTES, AND YOU MAY NOT BE
  ABLE TO SELL THEM QUICKLY OR AT THE PRICE THAT YOU PAID.

     The New Notes are a new issue of securities and there is no established
trading market for the New Notes. We do not intend to apply for the New Notes to
be listed on any securities exchange or to arrange for quotation on any
automated dealer quotation systems. The initial purchasers of the Old Notes have
advised us that they intend to make a market in the New Notes, but they are not
obligated to do so. The initial purchasers of the Old Notes may discontinue any
market making in the New Notes at any time, in their sole discretion. As a
result, we cannot assure you as to the liquidity of any trading market for the
New Notes.

     You may not be able to sell your New Notes at a particular time or at
favorable prices. We also cannot assure you as to the level of liquidity of the
trading market for the New Notes or, in the case of any holders of Old Notes
that do not exchange them, the trading market for the Old Notes following the
offer to exchange the Old Notes for New Notes. As a result, you may be required
to bear the financial risk of your investment in the New Notes or, in case of
any holders of Old Notes that do not exchange them, the Old Notes indefinitely.
Future trading prices of the Old Notes and the New Notes may be volatile and
will depend on many factors, including:

     - our operating performance and financial condition;

     - our ability to complete the offer to exchange the Old Notes for the New
       Notes;

     - the interest of securities dealers in making a market for them; and

     - the market for similar securities.

RISKS RELATED TO OUR COMPANY AND OUR INDUSTRY

  OUR REVENUE IS DEPENDENT ON REFERRALS.

     We generate most of our revenue from fees charged for the use of our
diagnostic imaging equipment at our centers. This revenue depends on referrals
from third parties, many of which are made by physicians who have no contractual
obligation to refer patients to us. We also generate revenue from service fees
that we receive from the contracted radiology practices. If a sufficiently large
number of physicians discontinues referring patients to us, our procedure volume
could decrease, which would reduce our revenue and operating margins.

     Further, commercial third-party payors have implemented programs to control
costs that could limit the ability of physicians to refer patients to us. For
example, prepaid healthcare plans, such as health maintenance organizations, in
certain instances provide diagnostic imaging services directly and contract
directly with providers and require their enrollees to obtain these services
from only these providers. Some insurance companies and self-insured employers
also limit these services to contracted providers. These "closed panel" systems
are now common in the managed care environment. Other systems create an economic
disincentive for referrals to providers outside of the system's designated panel
of providers. We may not be able to compete successfully for managed care
contracts against entities with greater resources within a market area.

                                        8


  CHANGES IN THIRD-PARTY REIMBURSEMENT RATES OR METHODS FOR DIAGNOSTIC IMAGING
  SERVICES COULD CREATE DOWNWARD PRICING PRESSURE, WHICH WOULD RESULT IN A
  DECLINE IN OUR REVENUE AND HARM OUR FINANCIAL POSITION.

     Our revenue is derived through our ownership, operation and management of
diagnostic imaging centers and from service fees paid to us by contracted
radiology practices. Substantially all of the revenue of our diagnostic imaging
centers and the contracted radiology practices is currently derived from
commercial third-party payors, government sponsored healthcare programs
(principally, Medicare and Medicaid) and private and other payors. For the year
ended December 31, 2001, revenue generated at our diagnostic imaging centers
consisted of 62% from commercial third-party payors, 28% from Medicare and
Medicaid and 10% from private and other payors.

     Rates paid by commercial third-party payors are based on established
physician and hospital charges and are generally higher than Medicare
reimbursement rates. Any decrease in the relative number of patients covered by
commercial third-party payors could decrease our revenue.

     Any change in the rates of or conditions for reimbursement from commercial
third-party payors, Medicare or Medicaid could substantially reduce the amounts
reimbursed to us or our contracted radiology practices for services provided.
These reductions could have a significant adverse effect on our revenue and
financial results by creating downward pricing pressure.

  WE COULD BE HARMED IF THE CONTRACTED RADIOLOGY PRACTICES TERMINATE THEIR
  AGREEMENTS WITH US OR LOSE A SIGNIFICANT NUMBER OF RADIOLOGISTS.

     Our diagnostic imaging services include a professional component that must
be provided by radiologists who are not directly employed by us. We do not
control the radiologists who perform professional services for us. Instead,
these radiologists are employed by the contracted radiology practices that
maintain agreements with us. These agreements typically have terms of between 10
and 40 years, but may be terminated by either party under certain limited
conditions. Depending on the termination event, the radiology practice may have
the right to require us to sell, assign and transfer to it, the assets and
related liabilities and obligations associated with the professional and
technical radiology services provided by the radiology practice immediately
prior to the termination. The termination or material modification of any of
them could reduce our revenue.

     If a significant number of radiologists terminate their relationships with
the contracted radiology practices and the radiology practices cannot recruit
sufficient qualified radiologists to fulfill practice obligations under our
agreements with them, our ability to maximize the use of our diagnostic imaging
centers could be adversely affected. Competition in recruiting radiologists may
make it difficult for contracted radiology practices to maintain adequate levels
of radiologists. Neither we nor the contracted radiology practices maintain
insurance on the lives of any affiliated physicians.

  WE MAY NOT BE ABLE TO SUCCESSFULLY COMPLETE OUR MARKET DEVELOPMENT PLANS.

     We intend to increase our presence in existing markets through acquisitions
of centers, developing de novo centers and adding additional equipment at
existing centers, establishing additional joint venture and outsourcing
relationships and selectively entering into contractual relationships with
high-quality, profitable radiology practices. We may not be able to expand
either within our existing markets or in new markets. In addition, any expansion
may not be beneficial to our overall strategy, and any such expansion may not
ultimately produce returns that justify our investment.

     Our ability to expand is dependent upon many factors, including our ability
to:

     - identify attractive and willing candidates for acquisitions, joint
       ventures or outsourcing relationships;

     - adapt our structure to comply with federal and state legal requirements
       affecting our arrangements with contracted radiology practices, including
       state prohibitions on fee-splitting, corporate practice of medicine and
       self-referrals;

                                        9


     - obtain regulatory approvals and certificates of need, where necessary,
       and comply with licensing and certification requirements applicable to
       our diagnostic imaging centers, the contracted radiology practices and
       the physicians associated with the contracted radiology practices;

     - recruit a sufficient number of qualified radiology technologists;

     - expand our infrastructure and management; and

     - obtain adequate financing.

     Our ability to expand is also dependent on our ability to compete for
opportunities. We may not be able to compete effectively for the acquisition of
diagnostic imaging centers, joint venture opportunities or other outsourcing
relationships. Our competitors may have better established operating histories
and greater resources than we do. Competitors may make it more difficult to
complete acquisitions or joint ventures on terms beneficial to us.

     Acquisitions involve a number of special risks, including the following:

     - possible adverse effects on our operating results;

     - diversion of management's attention and resources;

     - failure to retain key personnel;

     - difficulties in integrating new operations into our existing management
       infrastructure;

     - amortization or write-offs of acquired intangible assets; and

     - risks associated with unanticipated events or liabilities.

     Additionally, although we will continue to structure our operations in an
effort to comply with applicable antitrust laws, federal or state governmental
authorities may view us as being dominant in a particular market and, therefore,
cause us to divest ourselves of relationships or assets.

  WE AND THE CONTRACTED RADIOLOGY PRACTICES MAY BECOME SUBJECT TO BURDENSOME
  LAWSUITS.

     We may be subject to professional liability claims, including, without
limitation, for improper use or malfunction of our diagnostic imaging equipment.
We maintain insurance policies with coverages that we believe are appropriate in
light of the risks attendant to our business and consistent with industry
practice. We also require the contracted radiology practices to maintain
professional liability insurance consistent with industry practice. However,
adequate liability insurance may not be available to us and the contracted
radiology practices in the future at acceptable costs or at all.

     Providing medical services entails the risk of professional malpractice and
other similar claims. The physicians employed by the contracted radiology
practices are from time to time subject to malpractice claims. We structure our
relationships with the practices under our agreements with them in a manner that
we believe does not constitute the practice of medicine by us or subject us to
professional malpractice claims for acts or omissions of physicians in the
contracted radiology practices. Nevertheless, claims, suits or complaints
relating to services provided by the contracted radiology practices may be
asserted against us in the future, including malpractice.

     Any claim made against us not fully covered by insurance could be costly to
defend against, result in a substantial damage award against us and divert the
attention of our management from our operations, which could have an adverse
effect on our financial performance. In addition, claims might adversely affect
our business or reputation.

     We have assumed and succeeded to substantially all of the obligations of
some of the operations that we have acquired. Therefore, claims may be asserted
against us for events that occurred prior to these acquisitions. In connection
with our acquisitions, the sellers of the operations that we have acquired have
agreed to indemnify us for certain claims. However, we may not be able to
collect payment under these indemnity agreements, which could affect us
adversely.
                                        10


  MOST OF OUR IMAGING MODALITIES REQUIRE THE UTILIZATION OF RADIATION, AND
  CERTAIN IMAGING MODALITIES UTILIZE RADIOACTIVE MATERIALS, AND THESE OPERATIONS
  GENERATE REGULATED WASTE AND COULD SUBJECT US TO REGULATION, RELATED COSTS AND
  DELAYS AND POTENTIAL LIABILITIES FOR INJURIES OR VIOLATIONS OF ENVIRONMENTAL,
  HEALTH AND SAFETY LAWS.

     Most of our imaging modalities utilize radiation, and certain imaging
modalities utilize radioactive material. These operations generate medical and
other regulated wastes. Storage, use and disposal of these materials and waste
products present the risk of accidental environmental contamination and physical
injury. We are subject to federal, state and local regulations governing
storage, handling and disposal of these materials. We cannot completely
eliminate the risk of accidental contamination or injury from these hazardous
materials. In the event of an accident, we would be held liable for any
resulting damages, and any liability could exceed the limits of or fall outside
the coverage of our insurance. We may not be able to maintain insurance on
acceptable terms, or at all. We could incur significant costs and the diversion
of our management's attention in order to comply with current or future
environmental, health and safety laws and regulations.

  WE MAY EXPERIENCE COMPETITION FROM OTHER DIAGNOSTIC IMAGING COMPANIES. THIS
  COMPETITION COULD ADVERSELY AFFECT OUR REVENUE AND OUR BUSINESS.

     The market for diagnostic imaging services is competitive. We compete
principally on the basis of our reputation for providing multiple modalities,
our conveniently located centers and our cost-effective, high-quality diagnostic
imaging services. We compete locally with groups of radiologists, established
hospitals, clinics and certain other independent organizations that own and
operate imaging equipment. Our major national competitors include Alliance
Imaging, Inc., HEALTHSOUTH Corporation, InSight Health Services Corp., Medical
Resources, Inc., Syncor International Corporation and U.S. Diagnostic, Inc. Some
of our local or national competitors that provide diagnostic imaging services
may now or in the future have access to greater financial resources than we do
and may have access to newer, more advanced equipment.

     In addition, in the past some non-radiologist physician practices have
refrained from establishing their own diagnostic imaging centers because of the
federal physician self-referral legislation. Final regulations issued in January
2001 clarify certain of the exceptions to the physician self-referral
legislation, which may create opportunities for and encourage some physician
practices to establish their own diagnostic imaging centers within their group
practices, which may compete with us.

  TECHNOLOGICAL CHANGE IN OUR INDUSTRY COULD REDUCE THE DEMAND FOR OUR SERVICES
  AND REQUIRE US TO INCUR SIGNIFICANT COSTS TO UPGRADE OUR EQUIPMENT.

     Technological change in the diagnostic imaging industry has been gradual.
In the future, however, the development of new technologies or refinements of
existing modalities may make our existing equipment technologically or
economically obsolete, or cause a reduction in the value of, or reduce the need
for, our services. Diagnostic imaging equipment is currently manufactured by
numerous companies. Competition among manufacturers for a greater share of the
diagnostic imaging equipment market may result in technological advances in the
speed and imaging capacity of new equipment. Consequently, the obsolescence of
our equipment may be accelerated. We may not have the financial ability to
acquire the new or improved equipment.

  A FAILURE TO MEET OUR CAPITAL EXPENDITURE REQUIREMENTS COULD ADVERSELY AFFECT
  OUR BUSINESS.

     We operate in a capital intensive, high fixed-cost industry that requires
significant amounts of capital to fund operations, particularly the initial
start-up and development expenses of new diagnostic imaging

                                        11


centers and the acquisition of additional centers and new diagnostic imaging
equipment. We incur capital expenditures to, among other things:

     - upgrade and replace existing equipment;

     - purchase new diagnostic imaging equipment; and

     - expand within our existing markets and enter new markets.

     To the extent we are unable to generate sufficient cash from our
operations, funds are not available under our new senior credit facility or we
are unable to structure or obtain operating leases, we may be unable to meet our
capital expenditure requirements. Furthermore, we may not be able to raise any
necessary additional funds through bank financing or the issuance of equity or
debt securities on terms acceptable to us, if at all.

  OUR SUCCESS DEPENDS IN PART ON OUR KEY PERSONNEL AND WE MAY NOT BE ABLE TO
  RETAIN SUFFICIENT QUALIFIED PERSONNEL.

     Our success depends in part on our ability to attract and retain qualified
senior and executive management, managerial and technical personnel. Competition
in recruiting these personnel may make it difficult for us to continue our
growth and success. The loss of their services or our inability in the future to
attract and retain management and other key personnel could hinder the
implementation of our business strategy. We do not maintain key person insurance
for any of our executive officers. Recently, there has been a shortage in
certain of our markets of qualified radiology technologists, the personnel who
operate our equipment. If we are unable to recruit and retain a sufficient
number of qualified technologists, we will be unable to operate our centers at
maximum capacity.

  OUR INABILITY TO ENFORCE NON-COMPETE AGREEMENTS WITH THE RADIOLOGISTS MAY
  INCREASE COMPETITION.

     Each of the contracted radiology practices under our comprehensive services
model has entered into agreements with its physician shareholders and full-time
employed radiologists that generally prohibit those shareholders and
radiologists from competing for a period of two years within defined geographic
regions after they cease to be owners or employees, as applicable. In most
states, a covenant not to compete will be enforced only:

     - to the extent it is necessary to protect a legitimate business interest
       of the party seeking enforcement;

     - if it does not unreasonably restrain the party against whom enforcement
       is sought; and

     - if it is not contrary to public interest.

     Enforceability of a non-compete covenant is determined by a court based on
all of the facts and circumstances of the specific case at the time enforcement
is sought. For this reason, it is not possible to predict whether, or to what
extent, a court will enforce the contracted radiology practices' covenants. The
inability of the contracted radiology practices or us to enforce radiologists'
non-compete covenants could result in increased competition from individuals who
are knowledgeable about our business strategies and operations.

  IT IS DIFFICULT TO ESTIMATE OUR UNCOLLECTIBLE ACCOUNTS RECEIVABLE AND
  CONTRACTUAL ALLOWANCES FOR BILLED CHARGES, WHICH MAY IMPACT OUR EARNINGS.

     Due to the complex nature of billing for healthcare services, it is
difficult for us to estimate our uncollectible accounts receivable and our
contractual allowances for billed charges. If we have to revise our estimates
and our existing reserves are not adequate, this may impact our earnings. In
late 2000, we engaged in an extensive review of our collection processes and our
method of determining allowances for contractual adjustments and bad debts. At
that time, management determined, based on reports and analyses not previously
available, that the estimation process needed to be revised and that a portion
of our

                                        12


accounts receivable were no longer collectible. Accordingly, we incurred a $13.3
million pre-tax charge for uncollectible accounts receivable during the fourth
quarter of 2000.

  OUR RECORDED GOODWILL AMOUNTS MAY BE IMPAIRED UNDER NEW ACCOUNTING STANDARDS.

     At December 31, 2001, we had approximately $28.5 million recorded as
goodwill. Under new accounting standards effective January 1, 2002, we will be
required to assess our recorded goodwill amounts for impairment by applying a
fair-value-based test. We are currently in the process of assessing whether an
impairment charge is warranted as of January 1, 2002. Accordingly, we may be
required to record a non-cash charge by writing down all or a portion of our
recorded goodwill amounts. Such a write down could have a material impact on our
results of operations in 2002 or future periods.

  MANAGED CARE CONTRACTS AND CAPITATED FEE ARRANGEMENTS COULD REDUCE OUR
  OPERATING MARGINS.

     For the year ended December 31, 2001, approximately 91% of revenue
generated at our diagnostic imaging centers was derived from payments made on a
fee-for-service basis and approximately 9% was derived from capitated
arrangements. Under capitated or other risk-sharing arrangements, the healthcare
provider typically is paid a pre-determined amount per-patient per-month from
the payor in exchange for providing all necessary covered services to patients
covered under the arrangement. These contracts pass much of the financial risk
of providing outpatient diagnostic imaging services, including the risk of over-
use, from the payor to the provider. Our success will depend in part on our
ability to negotiate effectively, on behalf of the contracted radiology
practices and the diagnostic imaging centers that we own, operate or manage,
contracts with HMOs, employer groups and other third-party payors for services
to be provided on a risk-sharing or capitated basis by some or all of the
radiology practices and/or diagnostic imaging centers. Risk-sharing arrangements
result in better revenue predictability, but more unpredictability of expenses
and, consequently, profitability. We may not be able to negotiate satisfactory
arrangements on a capitated or other risk-sharing basis, on behalf of our
diagnostic imaging centers or the contracted radiology practices. In addition,
to the extent that patients or enrollees covered by these contracts require more
frequent or extensive care than anticipated, we would incur unanticipated costs
not offset by additional revenue, which would reduce operating margins.

  WE MAY BE UNABLE TO GENERATE REVENUE WHEN OUR EQUIPMENT IS NOT OPERATIONAL.

     Timely, effective service is essential to maintaining our reputation and
high utilization rates on our imaging equipment. Our warranties and maintenance
contracts do not compensate us for loss of revenue when our systems are not
fully operational. Equipment manufacturers may not be able to perform repairs or
supply needed parts in a timely manner. Thus, if we experience more equipment
malfunctions than anticipated or if we are unable to promptly obtain the service
necessary to keep our equipment functioning effectively, our revenue could
decline and our ability to provide services would be harmed.

  OUR CORPORATE ORGANIZATIONAL DOCUMENTS COULD DISCOURAGE ACQUISITION PROPOSALS
  AND MAKE DIFFICULT A CHANGE OF CONTROL.

     Certain provisions of Radiologix's Restated Certificate of Incorporation,
as amended, Radiologix's Amended and Restated Bylaws and Delaware law could
discourage potential acquisition proposals, delay or prevent a change in control
of Radiologix and, consequently, limit the price that investors might be willing
to pay in the future for shares of our common stock. These provisions include
the inability to remove directors except for cause and our ability to issue,
without further stockholder approval, shares of preferred stock with rights and
privileges senior to the common stock. We are also subject to Section 203 of the
Delaware General Corporation Law which, subject to certain exceptions, prohibits
a Delaware corporation from engaging in any of a broad range of business
combinations with an "interested stockholder" for three years after the
stockholder became an interested stockholder.

                                        13


     We have also entered into employment agreements with our four executive
officers, which contain provisions that require us to pay certain amounts to the
executives upon their termination following a change of control. These
agreements may delay or prevent a change of control of Radiologix.

RISKS RELATING TO GOVERNMENT REGULATION OF OUR BUSINESS

  STATE AND FEDERAL ANTI-KICKBACK AND ANTI-SELF-REFERRAL LAWS MAY ADVERSELY
  AFFECT OUR INCOME.

     Various federal and state laws govern financial arrangements among
healthcare providers. Federal anti-kickback law prohibits the knowing and
willful offer, payment, solicitation or receipt of any form of remuneration in
return for, or to induce, the referral of Medicare or Medicaid patients, or in
return for, or to induce, the purchase, lease or order of items or services that
are covered by Medicare or Medicaid. Similarly, many state laws prohibit the
solicitation, payment or receipt of remuneration in return for, or to induce,
the referral of patients in private as well as government programs. Violation of
these anti-kickback laws may result in substantial civil or criminal penalties
for individuals or entities and/or exclusion from federal or state healthcare
programs. We believe that we are operating in compliance with applicable law and
believe that our arrangements with providers would not be found to violate the
anti-kickback laws. However, these laws could be interpreted in a manner
inconsistent with our operations.

     Federal law prohibiting physician self-referrals (the "Stark Law")
prohibits a physician from referring Medicare or Medicaid patients to an entity
for certain "designated health services" if the physician has a prohibited
financial relationship with that entity, unless an exception applies. Diagnostic
radiology (other than nuclear medicine) is a designated health service. Although
we believe that our operations do not violate these laws, our activities may be
challenged. If a challenge to our activities is successful, it could have an
adverse effect on our operations. In addition, legislation may be enacted in the
future that further addresses Medicare and Medicaid fraud and abuse or that
imposes additional requirements or burdens on us.

     All of the states in which our diagnostic imaging centers are located have
adopted a form of anti-kickback law and almost all of those states have also
adopted a form of Stark Law. The scope of these laws and the interpretations of
them vary from state to state and are enforced by state courts and regulatory
authorities, each with broad discretion. A determination of liability under the
laws described in this risk factor could result in fines and penalties and
restrictions on our ability to operate in these jurisdictions.

  FEDERAL FALSE CLAIMS ACT VIOLATIONS COULD AFFECT OUR PARTICIPATION IN
  GOVERNMENT PROGRAMS.

     The Federal False Claims Act provides in part that the federal government
may bring a lawsuit against any person whom it believes has knowingly presented,
or caused to be presented, a false or fraudulent request for payment from the
federal government, or who has made a false statement or used a false record to
get a claim approved. The Federal False Claims Act further provides that a
lawsuit thereunder may be initiated in the name of the United States by an
individual who is an original source of the allegations. The government has
taken the position that claims presented in violation of the federal
anti-kickback law or Stark Law may be considered a violation of the Federal
False Claims Act. Penalties include fines ranging from $5,500 to $11,000 for
each false claim, plus three times the amount of damages that the federal
government sustained because of the act of that person. We believe that we are
in compliance with the rules and regulations that apply to the Federal False
Claims Act. However, we could be found to have violated certain rules and
regulations resulting in sanctions under the Federal False Claims Act, and if we
are so found in violation, any sanctions imposed could result in fines and
penalties and restrictions on and exclusions from participation in federal and
state healthcare programs that are integral to our business.

                                        14


  OUR AGREEMENTS WITH THE CONTRACTED RADIOLOGY PRACTICES MUST BE STRUCTURED TO
  AVOID THE CORPORATE PRACTICE OF MEDICINE AND FEE-SPLITTING.

     The laws of many states, including many of the states in which the
contracted radiology practices are located, prohibit us from exercising control
over the medical judgments or decisions of physicians and from engaging in
certain financial arrangements, such as the splitting of professional fees with
physicians. These laws and their interpretations vary from state to state and
are enforced by state courts and regulatory authorities, each with broad
discretion. A component of our business has been to enter into service
agreements with radiology practices. We provide management, administrative,
technical and other non-medical services to the radiology practices in exchange
for a service fee. We structure our relationships with the radiology practices,
including the purchase of diagnostic imaging centers, in a manner that we
believe keeps us from engaging in the practice of medicine or exercising control
over the medical judgments or decisions of the radiology practices or their
physicians or violating the prohibitions against fee-splitting. State regulatory
authorities or other parties may assert that we are engaged in the corporate
practice of medicine or that the payment of service fees to us by the radiology
practices constitutes fee-splitting. If such a claim were successfully asserted,
we could be subject to civil and criminal penalties and could be required to
restructure or terminate the applicable contractual arrangements. This result,
or our inability to successfully restructure our relationships to comply with
these statutes, could jeopardize our business strategy.

  LICENSING AND CERTIFICATION LAWS MAY LIMIT OUR ABILITY TO EXPAND.

     Ownership, construction, operation, expansion and acquisition of diagnostic
imaging centers are subject to various federal and state laws, regulations and
approvals concerning licensing of centers, personnel, certificates of need and
other required certificates for certain types of healthcare centers and major
medical equipment. The laws of some of the states in which we operate limit our
ability to acquire new diagnostic imaging equipment or expand or replace our
existing equipment at diagnostic imaging centers in those states. In addition,
free-standing diagnostic imaging centers that provide services that are not
performed as part of a physician office must meet Medicare requirements to be
certified as an independent diagnostic testing facility to bill the Medicare
program. We may not be able to receive the required regulatory approvals for any
future acquisitions, expansions or replacements, and the failure to obtain these
approvals could limit the market for our services.

  THE REGULATORY FRAMEWORK IS UNCERTAIN AND EVOLVING.

     Healthcare laws and regulations may change significantly in the future. We
continuously monitor these developments and modify our operations from time to
time as the regulatory environment changes. We cannot assure you, however, that
we will be able to adapt our operations to address new regulations or that new
regulations will not adversely affect our business. In addition, although we
believe that we are operating in compliance with applicable federal and state
laws, neither our current or anticipated business operations nor the operations
of the contracted radiology practices have been the subject of judicial or
regulatory interpretation. We cannot assure you that a review of our business by
courts or regulatory authorities will not result in a determination that could
adversely affect our operations or that the healthcare regulatory environment
will not change in a way that restricts our operations.

     Certain states have enacted statutes or adopted regulations affecting risk
assumption in the healthcare industry, including statutes and regulations that
subject any physician or physician network engaged in risk-based managed care
contracting to applicable insurance laws and regulations. These laws and
regulations may require physicians and physician networks to meet minimum
capital requirements and other safety and soundness requirements. Implementing
additional regulations or compliance requirements could result in substantial
costs to us and the contracted radiology practices and limit our ability to
enter into capitated or other risk-sharing managed care arrangements.

                                        15


                    THE DIAGNOSTIC IMAGING SERVICES INDUSTRY

OVERVIEW

     Diagnostic imaging involves the use of less-invasive techniques to generate
representations of internal anatomy that can be recorded on film or digitized
for display on a video monitor. Diagnostic imaging procedures facilitate the
early diagnosis of diseases and disorders, often minimizing the cost and amount
of care required for patients and healthcare providers. Diagnostic imaging
procedures include: magnetic resonance imaging (or MRI), computed tomography (or
CT), positron emission tomography (or PET), nuclear medicine, ultrasound,
mammography, bone densitometry (or DEXA), general radiography (or X-ray) and
fluoroscopy.

     The Centers for Medicare & Medicaid Services estimate that national
healthcare spending in 2000 was approximately $1.3 trillion and expect that
spending will grow, on average, in excess of 7% annually through 2008. The
American College of Radiology estimates that over 300 million diagnostic imaging
procedures were performed in the United States during 1999, the most recent year
for which data are available, generating estimated revenue of over $60 billion,
or 5% of total healthcare spending. Furthermore, the American College of
Radiology estimates that over 60% of this diagnostic imaging revenue was
generated on an outpatient basis.

     We believe that the diagnostic imaging services industry will continue to
grow as a result of:

     The Escalating Demand for Healthcare Services from an Aging Population.
There has been strong demand for healthcare services due to an aging population
in the United States. According to the United States Census Bureau, one of the
fastest growing segments of the population is the group over 65 years of age,
which is expected to increase as much as 16% from 2000 to 2010. We believe the
aging population will help drive the growth for diagnostic imaging procedures
over the coming years because diagnostic imaging utilization tends to increase
as a person ages.

     The Increasing Role of Diagnostic Imaging in Healthcare.  Advanced imaging
equipment and modalities are allowing physicians to diagnose a wide variety of
diseases and injuries quickly and accurately without exploratory surgery or
other surgical or invasive procedures, which are usually more expensive, involve
greater risk to patients and result in longer rehabilitation time. We believe
that future technological advances will continue to enhance the ability of
radiologists to diagnose and influence treatment. For example, experimental MRI
techniques, such as magnetic resonance spectroscopic imaging, are used to show
the functions of the brain and to investigate how epilepsy, AIDS, brain tumors,
Alzheimer's disease and other abnormalities affect the brain. In addition,
advanced imaging systems are gaining wider acceptance among payors, as they are
increasingly seen and accepted as a tool for reducing long-term healthcare
costs.

     Greater Consumer Awareness of and Demand for Preventive Diagnostic
Screening.  Diagnostic imaging is increasingly being used as a screening tool
for preventive care. Consumer awareness of and demand for diagnostic imaging as
a less-invasive and preventive screening method has added to the growth in
diagnostic imaging procedures. Consumers are now more aware of the advanced
procedures that are available to them and are requesting them as preventive
procedures from their physicians and healthcare providers. We believe that, with
increased technological advancements, there will be greater consumer awareness
of and demand for diagnostic imaging procedures as preventive and less-invasive
procedures for early diagnosis of diseases and disorders.

     An Increased Number of High-End Procedures That Utilize Advancements in
Technology.  Recent technological advancements include: magnetic resonance
spectroscopic imaging, which can differentiate malignant from benign lesions;
magnetic resonance angiography, which can produce three-dimensional images of
body parts and assess the status of blood vessels; and enhancements in
teleradiology systems, which permit the digital transmission of radiological
images from one location to another for interpretation. Additional improvements
in imaging technologies, contrast agents and scanning capabilities are leading
to new, less-invasive methods of diagnosing diseases. For example, these
improvements are aiding in detecting

                                        16


blockages in the heart's vital arteries, liver metastases, pelvic diseases and
certain vascular abnormalities without exploratory surgery.

DIAGNOSTIC IMAGING MODALITIES

     The principal diagnostic imaging modalities include the following:

     Magnetic Resonance Imaging.  MRI utilizes a strong magnetic field in
conjunction with low energy electromagnetic waves that are processed by a
computer to produce high-resolution, three-dimensional, cross-sectional images
of body tissue, including the brain, spine, abdomen, heart and extremities.
Unlike CT and conventional X-rays, MRI does not utilize ionizing radiation,
which can cause tissue damage in high doses. A typical MRI examination takes
from 20 to 45 minutes. MRI systems are priced in the range of $0.9 million to
$2.5 million.

     Computed Tomography.  CT utilizes a computer to direct the movement of an
X-ray tube to produce multiple cross-sectional images of a particular organ or
area of the body. CT is used to detect tumors and other conditions affecting
bones and internal organs. It is also used to detect the occurrence of strokes,
hemorrhages and infections. CT provides higher resolution images than
conventional X-rays, but generally not as well-defined as those produced by
magnetic resonance. A typical CT examination takes from 15 to 45 minutes. CT
systems are priced in the range of $0.3 million to $1.2 million.

     Positron Emission Tomography.  PET utilizes a scanner to record signals
emitted by compounds with signal-emitting tracers after such compounds are
injected into a patient's body. A scanner records the signals as they travel
through the body and collect in the various organs targeted for examination. A
computer assembles the signals into actual images. PET has proven effective in
the detection and tracking of cancer (including lung, colorectal, breast and
prostate cancers), heart disease and brain disorders, including Alzheimer's
disease, Parkinson's disease and seizure disorders. PET systems are priced in
the range of $1 million to $1.4 million.

     Nuclear Medicine.  Nuclear medicine utilizes short-lived radioactive
isotopes that release small amounts of radiation that can be recorded by a gamma
camera and processed by a computer to produce an image of various anatomical
structures or to assess the function of various organs such as the heart,
kidneys, thyroid and bones. Nuclear medicine is used primarily to study anatomic
and metabolic functions.

     Ultrasound.  Ultrasound imaging utilizes high-frequency sound waves to
develop images of internal organs, fetuses and the vascular system. Ultrasound
has widespread applications, particularly for procedures in obstetrics,
gynecology and cardiology.

     Mammography.  Mammography is a specialized form of radiology utilizing low
dosage X-rays to visualize breast tissue and is the primary screening tool for
breast cancer. Mammography procedures and related services assist in the
diagnosis and treatment planning for breast cancer.

     Bone Densitometry.  Bone densitometry uses an advanced technology called
dual-energy X-ray absorptiometry, or DEXA, which safely, accurately and
painlessly measures bone density and the mineral content of bone for the
diagnosis of osteoporosis and other bone diseases.

     General Radiography (or X-ray) and Fluoroscopy.  X-rays utilize roentgen
rays to penetrate the body and record images of organs and structures on film.
Fluoroscopy utilizes ionizing radiation combined with a video viewing system for
real time monitoring of organs. X-ray and fluoroscopy are the most frequently
used imaging modalities. Digital X-ray systems add computer image processing
capability to traditional X-ray images.

                                        17


                                    BUSINESS

OUR COMPANY

     We are a leading national provider of diagnostic imaging services through
our ownership and operation of free-standing, outpatient diagnostic imaging
centers. We utilize sophisticated technology and technical expertise to perform
a broad range of imaging procedures, such as MRI, CT, PET, nuclear medicine,
ultrasound, mammography, DEXA, X-ray and fluoroscopy. We operate 120 diagnostic
imaging centers located in 18 states, with a concentration of diagnostic imaging
centers in markets located in California, Florida, Kansas, Maryland, New York,
Texas and Virginia. We offer multi-modality imaging services at 70 of our
diagnostic imaging centers, which provide patients and referring physicians
access to advanced diagnostic imaging services in one convenient location.

     We also provide administrative, management and information services to
certain radiology practices that provide professional services in connection
with our diagnostic imaging centers and to hospitals and radiology practices
with which we operate joint ventures. The services we provide leverage our
existing infrastructure and improve radiology practice or joint venture
profitability, efficiency and effectiveness.

     For the year ended December 31, 2001, we performed over 1.9 million
diagnostic imaging procedures and generated service fee revenue of $276.7
million. In addition, we generated cash flow from operations of $41 million for
the year ended December 31, 2001. We have achieved substantial growth, having
increased service fee revenue and EBITDA at compounded annual growth rates of
23% and 16%, respectively, from the year ended December 31, 1998 through the
year ended December 31, 2001. Over the same period, we achieved average annual
same center revenue growth of 12.2%.

COMPETITIVE STRENGTHS

     We believe that we are well-positioned to take advantage of favorable
demographic and diagnostic imaging services industry trends by capitalizing on
the following strengths:

     Our Leading Market Position in Our Core Markets.  We have a concentrated
presence in our core markets, which enables us to offer patients, referring
physicians and payors a higher degree of responsiveness and convenience than
independent operators or hospitals. We provide flexible scheduling, convenient
locations and expanded hours of operation, as well as the expeditious delivery
of radiology reports to referring physicians. The 89 centers in our core markets
generated 87% of our service fee revenue for the year ended December 31, 2001.
We believe that payors contract with us because of our strong market presence,
the high quality of our services and our ability to provide a single point of
contact and centralized administration. In addition, our leading position
enables us to increase our procedure volume, optimize equipment utilization,
benefit from economies of scale in purchasing and negotiation of payor contracts
and leverage our administrative and information technology infrastructure in our
core markets.

     Comprehensive, Leading-Edge Diagnostic Imaging Services.  We provide a
broad range of diagnostic imaging services within our core markets. Our 70
multi-modality centers enable us to offer one-stop shopping to patients,
referring physicians and payors. In our experience, referring physicians and
payors prefer to enter into relationships with diagnostic imaging providers that
offer a broad spectrum of services at convenient locations, benefiting referring
physicians and patients who require more than one type of diagnostic imaging
procedure. From January 1, 1999 to December 31, 2001, we added over $70 million
of equipment and leasehold improvements through purchase or lease to enhance our
diagnostic imaging centers and increase the number of modalities offered per
center to provide services demanded by patients, referring physicians and
payors. Our multi-modality offerings, coupled with the introduction of
technologically advanced imaging equipment, have contributed to an increase in
our volume of procedures and an increase in the average revenue per technical
procedure from $87.61 in 1998 to $112.65 for the year ended December 31, 2001.

                                        18


     Diversified Payor Mix and Multi-Modality Service Offerings.  Our revenue
base comprises a diverse mix of payors, including managed care organizations,
traditional indemnity providers, Medicare, Medicaid and private and other
payors. For the year ended December 31, 2001, revenue generated at our
diagnostic imaging centers consisted of 62% from commercial third-party payors,
28% from Medicare and Medicaid and 10% from private and other payors. In
addition, we have experienced relatively stable pricing, with modest increases
in most markets and across most modalities. We believe our payor diversity and
multi-modality service offerings mitigate our exposure to possible unfavorable
reimbursement trends within any one payor class and to modality-specific rate
changes.

     Strong Relationships with Leading Radiology Practices.  In each of our core
markets, we contract with leading radiology practices to provide professional
radiology services in connection with our diagnostic imaging centers. We believe
that our affiliation with these leading radiology practices enhances our
reputation with referring physicians and their patients. We also provide
administrative, management and information services to certain radiology
practices. In light of a recent shortage of radiologists, we believe that our
contractual relationships with large, established radiology practices are
important to maintaining our high quality service.

     Experienced Management Team.  We have a highly experienced management team
with an average of approximately 20 years of healthcare services experience.
Management has successfully generated growth by increasing same center revenue
and executing a disciplined expansion strategy.

BUSINESS STRATEGY

     Our strategy is to enhance our strong market presence and to increase
revenue and cash flow by continuing to pursue the following business strategy:

     Increase Procedure Volume and Maximize Revenue at Existing Centers.  We
intend to enhance our operations and increase procedure volume and revenue at
our existing centers by:

     - expanding referring physician, hospital and payor relationships;

     - increasing patient referrals through targeted marketing efforts; and

     - leveraging our multi-modality offerings to increase the number of
       high-end procedures performed.

     Maintain Market Leadership in Our Core Markets.  We intend to maintain our
leading market position in our core markets by pursuing strategic "tuck-in"
acquisitions and developing de novo centers. In addition, we believe that we
will have opportunities to increase the use of our diagnostic imaging services
through additional joint venture or outsourcing arrangements with hospitals, in
part due to recent federal healthcare regulatory changes that favor outpatient
centers that are managed or owned in joint venture or outsourcing arrangements
with third parties.

     Maximize Equipment Utilization and Enhance Service Offerings.  Seventy of
our centers provide multi-modality imaging services, including various
combinations of MRI, CT, PET, nuclear medicine, ultrasound, mammography, DEXA,
X-ray and fluoroscopy. We intend to maximize our equipment utilization by
adding, upgrading and re-deploying equipment where we experience excess demand
and by consolidating, divesting or closing unprofitable centers or markets. In
addition, we intend to enhance our service offerings by adding, upgrading and
replacing our diagnostic imaging equipment to meet referring physician and
patient demands.

OPERATION OF CENTERS

     At December 31, 2001, we operated 120 diagnostic imaging centers located in
18 states. We utilize sophisticated technology and technical expertise to
perform a broad range of imaging procedures such as MRI, CT, PET, nuclear
medicine, ultrasound, mammography, DEXA, X-ray and fluoroscopy. As part of
operating our diagnostic imaging centers, we purchase and maintain diagnostic
imaging equipment, hire and train employees, schedule patient appointments,
perform patient procedures, process bills, keep records and obtain and maintain
permits, licenses and insurance.
                                        19


     Referrals for diagnostic imaging services at our centers come from
referring physicians, including primary care physicians and specialists. In our
experience, these referrals are influenced by individual patients acting as
consumers as well as by health systems, managed care organizations, insurers and
other entities representing large groups of patients. Offering a wide spectrum
of modalities at a diagnostic imaging center enables us to offer "one-stop
shopping" to referring physicians and patients. For example, a physician may
refer a patient for an X-ray. If the X-ray, when interpreted by a radiologist
who is providing professional services at the diagnostic imaging center, reveals
that further diagnostic imaging (for example, a CT procedure) is necessary, the
radiologist can confer with the referring physician and the patient can undergo
the CT procedure at the same center. Thus, by offering both X-ray and CT
modalities at the diagnostic imaging center, the patient can avoid multiple
visits, thereby decreasing costs and time delays.

     Managed care organizations, insurers and other entities often represent
large groups of patients who are dispersed throughout a wide geographic area.
These entities influence referring physicians' decisions by entering into
provider agreements with, or otherwise selecting or approving, healthcare
service providers, including diagnostic imaging service providers. Our
experience is that entities representing large groups of patients often prefer
to enter into managed care contracts with providers who offer a broad array of
diagnostic imaging services throughout a corresponding geographic area. We have
developed our diagnostic imaging networks, in part, to be selected as a
preferred provider for these entities more frequently, which may increase
physician referrals to our centers.

     To increase the convenience of our diagnostic imaging centers to patients,
we implement market-wide scheduling systems where practical. In these instances,
each diagnostic imaging center in a market area can access the patient
appointment calendar of other centers in the market area. Each center also can
schedule patient appointments at every other center within the network. This
system permits each of our centers within a market area to efficiently allocate
time available at our diagnostic imaging centers within that market area and to
meet a patient's appointment time, date or location preferences.

     We focus on providing quality patient care and service to ensure patient
and referring physician satisfaction. Our development of comprehensive radiology
networks permits us to invest in technologically advanced imaging equipment,
including MRI, open MRI, spiral CT and PET. Our consolidation of diagnostic
imaging centers into coordinated networks improves response time, increases
overall patient accessibility, permits us to standardize certain customer
relations procedures and permits us to develop "best practices" for our
diagnostic imaging centers. We seek the input and participation of the
contracted radiology practices to which we provide administrative, management
and information services to develop best practices and to improve productivity
and the quality of services. By focusing on further improving and, where
appropriate, standardizing the operations of our diagnostic imaging centers, we
believe that we can increase patient and referring physician satisfaction, which
should lead to increased referrals and increased utilization of our diagnostic
imaging centers.

     Payment for diagnostic imaging services comes primarily from commercial
third-party payors, governmental payors (including Medicare and Medicaid) and
private and other payors. Our centers are principally dependent on our ability
to attract referrals from primary care physicians, specialists and other
healthcare providers. The referral often depends on the existence of a
contractual arrangement with the referred patient's health benefit plan. For the
year ended December 31, 2001, approximately 9% of our revenue generated at our
diagnostic imaging centers was generated from capitated arrangements. The
following table illustrates our approximate payor mix, based on revenue
generated at our diagnostic imaging centers, for the year ended December 31,
2001:



                                                               PERCENT OF
PAYOR                                                         TOTAL REVENUE
- -----                                                         -------------
                                                           
Commercial..................................................       62%
Medicare and Medicaid.......................................       28%
Private and Other...........................................       10%


                                        20


CONTRACTED RADIOLOGY PRACTICES

     We contract with radiology practices to provide professional services,
including supervision and interpretation of diagnostic imaging procedures
performed in our diagnostic imaging centers. We believe that we do not engage in
the practice of medicine nor do we employ physicians. The radiology practices
maintain full control over the provision of professional radiological services.
The contracted radiology practices generally have outstanding physician and
practice credentials and reputations; strong competitive market positions; a
broad sub-specialty mix of physicians; a history of growth and potential for
continued growth; and a willingness to embrace our strategy for the delivery of
diagnostic imaging services.

     We have two models by which we contract with radiology practices: a
comprehensive services model and a technical services model. Under our
comprehensive services model, we enter into a long-term agreement with a
radiology practice group (typically 40 years). Under this arrangement, in
addition to obtaining technical fees for the use of our diagnostic imaging
equipment and the provision of technical services, we provide management
services and receive a fee based on the practice group's professional revenue,
including revenue derived outside of our diagnostic imaging centers. Under our
technical services model, we enter into a shorter-term agreement with a
radiology practice group (typically 10 to 15 years) and pay them a fee based on
cash collections from reimbursements for imaging procedures. In both the
comprehensive services and technical services models, we own the diagnostic
imaging assets, and, therefore, receive 100% of the technical reimbursements
associated with imaging procedures. Additionally, in most instances, both the
comprehensive services and the technical services models contemplate an
incentive technical bonus for the radiology group if the net technical income
exceeds specified thresholds.

     The agreements with the radiology practices under our comprehensive
services model contain provisions whereby both parties have agreed to certain
restrictions on accepting or pursuing radiology opportunities within a five to
15-mile radius of any of our owned, operated or managed diagnostic imaging
centers at which the radiology practice provides professional radiology services
or any hospital at which the radiology practice provides on-site professional
radiology services. Each of these agreements also restricts the applicable
radiology practice from competing with us and our other contracted radiology
practices within a specified geographic area during the term of the agreement.
In addition, the agreements require the radiology practices to enter into and
enforce agreements with their physician shareholders at each radiology practice
(subject to certain exceptions) that include covenants not to compete with us
for a period of two years after termination of employment or ownership, as
applicable.

     Under our comprehensive services model, we have the right to terminate each
agreement if the radiology practice or a physician employee of the contracted
radiology practice engages in conduct, or is formally accused of conduct, for
which the physician employee's license to practice medicine reasonably would be
expected to be subject to revocation or suspension or is otherwise disciplined
by any licensing, regulatory or professional entity or institution, the result
of any of which (in the absence of termination of this physician or other action
to monitor or cure this act or conduct) adversely affects or would reasonably be
expected to adversely affect the radiology practice. In addition, we may
terminate each of these agreements if, during the first five years of the
agreement, more than one-third of the total number of physicians employed or
retained by the practice are no longer employed or retained by such practice
other than because of certain events, including death, permanent disability,
pre-qualified retirement or involuntary loss of hospital contracts or
privileges.

     Under our comprehensive services model, upon termination of an agreement
with a radiology practice, depending upon the termination event, we may have the
right to require the radiology practice to purchase and assume, or the radiology
practice may have the right to require us to sell, assign and transfer to it,
the assets and related liabilities and obligations associated with the
professional and technical radiology services provided by the radiology practice
immediately prior to the termination. The purchase price for the assets,
liabilities and obligations would be the lesser of their fair market value or
the return of the consideration received in the acquisition. However, the
purchase price may not be less than the net book value of the assets being
purchased.

                                        21


     The agreements with most of the radiology practices under our technical
services model contain noncompete provisions that are generally less restrictive
than those provisions under our comprehensive services model. The geographic
scope of and types of services covered by the non-compete provisions vary from
practice to practice. Under our technical services model, we generally have the
right to terminate the agreement if a contracted radiology practice loses the
licenses required to perform the service obligations under the agreement,
violates noncompete provisions relating to the modalities offered or if certain
net income thresholds are not met.

DIAGNOSTIC IMAGING CENTERS

     We operate 120 diagnostic imaging centers consisting of 86 owned and
operated free-standing diagnostic imaging centers; 21 diagnostic imaging centers
operated by us and owned through 15 joint venture relationships with hospitals,
health systems or radiology practices; and 13 diagnostic imaging centers to
which we provide management, administrative and information services or
diagnostic imaging equipment. Of our 120 centers, 70 offer multiple modalities
of diagnostic imaging services. The number and type of modalities offered are
determined primarily by the demand for such services within their respective
market areas.

     Information related to these diagnostic imaging centers is set forth below:



                                                                DIAGNOSTIC IMAGING CENTERS
                                                               ----------------------------
                                                                           JOINT
                                                                OWNED     VENTURE
MARKET NAME                   GEOGRAPHIC LOCATION              CENTERS    CENTERS    OTHER
- -----------                   -------------------              --------   --------   ------
                                                                         
Mid-Atlantic        Baltimore, MD/Washington Metro-Area.....      26         10         0
Finger Lakes        Rochester, NY...........................       6          0         3
Bay Area            an Francisco/Oakland/San Jose, CA.......      18          0         0
South Texas         San Antonio, TX.........................       1          5         0
Northeast Kansas    Topeka, KS and Northeast KS.............       1          1         0
Hudson Valley       Rockland County, NY.....................       7          0         6
Treasure Coast      St. Lucie County, FL....................       3          0         0
Questar             Multiple locations(1)...................      24          5         4
                                                                  --         --        --
  TOTAL.....................................................      86         21        13
                                                                  ==         ==        ==


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

(1) Includes diagnostic imaging centers in Arizona, California, Colorado,
    Delaware, Florida, Georgia, Illinois, Kansas, Minnesota, Missouri, Nebraska,
    Nevada, Ohio and Pennsylvania that were acquired as part of the Questar
    acquisition and are not integrated into our core market areas.

     Many of the 21 joint venture diagnostic imaging centers are located on, or
adjacent to, the participating hospital or health center's campus. We are the
general partner or managing member of 13 of our 15 joint ventures, comprising 19
of the 21 joint venture diagnostic imaging centers.

     The 13 diagnostic imaging centers to which we provide management,
administrative and information services include 11 locations where we own the
diagnostic imaging equipment. Examples of these 11 locations include hospitals
where we have installed equipment that we operate under an agreement with the
hospital or health center. These relationships permit us to provide services to
hospitals and health centers without directly competing against a radiology
department that is equipped and operated by the hospital or health center. In
the remaining two centers, we do not have an ownership interest in the
equipment, but provide management services and employees.

DIAGNOSTIC IMAGING EQUIPMENT

     We currently operate 487 diagnostic imaging units at our 120 centers, of
which 83 are MRI units, 43 are CT units, 6 are PET units, 26 are nuclear
medicine units, 95 are ultrasound units, 71 are

                                        22


mammography units, 27 are DEXA units, 79 are X-ray units and 57 are fluoroscopy
units. The average age of our MRI units is 3.8 years, our CT units is 4.4 years
and our PET units is 1.5 years.

     We continue to evaluate the mix of our diagnostic imaging equipment in
response to changes in technology and to maximize utilization of our equipment.
The overall technological competitiveness of our equipment continually improves
through upgrades, disposal and/or trade-in of older equipment and the purchase
or execution of leases for new equipment. Several substantial companies
presently manufacture MRI (including open MRI), CT, PET and other diagnostic
imaging equipment, including GE Medical Systems, Hitachi Medical Systems,
Siemens Medical Systems and Phillips Medical Systems. We maintain good working
relationships with many of the major manufacturers to better ensure an adequate
supply as well as access to the most appropriate types of diagnostic imaging
equipment for the specific imaging center to be established.

     Timely, effective maintenance is essential for achieving high utilization
rates of our imaging equipment. Most of our equipment is covered by a one year
warranty from the original equipment manufacturers. We also contract with the
original equipment manufacturers for comprehensive maintenance programs to
minimize the period of time our equipment is unavailable.

SALES AND MARKETING

     We selectively invest in marketing and sales resources and activities in an
effort to attract new patients, expand business relationships, grow revenue at
our existing centers and maintain present business alliances and contractual
agreements. Marketing activities include having frequent contact with referring
physicians and their office staffs, organizing and presenting educational
programs on new applications and uses of technology, developing and conducting
customer service programs and proactively calling managed care organizations and
third-party insurance companies to solicit additional contracts. Sales
activities principally focus on referring physicians and managed care entities,
while general awareness programs are targeted to patients and referring
physicians.

GOVERNMENT REGULATION AND SUPERVISION

     General.  The healthcare industry is highly regulated, and we can give no
assurance that the regulatory environment in which we operate will not change
significantly in the future. Our ability to operate profitably will depend in
part upon us, the contracted radiology practices and their affiliated physicians
obtaining and maintaining all necessary licenses, certificates of need and other
approvals and operating in compliance with applicable healthcare regulations. We
believe that healthcare regulations will continue to change. Therefore, we
monitor developments in healthcare law and modify our operations from time to
time as the business and regulatory environment changes. Although we intend to
continue to operate in compliance, we cannot ensure that we will be able to
adequately modify our operations so as to address changes in the regulatory
environment.

     Licensing and Certification Laws.  Ownership, construction, operation,
expansion and acquisition of diagnostic imaging centers are subject to various
federal and state laws, regulations and approvals concerning licensing of
centers, personnel, certificates of need and other required certificates for
certain types of healthcare centers and major medical equipment. The laws of
some of the states in which we operate limit our ability to acquire new
diagnostic imaging equipment or expand or replace our existing equipment at
diagnostic imaging centers in those states. In addition, free-standing
diagnostic imaging centers that provide services not performed as part of a
physician office must meet Medicare requirements to be certified as an
independent diagnostic testing facility to bill the Medicare program. We may not
be able to receive the required regulatory approvals for any future
acquisitions, expansions or replacements, and the failure to obtain these
approvals could limit the market for our services.

     Fee-Splitting; Corporate Practice of Medicine.  The laws of many states,
including many of the states in which the contracted radiology practices are
located, prohibit us from exercising control over the medical judgments or
decisions of physicians and from engaging in certain financial arrangements,
such as splitting professional fees with physicians. These laws and their
interpretations vary from state to state and
                                        23


are enforced by state courts and regulatory authorities, each with broad
discretion. A component of our business has been to enter into service
agreements with radiology practices. We provide management, administrative,
technical and other non-medical services to the radiology practices in exchange
for a service fee. We structure our relationships with the radiology practices,
including the purchase of diagnostic imaging centers, in a manner that we
believe keeps us from engaging in the practice of medicine or exercising control
over the medical judgments or decisions of the radiology practices or their
physicians or violating the prohibitions against fee-splitting. State regulatory
authorities or other parties may assert that we are engaged in the corporate
practice of medicine or that the payment of service fees to us by the radiology
practices constitutes fee-splitting. If such a claim were successfully asserted,
we could be subject to civil and criminal penalties and could be required to
restructure or terminate the applicable contractual arrangements. This result or
our inability to successfully restructure our relationships to comply with these
statutes could jeopardize our business strategy.

     Medicare and Medicaid Reimbursement Program.  Our revenue is derived
through our ownership, operation and management of diagnostic imaging centers
and from service fees paid to us by contracted radiology practices. During the
year ended December 31, 2001, approximately 28% of our revenue generated at our
diagnostic imaging centers was derived from government sponsored healthcare
programs (principally, Medicare and Medicaid).

     Initiatives have been proposed that, if implemented, would have the effect
of substantially decreasing reimbursement rates for outpatient diagnostic
imaging services provided at hospital facilities. We believe that we will have
opportunities to increase the use of our diagnostic imaging services through
additional joint venture or outsourcing arrangements with hospitals, in part due
to such federal healthcare regulatory changes that favor outpatient centers that
are managed or owned in joint venture or outsourcing arrangements with third
parties. As of January 2002, Medicare has decreased reimbursement rates for
physician and outpatient services, including diagnostic imaging services. Our
centers are principally dependent on our ability to attract referrals from
primary care physicians, specialists and other healthcare providers. The
referral often depends on the existence of a contractual arrangement with the
referred patient's health benefit plan.

     Any further change in Medicare or Medicaid rates or conditions for
reimbursement could substantially reduce the amounts reimbursed to us or our
contracted radiology practices for services provided. These reductions could
have a significant adverse effect on our revenue and financial results by
creating downward pricing pressure.

     Medicare and Medicaid Fraud and Abuse.  Federal law prohibits the knowing
and willful offer, payment, solicitation or receipt of any form of remuneration
in return for, or to induce, (i) the referral of a person, (ii) the furnishing
or arranging for the furnishing of items or services reimbursable under the
Medicare, Medicaid or other governmental programs or (iii) the purchase, lease
or order or arranging or recommending purchasing, leasing or ordering of any
item or service reimbursable under the Medicare, Medicaid or other governmental
programs. Enforcement of this anti-kickback law is a high priority for the
federal government, which has substantially increased enforcement resources and
is scheduled to continue increasing such resources. The applicability of the
anti-kickback law to many business transactions in the healthcare industry has
not yet been subject to judicial or regulatory interpretation. Noncompliance
with the federal anti-kickback legislation can result in exclusion from the
Medicare, Medicaid or other governmental programs and civil and criminal
penalties.

     We receive fees under our service agreements for management and
administrative services, which include contract negotiation and marketing
services. We do not believe we are in a position to make or influence referrals
of patients or services reimbursed under Medicare, Medicaid or other
governmental programs to radiology practices or their affiliated physicians or
to receive referrals. However, we may be considered to be in a position to
arrange for items or services reimbursable under a federal healthcare program.
Because the provisions of the federal anti-kickback statute are broadly worded
and have been broadly interpreted by federal courts, it is possible that the
government could take the position that our arrangements with the contracted
radiology practices implicate the federal anti-kickback statute. Violation

                                        24


of the law can result in monetary fines, civil and criminal penalties, and
exclusion from participation in federal or state healthcare programs, any of
which could have an adverse effect on our business and results of operations.
While our service agreements with the contracted radiology practices will not
meet a "safe harbor" to the federal anti-kickback statute, failure to meet a
"safe harbor" does not mean that agreements violate the anti-kickback statute.
We have sought to structure our agreements to be consistent with fair market
value in arms' length transactions for the nature and amount of management and
administrative services rendered. For these reasons, we do not believe that
service fees payable to us should be viewed as remuneration for referring or
influencing referrals of patients or services covered by such programs as
prohibited by statute.

     Significant prohibitions against physician referrals have been enacted by
Congress. These prohibitions are commonly known as the "Stark Law." The Stark
Law prohibits a physician from referring Medicare or Medicaid patients to an
entity providing "designated health services," including, without limitation,
radiology services, in which the physician has an ownership or investment
interest or with which the physician has entered into a compensation
arrangement. The penalties for violating the Stark Law include a prohibition on
payment by these governmental programs and civil penalties of as much as $15,000
for each violative referral and $100,000 for participation in a "circumvention
scheme." We believe that, although we receive fees under our service agreements
for management and administrative services, we are not in a position to make or
influence referrals of patients.

     On January 4, 2001, the Health Care Financing Administration, Department of
Health and Human Services, now known as the Centers for Medicare and Medicaid
Services ("CMS"), published final regulations to implement the Stark Law. Under
the final regulations, radiology and certain other imaging services and
radiation therapy services and supplies are services included in the designated
health services subject to the self-referral prohibition. Under the final
regulations, such services include the professional and technical components of
any diagnostic test or procedure using X-rays, ultrasound or other imaging
services, computerized axial tomography, MRI, radiation therapy and diagnostic
mammography services (but not screening mammography services). The final
regulations, however, exclude from designated health services: (i) X-ray,
fluoroscopy or ultrasonic procedures that require the insertion of a needle,
catheter, tube or probe through the skin or into a body orifice; (ii) radiology
procedures that are integral to the performance of, and performed during,
nonradiological medical procedures; (iii) nuclear medicine procedures; and (iv)
"invasive" or "interventional" radiology, because the radiology services in
these procedures are merely incidental or secondary to another procedure that
the physician has ordered.

     The Stark Law provides that a request by a radiologist for diagnostic
radiology services or a request by a radiation oncologist for radiation therapy,
if such services are furnished by or under the supervision of such radiologist
or radiation oncologist pursuant to a consultation requested by another
physician, does not constitute a "referral" by a "referring physician." If such
requirements are met, the Stark Law self-referral prohibition would not apply to
such services. The effect of the Stark Law on the radiology practices,
therefore, will depend on the precise scope of services furnished by each such
practice's radiologists and whether such services derive from consultations or
are self-generated. We believe that (other than self-referred patients) all of
the services covered by the Stark Law provided by the contracted radiology
practices derive from requests for consultation by non-affiliated physicians.
Therefore, we believe that the Stark Law is not implicated by the financial
relationships between us and the contracted radiology practices.

     In addition, we believe that we have structured our acquisitions of the
assets of existing practices, and we intend to structure any future
acquisitions, so as to not violate the anti-kickback and Stark Law and
regulations. Specifically, we believe the consideration paid by us to physicians
to acquire the tangible and intangible assets associated with their practices is
consistent with fair market value in arms' length transactions and is not
intended to induce the referral of patients. Should any such practice be deemed
to constitute an arrangement designed to induce the referral of Medicare or
Medicaid patients, then our acquisitions could be viewed as possibly violating
anti-kickback and anti-referral laws and regulations. A determination of
liability under any such laws could have an adverse effect on our business,
financial condition and results of operations.
                                        25


     The federal government recently announced an initiative to audit all
Medicare carriers, which are the companies that adjudicate and pay Medicare
claims. These audits are expected to intensify governmental scrutiny of
individual providers. An unsatisfactory audit of any of our diagnostic imaging
centers or contracted radiology practices could result in significant repayment
obligations, exclusion from the Medicare, Medicaid, or other governmental
programs and/or civil and criminal penalties.

     Federal regulatory and law enforcement authorities have recently increased
enforcement activities with respect to Medicare and Medicaid fraud and abuse
regulations and other reimbursement laws and rules, including laws and
regulations that govern our activities and the activities of the radiology
practices. Our or the radiology practices' activities may be investigated,
claims may be made against us or the radiology practices and these increased
enforcement activities may directly or indirectly have an adverse effect on our
business, financial condition and results of operations.

     State Anti-kickback and Physician Self-referral Laws.  All of the states in
which our diagnostic imaging centers are located have adopted a form of
anti-kickback law and almost all of those states have also adopted a form of
Stark Law. The scope of these laws and the interpretations of them vary from
state to state and are enforced by state courts and regulatory authorities, each
with broad discretion. Generally, state laws cover all referrals by all
healthcare providers for all healthcare services. A determination of liability
under such laws could result in fines and penalties and restrictions on our
ability to operate in these jurisdictions.

     Federal False Claims Act.  The Federal False Claims Act provides, in part,
that the federal government may bring a lawsuit against any person whom it
believes has knowingly presented, or caused to be presented, a false or
fraudulent request for payment from the federal government, or who has made a
false statement or used a false record to get a claim approved. The Federal
False Claims Act further provides that a lawsuit thereunder may be initiated in
the name of the United States by an individual who is an original source of the
allegations. The government has taken the position that claims presented in
violation of the federal anti-kickback law or Stark Law may be considered a
violation of the Federal False Claims Act. Penalties include civil penalties of
not less than $5,500 and not more than $11,000 for each false claim, plus three
times the amount of damages that the federal government sustained because of the
act of that person. We believe that we are in compliance with the rules and
regulations that apply to the Federal False Claims Act. However, we could be
found to have violated certain rules and regulations resulting in sanctions
under the Federal False Claims Act, and if we are so found in violation, any
sanctions imposed could result in fines and penalties and restrictions on and
exclusion from participation in federal and state healthcare programs that are
integral to our business.

     Healthcare Reform Initiatives.  Healthcare laws and regulations may change
significantly in the future. We continuously monitor these developments and
modify our operations from time to time as the regulatory environment changes.
We cannot assure you, however, that we will be able to adapt our operations to
address new regulations or that new regulations will not adversely affect our
business. In addition, although we believe that we are operating in compliance
with applicable federal and state laws, neither our current or anticipated
business operations nor the operations of the contracted radiology practices has
been the subject of judicial or regulatory interpretation. We cannot assure you
that a review of our business by courts or regulatory authorities will not
result in a determination that could adversely affect our operations or that the
healthcare regulatory environment will not change in a way that restricts our
operations.

     Health Insurance Portability and Accountability Act of 1996.  In an effort
to combat healthcare fraud, Congress enacted the Health Insurance Portability
and Accountability Act of 1996 ("HIPAA"). HIPAA, among other things, amends
existing crimes and criminal penalties for Medicare fraud and enacts new federal
healthcare fraud crimes, including actions affecting non-governmental payors.
Under HIPAA, a "healthcare benefit program" includes any private plan or
contract affecting interstate commerce under which any medical benefit, item or
services is provided. A person or entity that knowingly and willfully obtains
the money or property of any healthcare benefit program by means of false or
fraudulent representations in connection with the delivery of healthcare
services is subject to a fine and/or

                                        26


imprisonment. In addition, HIPAA authorizes the imposition of civil money
penalties against entities that employ or enter into contracts with excluded
Medicare or Medicaid program participants if such entities provide services to
federal health program beneficiaries. A finding of liability under HIPAA could
have a material adverse effect on our business, financial condition and results
of operations.

     Further, HIPAA requires healthcare providers and their business associates
to maintain the privacy and security of individually identifiable health
information. HIPAA imposes federal standards for electronic transactions with
health plans, the security of electronic health information and for protecting
the privacy of individually identifiable health information. The government
recently published regulations to implement the privacy standards with an
initial compliance date of April 14, 2003. We may encounter certain costs
associated with complying with the primary provisions. A finding of liability
under HIPAA's privacy or security provisions may also result in criminal and
civil penalties, and could have a material adverse effect on our business,
financial condition, and results of operations.

     Compliance Program.  With the assistance of our special healthcare
regulatory counsel, we implemented a program to monitor compliance with federal
and state laws and regulations applicable to healthcare entities. We have
appointed a compliance officer who is charged with implementing and supervising
our compliance program, which includes the adoption of (i) "Standards of
Conduct" for our employees and affiliates and (ii) an "Ethics Process" that
specifies how employees, affiliates and others may report regulatory or ethical
concerns to our compliance officer. We believe that our compliance program meets
the relevant standards provided by the Office of Inspector General of the
Department of Health and Human Services. An important part of our compliance
program consists of conducting periodic audits of various aspects of our
operations and that of the contracted radiology practices. We also conduct
mandatory educational programs designed to familiarize our employees with the
regulatory requirements and specific elements of our compliance program.

     Insurance Laws and Regulation.  Certain states have enacted statutes or
adopted regulations affecting risk assumption in the healthcare industry,
including statutes and regulations that subject any physician or physician
network engaged in risk-based managed care contracting to applicable insurance
laws and regulations. These laws and regulations may require physicians and
physician networks to meet minimum capital requirements and other safety and
soundness requirements. Implementing additional regulations or compliance
requirements could result in substantial costs to us and the contracted
radiology practices and limit our ability to enter into capitated or other
risk-sharing managed care arrangements.

COMPETITION

     The market for diagnostic imaging services is competitive. We compete
principally on the basis of our reputation, our ability to offer multiple
modalities, our conveniently located centers and our cost-effective,
high-quality diagnostic imaging services. We compete locally with groups of
radiologists, established hospitals, clinics and certain other independent
organizations that own and operate imaging equipment. Our major national
competitors include Alliance Imaging, Inc., HEALTHSOUTH Corporation, InSight
Health Services Corp., Medical Resources, Inc., Syncor International Corporation
and U.S. Diagnostic, Inc. Some of our local or national competitors that provide
diagnostic imaging services may now or in the future have access to greater
financial resources than we do and may have access to newer, more advanced
equipment.

     In addition, in the past some non-radiologist physician practices have
refrained from establishing their own diagnostic imaging centers because of the
federal physician self-referral legislation. Final regulations issued in January
2001 clarify certain of the exceptions to the physician self-referral
legislation, which may create opportunities for and encourage some physician
practices to establish their own diagnostic imaging centers within their group
practices, which may compete with us.

     Each of the contracted radiology practices under our comprehensive services
model has entered into agreements with its physician shareholders and full-time
employed radiologists that generally prohibit those shareholders and
radiologists from competing for a period of two years within defined geographic
regions

                                        27


after they cease to be owners or employees, as applicable. In most states, a
covenant not to compete will be enforced only:

     - to the extent it is necessary to protect a legitimate business interest
       of the party seeking enforcement;

     - if it does not unreasonably restrain the party against whom enforcement
       is sought; and

     - if it is not contrary to public interest.

     Enforceability of a non-compete covenant is determined by a court based on
all of the facts and circumstances of the specific case at the time enforcement
is sought. For this reason, it is not possible to predict whether, or to what
extent, a court will enforce the contracted radiology practices' covenants. The
inability of the contracted radiology practices or us to enforce radiologists'
non-compete covenants could result in increased competition from individuals who
are knowledgeable about our business strategies and operations.

     We may not be able to compete effectively for the acquisition of diagnostic
imaging centers, joint venture opportunities or other outsourcing relationships.
Our competitors may have better established operating histories and greater
resources than we do. Competitors may make it more difficult to complete
acquisitions or joint ventures on terms beneficial to us.

CORPORATE LIABILITY AND INSURANCE

     We may be subject to professional liability claims including, without
limitation, for improper use or malfunction of our diagnostic imaging equipment.
We maintain insurance policies with coverages that we believe are appropriate in
light of the risks attendant to our business and consistent with industry
practice. We also require the contracted radiology practices to maintain
sufficient professional liability insurance consistent with industry practice.
However, adequate liability insurance may not be available to us and the
contracted radiology practices in the future at acceptable costs or at all.

     Providing medical services entails the risk of professional malpractice and
other similar claims. The physicians employed by the contracted radiology
practices are from time to time subject to malpractice claims. We structure our
relationships with the practices under our agreements with them in a manner that
we believe does not constitute the practice of medicine by us or subject us to
professional malpractice claims for acts or omissions of physicians in the
contracted radiology practices. Nevertheless, claims, suits or complaints
relating to services provided by the contracted radiology practices may be
asserted against us in the future, including malpractice.

     Any claim made against us not fully covered by insurance could be costly to
defend against, result in a substantial damage award against us and divert the
attention of our management from our operations, which could have an adverse
effect on our financial performance. In addition, claims might adversely affect
our business or reputation.

     The contracted radiology practices maintain professional liability
insurance coverage primarily on a claims made basis. This insurance provides
coverage for claims asserted when the policy is in effect, regardless of when
the events that caused the claim occurred. The contracted radiology practices
are required by the terms of the service agreements to maintain medical
malpractice liability insurance consistent with minimum limits mandated in their
hospital contracts or by applicable state law.

     We maintain general liability and umbrella coverage in commercially
reasonable amounts. Additionally, we maintain workers' compensation insurance on
all employees. Coverage is placed on a statutory basis and responds to each
state's specific requirements.

     In 1997, a law became effective in the State of Texas that permits injured
patients to sue health insurance carriers, HMOs and other managed care entities
for medical malpractice. This law could increase the cost of liability insurance
to us for services provided in Texas or any other states in which we do business
if similar legislation is adopted in those states.

                                        28


     We have assumed and succeeded to substantially all of the obligations of
some of the operations that we have acquired. Therefore, claims may be asserted
against us for events that occurred prior to our acquiring these acquisitions.
In connection with our acquisitions, the sellers of the operations that we have
acquired have agreed to indemnify us for certain claims. However, we may not be
able to collect payment under these indemnity agreements which could affect us
adversely.

EMPLOYEES

     As of December 31, 2001, we had approximately 2,600 employees,
approximately 70 of whom are employed at our headquarters and regional offices
and the remainder of whom are employed at our diagnostic imaging centers and
regional administrative operations. We believe that our relationship with our
employees is good.

PROPERTIES

     Our corporate headquarters are located at 3600 JP Morgan Chase Tower, 2200
Ross Avenue, Dallas, Texas 75201-2776, in approximately 26,000 square feet
occupied under a lease, which expires on August 31, 2011.

LEGAL PROCEEDINGS

     We are not currently subject to any material litigation nor, to our
knowledge, is any material litigation threatened against us. All of our current
litigation is (i) expected to be covered by liability insurance or (ii) not
expected to adversely affect our business. Some risk exists, however, that we
could subsequently be named as a defendant in additional lawsuits or that
pending litigation could adversely affect us.

                             NO CASH PROCEEDS TO US

     This exchange offer is intended to satisfy our obligations under the
registration rights agreement we entered into when we sold the Old Notes. We
will not receive any proceeds from the issuance of the New Notes and have agreed
to pay all of the expenses of the exchange offer. In consideration for issuing
the New Notes, we will receive, in exchange, a like principal amount of Old
Notes. The Old Notes surrendered in exchange for the New Notes will be retired
and canceled and cannot be reissued. Accordingly, issuing the New Notes will not
result in any increase in our outstanding debt.

                                        29


                                 CAPITALIZATION

     The following table sets forth our cash and cash equivalents and our
capitalization as of December 31, 2001. This table should be read in conjunction
with "Management's Discussion and Analysis of Operations and Financial
Condition," "Selected Consolidated Financial and Operating Data" and our
consolidated financial statements and related notes incorporated by reference
herein.



                                                                   AS OF
                                                                DECEMBER 31,
                                                                    2001
                                                               --------------
                                                               (IN THOUSANDS)
                                                            
Cash and cash equivalents...................................      $ 10,761
                                                                  ========
Long-term debt (including current maturities):
  Senior credit facility(1).................................            --
  Old Notes offered.........................................       160,000
  Other long-term debt......................................         1,098
  Capital lease obligations.................................        11,849
  Convertible junior subordinated note......................        24,205
                                                                  --------
       Total long-term debt.................................       197,152
Total stockholders' equity..................................        44,476
                                                                  --------
          Total capitalization..............................      $241,628
                                                                  ========


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

(1) Concurrently with the offering of the Old Notes, we entered into a new
    senior credit facility that provides for up to $35.0 million of borrowings.

                                        30


               SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

     The following selected consolidated historical financial and operating data
is derived from our consolidated financial statements contained in our Annual
Reports on Form 10-K for the periods indicated and, as such, reflects the impact
of acquired entities from the effective dates of such transactions. The
information in the table and its notes should be read in conjunction with
"Management's Discussion and Analysis of Operations and Financial Condition" and
with our consolidated financial statements and their notes incorporated by
reference herein.



                                                         YEAR ENDED DECEMBER 31,
                                           ---------------------------------------------------
                                            1997       1998       1999       2000       2001
                                           -------   --------   --------   --------   --------
                                                  (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                       
SERVICE FEE REVENUE......................  $ 9,545   $149,327   $199,700   $246,687   $276,650
COSTS AND EXPENSES:
  Salaries and benefits..................    2,922     42,227     52,826     66,567     75,667
  Field supplies.........................    1,036      8,865     11,630     13,265     16,514
  Field rent and lease expense...........      852     11,532     18,444     30,191     34,378
  Other field expenses...................    1,557     25,311     32,278     45,871(a)  47,339
  Bad debt expense.......................      862     13,723     18,838     34,389(b)  25,682
  Merger related costs...................       --         --         --      1,772      1,000
  Supplemental incentive compensation....       --         --         --         --        615
  Corporate general and administrative...    4,910      9,597     11,192     10,571     13,855
  Depreciation and amortization..........      888     12,178     18,403     22,118     23,504
  Interest expense, net..................      617      7,541     12,357     18,036     15,540
                                           -------   --------   --------   --------   --------
          Total costs and expenses.......   13,644    130,974    175,968    242,780    254,094
                                           -------   --------   --------   --------   --------
Income (loss) before equity in earnings
  of investments, non-operating income,
  minority interests in consolidated
  subsidiaries, taxes and extraordinary
  loss...................................   (4,099)    18,353     23,732      3,907     22,556
  Equity in earnings of investments......      220      4,339      3,581      4,274      5,017
  Non-operating income...................       --         --         --         --      1,300
  Minority interests in consolidated
     subsidiaries........................      (49)      (710)      (910)      (948)    (1,092)
                                           -------   --------   --------   --------   --------
Income (loss) before taxes and
  extraordinary loss.....................   (3,928)    21,982     26,403      7,233     27,781
  Income tax expense.....................       --      6,499     10,346      2,900     11,112
                                           -------   --------   --------   --------   --------
Income (loss) before extraordinary
  loss...................................   (3,928)    15,483     16,057      4,333     16,669
Extraordinary loss on early
  extinguishment of debt, net of tax.....       --         --         --         --     (2,838)
                                           -------   --------   --------   --------   --------
Net income (loss)........................  $(3,928)  $ 15,483   $ 16,057   $  4,333   $ 13,831
                                           =======   ========   ========   ========   ========
Earnings Per Share:
  Basic
  Income (loss) before extraordinary
     loss................................  $ (1.13)  $   0.83   $   0.83   $   0.22   $   0.85
  Income (loss) after extraordinary
     loss................................  $ (1.13)  $   0.83   $   0.83   $   0.22   $   0.71
  Diluted
  Income (loss) before extraordinary
     loss................................  $ (1.13)  $   0.80   $   0.80   $   0.22   $   0.78
  Income (loss) after extraordinary
     loss................................  $ (1.13)  $   0.80   $   0.80   $   0.22   $   0.66


                                        31


                                                                       
Other Operating Data:
  EBITDA(c)...........................  $(2,423)  $  41,701   $  57,163   $  47,387   $  65,525
  Cash flow provided by (used in):
     Operating activities.............   (5,333)      9,950      (1,462)     13,325      41,016
     Investing activities.............     (420)    (63,501)    (44,957)    (23,060)    (19,104)
     Financing activities.............    7,834      55,464      44,236       9,053     (14,771)
  Capital expenditures................      481      12,651      31,458      14,002       7,184(d)
  Ratio of earnings of fixed
     charges(e).......................       NM        3.0x        2.5x        1.3x        2.1x





                                                  AS OF DECEMBER 31,
                                            ------------------------------
                                              1999       2000       2001
                                            --------   --------   --------
                                                    (IN THOUSANDS)
                                                                        
Balance Sheet Data:
  Working capital.........................  $ 25,181   $ 36,682   $ 55,214
  Total assets............................   244,840    268,636    284,725
  Long-term debt and capital lease
     obligations..........................   164,840    175,836    172,947
  Convertible notes.......................    20,000     20,000     24,205
  Stockholders' equity....................    25,375     29,719     44,476


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

(a) Other field expenses for the year ended December 31, 2000 includes a $3.7
    million charge for the write-off in the fourth quarter of 2000 of a note
    receivable. See Note 2 to consolidated financial statements incorporated by
    reference herein.

(b) Bad debt expense for the year ended December 31, 2000 includes a $13.3
    million charge recorded in the fourth quarter of 2000. See Note 2 to
    consolidated financial statements incorporated by reference herein.

(c) EBITDA is net income before depreciation and amortization, interest expense,
    net, and income tax expense. This measurement has been included because
    management believes that certain investors will find it to be a useful tool
    for measuring our ability to meet debt service, capital expenditure and
    working capital requirements. EBITDA should not be considered an alternative
    to, or more meaningful than, income from operations or other traditional
    indicators of operating performance and cash flow from operating activities
    determined in accordance with generally accepted accounting principles. In
    addition, the definition of EBITDA used in this Prospectus may not be
    comparable to the definition of EBITDA used by other companies.

(d) Total capital expenditures excludes the buy out of operating leases for
    $13.9 million, See Note 6 to the consolidated financial statements
    incorporated by reference herein.

(e) For purposes of this calculation, earnings consist of pretax income plus
    fixed charges. Fixed charges consist of interest expense, the amortization
    of deferred financing costs and an estimate representing that portion of
    rental expense deemed representative of an appropriate interest factor.

                                        32


               MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
                            AND FINANCIAL CONDITION

     We are a leading national provider of diagnostic imaging services through
our ownership and operation of free-standing, outpatient diagnostic imaging
centers. We utilize sophisticated technology and technical expertise to perform
a broad range of imaging procedures, such as magnetic resonance imaging (or
MRI), computed tomography (or CT), positron emission tomography (or PET),
nuclear medicine, ultrasound, mammography, bone densitometry (or DEXA), general
radiography (or X-ray) and fluoroscopy. For the year ended December 31, 2001, we
derived 78% of our service fee revenue from the ownership, management and
operation of our radiology and imaging center network and 22% of our service fee
revenue from the administrative, management and information services provided to
contracted radiology practices. As of December 31, 2001, we owned, operated or
maintained an ownership interest in imaging equipment at 120 locations and
provided management services to ten radiology practices. As of December 31,
2001, our imaging centers are located in 18 states, with concentrated geographic
coverage in markets located in California, Florida, Kansas, Maryland, New York,
Texas and Virginia.

     We focus on providing quality patient care and service to ensure patient
and referring physician satisfaction. Our development of comprehensive radiology
networks permits us to invest in technologically advanced imaging equipment,
including MRI, open MRI, spiral CT and PET. Our consolidation of diagnostic
imaging centers into coordinated networks improves response time, increases
overall patient accessibility, permits us to standardize certain customer
relations procedures and permits us to develop "best practices" for our
diagnostic imaging centers. We seek the input and participation of the
contracted radiology practices to which we provide administrative, management
and information services to develop best practices and to improve productivity
and the quality of services. By focusing on further improving and, where
appropriate, standardizing the operations of our diagnostic imaging centers, we
believe that we can increase patient and referring physician satisfaction, which
should lead to increased referrals and increased utilization of our diagnostic
imaging centers.

     We contract with radiology practices to provide professional services,
including the supervision and interpretation of diagnostic imaging procedures
performed in our diagnostic imaging centers. We believe that we do not engage in
the practice of medicine nor do we employ physicians. The radiology practices
maintain full control over the provision of professional radiological services.
The contracted radiology practices generally have outstanding physician and
practice credentials and reputations; strong competitive market positions; a
broad sub-specialty mix of physicians; a history of growth and potential for
continued growth; and a willingness to embrace our strategy for the delivery of
diagnostic imaging services.

     Payment for diagnostic imaging services comes primarily from commercial
third-party payors (62%), governmental payors (28% including Medicare and
Medicaid) and private and other payors (10%). In August 2000, Medicare made
significant changes in the reimbursement methodology for hospital outpatient
services. We believe that we will have opportunities to increase the use of our
diagnostic imaging services through additional joint venture or outsourcing
arrangements with hospitals, in part because such federal healthcare regulatory
changes favor outpatient centers that are managed or owned in joint venture or
outsourcing arrangements with third parties. As of January 2002, Medicare has
decreased reimbursement rates for physician and outpatient services, including
diagnostic imaging services. Our centers are principally dependent on our
ability to attract referrals from primary care physicians, specialists and other
healthcare providers. The referral often depends on the existence of a
contractual arrangement with the referred patient's health benefit plan. For the
year ended December 31, 2001, approximately 9% of our revenue generated at our
diagnostic imaging centers was generated from capitated arrangements.

     Our service fee revenue is dependent upon the operating results of the
contracted radiology practices and diagnostic imaging centers. Where state law
allows, service fees due under the service agreements for the contracted
radiology practices are derived from two distinct revenue streams: (1) a
negotiated percentage (typically 20% to 30%) of the adjusted professional
revenues as defined in the service agreements; and (2) 100% of the adjusted
technical revenues as defined in the service agreements. In states where the law
requires a flat fee structure, we have negotiated a base service fee, which is
equal to

                                        33


the estimated fair market value of the services provided under the service
agreements and which is renegotiated each year to equal the fair market value of
the services provided under the service agreements. The fixed fee structure
results in us receiving substantially the same amount of service fee as we would
have received under a negotiated percentage fee structure. Adjusted professional
revenues and adjusted technical revenues are determined by deducting certain
contractually agreed-upon expenses (non-physician salaries and benefits, rent,
depreciation, insurance, interest and other physician costs) from the contracted
radiology practices' revenue. Revenues of our subsidiary, Questar Imaging, Inc.
of Tampa, Florida ("Questar") are primarily derived from technical revenues
generated from those imaging centers.

RESULTS OF OPERATIONS

     We report the results of our operations through four designated regions of
the United States: Mid-Atlantic, Northeastern, Central and Western regions. In
addition, we report separately the results of our operations of the imaging
centers of our subsidiary, Questar. Our operations in each of the four
designated regions are comprised of the ownership and operation of diagnostic
imaging centers and the provision of administrative, management and information
services to the contracted radiology practices that provide professional
interpretation and supervision services in connection with our diagnostic
imaging centers and to hospitals and radiology practices with which we operate
joint ventures. Our services leverage our existing infrastructure and improve
radiology practice or joint venture profitability, efficiency and effectiveness.
We have divided the operations into the four regions and Questar only for
purposes of the division of internal management responsibilities, but do not
focus on each of these regions as a separate product line or make financial
decisions as if they were separate product lines. The Questar operations are
treated as a separate group only from the perspective that the imaging centers
of Questar do not have the same type of management service agreement with
physicians as we have with each of the contracted radiology practices in the
four designated regions. In addition, any imaging centers of Questar that are in
the same market as the operations of the contracted radiology practices in the
four designated regions are not included in the service agreements of the
contracted radiology practices.

     The operating margin in 2001 for each of the four regions and Questar was
impacted by a change in the estimation of contractual allowances of the billed
charges. Generally, the change in the estimation of contractual allowances
increased the contractual allowance which decreased the revenue of the
contracted radiology practices and diagnostic imaging centers recognized and
therefore, the service fee recognized and the operating margin. The operating
margin for the Mid-Atlantic region of 32% and 31% for the twelve months ended
December 31, 2000 and 2001, respectively, remained relatively constant. The
operating margin of the Northeastern region decreased from 30% for the twelve
months ended December 31, 2000 to 26% in 2001. The decline in the operating
margin between periods is primarily the result of a decrease in the fixed fee
recognized at one of the New York practices. The operating margin for the
Central region of 35% and 34% for the twelve months ended December 31, 2000 and
2001, respectively, remained relatively constant. The operating margin for the
Western region of 24% and 26% for the twelve months ended December 31, 2000 and
2001, respectively, also remained relatively constant. The operating margin for
Questar of 23% and 17% for the twelve months ended December 31, 2000 and 2001,
respectively, decreased. The significant decrease in the operating margin was a
direct result of the change in the estimation of contractual allowances for
billed charges and also due to additional costs, such as maintenance agreements
put in place, associated with operating the facilities. These operating margins
as discussed exclude the buyout of operating leases for $13.9 million in the
fourth quarter of 2001 and charges in the fourth quarter of 2000 of $13.3
million for the provision of uncollectible accounts receivable and a $3.7
million charge for the write-off of a note receivable due from one of our
contracted radiology practices.

     On August 1, 1999, we acquired all the outstanding stock of Questar, a
private operator of primarily MRI radiology centers. The total 1999
consideration for the transaction was approximately $18.9 million in cash, plus
the assumption of $16.8 million in liabilities. The total consideration for all
other 1999 acquisitions was approximately $6.5 million in cash, 50,264 shares of
our common stock valued at $304,000, plus the assumption of $3.2 million in
liabilities.

                                        34


     In March 2000, we completed an acquisition of an imaging center in Osceola,
Florida for total consideration of approximately $2.7 million. During 2000, we
continued to complete the development of imaging centers of Questar for total
consideration of approximately $5.9 million. Total consideration paid for all
other acquisitions and affiliations in 2000 was approximately $1.5 million.

     In November 2001, we completed the acquisition of an imaging center in
Laurel, Maryland for total consideration of $906,000.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEAR ENDED DECEMBER 31, 2001

  SERVICE FEE REVENUE

     Revenue of the contracted radiology practices and diagnostic imaging
centers is recorded when services are rendered by the contracted radiology
practices and diagnostic imaging centers based on established charges and
reduced by contractual allowances and estimated bad debts. We use historical
collection experience in estimating contractual allowances and bad debt expense.
The factors influencing the historical collection experience include the
contracted radiology practices' and diagnostic imaging centers' patient mix,
impact of managed care contract pricing and contract revenue and the aging of
patient accounts receivable balances. As these factors change, the historical
collection experience is revised accordingly in the period known. Service fee
revenue represents contracted radiology practices' and diagnostic imaging
centers' revenue less amounts retained by contracted radiology practices. The
amounts retained by contracted radiology practices represents amounts paid to
the physicians pursuant to the service agreements between us and the contracted
radiology practices. Under the service agreements, we provide each contracted
radiology practice with the facilities and equipment used in its medical
practice, assume responsibility for managing the operations of the practice, and
employ substantially all of the non-physician personnel utilized by the
contracted radiology practice. Although we assist in negotiating managed care
contracts for the contracted radiology practices, we assume no risk under these
arrangements.

     The following table sets forth the amounts of revenue from the contracted
radiology practices and diagnostic imaging centers and the amounts retained by
contracted radiology practices (in thousands):



                                                         1999       2000       2001
                                                       --------   --------   --------
                                                                    
Revenue from contracted radiology practices and
  diagnostic imaging centers, net of contractual
  allowances.........................................  $286,824   $344,887   $383,527
Less: amounts retained by contracted radiology
  practices..........................................   (87,124)   (98,200)  (106,877)
                                                       --------   --------   --------
Service fee revenue, as reported.....................  $199,700   $246,687   $276,650
                                                       ========   ========   ========


     Revenue from contracted radiology practices and diagnostic imaging centers,
net of contractual allowances, increased $38.6 million, from $344.9 million in
2000 to $383.5 million in 2001. This increase was primarily due to increased
procedure volume, a shift in the mix to "high-end" procedures and the addition
of new reading contracts and agreements with managed care organizations. The
increase in volume growth was primarily attributable to a 14.8% increase in
magnetic resonance imaging ("MRI") procedures and a 13.6% increase in computed
tomography ("CT") procedures provided in imaging centers. Revenue from
contracted radiology practices and diagnostic imaging centers, net of
contractual allowances in 2001, was impacted by a change in the estimation of
contractual allowances of the billed charges. Generally, the change in the
estimation of contractual allowances increased the contractual allowance which
decreased the revenue of the contracted radiology practices and diagnostic
imaging centers and therefore the service fee recognized. Amounts retained by
contracted radiology practices increased from $98.2 million in 2000 to $106.9
million in 2001. This increase is directly attributable to the growth in revenue
from contracted radiology practices and diagnostic imaging centers and the
higher profitability of the contracted radiology practices and diagnostic
imaging centers. The increase in revenue from contracted radiology practices and
diagnostic imaging centers, net of contractual allowances offset by the increase
in amounts retained by contracted radiology practices, resulted in service fee
revenue increasing $30 million, from $246.7 million in 2000 to $276.7 million,
in 2001.

                                        35


  COSTS AND EXPENSES

     The comparison between periods for costs and expenses discussed below as a
percentage of service fee revenue is impacted in 2001 by the change in the
estimation of contractual allowances of the billed charges. The change in the
estimation of contractual allowances increased the contractual allowance, which
decreased the revenue of the contracted radiology practices and diagnostic
imaging centers and service fee recognized. As a result of this change, costs
and expenses as a percentage of service fee revenue will be at a higher stated
value in 2001 when compared to 2000.

  SALARIES AND BENEFITS

     Salaries and benefits increased $9.1 million, from $66.6 million in 2000 to
$75.7 million in 2001. As a percentage of service fee revenue, these costs were
27.0% and 27.4% in 2000 and 2001, respectively.

  FIELD SUPPLIES

     Field supplies increased $3.2 million, from $13.3 million in 2000 to $16.5
million in 2001. As a percentage of service fee revenue, these costs were 5.4%
and 6.0% in 2000 and 2001, respectively. The increase in supplies is primarily
attributable to an increase in volume of speciality procedures. These procedures
require supplies at higher unit cost than typically required for other types of
procedures.

  FIELD RENT AND LEASE EXPENSE

     Field rent and lease expense increased $4.2 million, from $30.2 million in
2000 to $34.4 million in 2001. As a percentage of service fee revenue, these
costs were 12.2% and 12.4% in 2000 and 2001, respectively. The increase in these
costs is primarily attributable to additional equipment operating leases entered
into subsequent to fiscal 2000.

  OTHER FIELD EXPENSES

     Other field expenses increased $1.5 million, from $45.9 million in 2000 to
$47.4 million in 2001. As a percentage of service fee revenue, these costs were
18.6% and 17.1% in 2000 and 2001, respectively. During the fourth quarter of
2000, $3.7 million was recognized for the write-off of a note receivable. The
note receivable was due from one of the contracted radiology practices and was
determined in the fourth quarter to no longer be collectible. As a result of the
write-off, we have adjusted this contracted radiology group's incentive
technical bonus potential.

  BAD DEBT EXPENSE

     Bad debt expense decreased $8.7 million, from $34.4 million in 2000 to
$25.7 million in 2001. As a percentage of service fee revenue, these costs were
13.9% and 9.3% in 2000 and 2001, respectively. Since service fee revenue
represents contracted radiology practices' and diagnostic imaging centers'
revenue less amounts retained by contracted radiology practices, these
percentages are inherently at a higher stated value. Therefore, bad debt expense
should be compared for 2000 and 2001 as a percentage of revenue of the
contracted radiology practices and diagnostic imaging centers, net of
contractual allowances, rather than as a percentage of service fee revenue. As a
percentage of revenue of the contracted radiology practices and diagnostic
imaging centers, bad debt expense was 10.0% and 6.7% in 2000 and 2001,
respectively. This decrease was primarily due to a $13.3 million charge recorded
in the fourth quarter of 2000 for the provision of uncollectible accounts.
During the fourth quarter of 2000, we performed an extensive review of our
accounts receivable and collection experience utilizing reports and analyses not
previously available. Based on this review, we believed that the estimation
process of determining contractual allowances for billed charges needed to be
revised and that a portion of our accounts receivable was no longer collectible.
This review allowed us to better analyze old accounts receivable, however it did
not indicate what our historical collection rates would have been if the newly
implemented collection policies and procedures had been in place. Accordingly,
the adjustment for an increase in the provision for uncollectible accounts was
recognized as a bad debt expense as opposed to an increase in contractual
                                        36


allowances. We recognized the $13.3 million charge in the fourth quarter as a
change in accounting estimate when the information became known.

  MERGER RELATED COSTS

     During the third quarter of 2001, we recorded $1 million in merger related
costs. The charge was our share of transaction costs incurred by Saunders Karp &
Megrue, L.P. and its affiliates in connection with the proposed merger between
Radiologix and SKM-RD Acquisition Corp. The proposed merger was terminated in
April 2001. In the fourth quarter of 2000, we also incurred a $1.8 million
charge for the write-off of transaction costs incurred in connection with the
proposed merger with SKM.

  SUPPLEMENTAL INCENTIVE COMPENSATION

     In the fourth quarter of 2001, upon the successful completion of the Old
Notes offering, we incurred $615,000 in supplemental incentive compensation.

  CORPORATE GENERAL AND ADMINISTRATIVE

     Corporate general and administrative expenses increased $3.3 million, from
$10.6 million in 2000 to $13.9 million in 2001. As a percentage of service fee
revenue, these costs were 4.3% and 5.0% in 2000 and 2001, respectively. The
increase in these costs is primarily due to the further development of our
infrastructure at the corporate office, including additional employees and
associated employee benefits and incentive compensation.

  NON-OPERATING INCOME

     Non-operating income of $1.3 million was recognized in the fourth quarter
of 2001 as partial consideration for early termination of management services
provided at certain imaging sites not owned or operated by the Company.

  DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expense increased $1.4 million, from $22.1
million in 2000 to $23.5 million in 2001. We have continued to buy new equipment
to replace older equipment resulting in increased depreciation expense. As a
percentage of service fee revenue, these costs were 9.0% and 8.5% in 2000 and
2001, respectively.

  INTEREST EXPENSE, NET

     Interest expense, net, decreased $2.5 million, from $18 million in 2000 to
$15.5 million in 2001. The decrease in interest expense in 2001 from 2000 was
due to lower interest rates and the pay-down of outstanding debt during 2001.

  INCOME TAX EXPENSE

     Income tax expense of $2.9 million in 2000 and $11.1 million in 2001
remained constant at a 40% effective tax rate.

  EXTRAORDINARY LOSS

     In the fourth quarter of 2001, we incurred a charge of $4.7 million ($2.8
million, after tax) as an extraordinary loss for the early extinguishment of
debt in relation to terminating our senior credit facility with the proceeds
from our Old Notes issuance in December 2001.

                                        37


  NET INCOME

     Net income increased from $4.3 million in 2000 to $13.8 million in 2001.
Net income as a percentage of service fee revenue was 5% in 2001, which
increased from 1.8% in 2000. Included in net income for 2001 are $780,000 of
after tax non-operating income offset by $600,000 after tax expense related to
merger costs and $369,000 after tax expense for supplemental incentive
compensation related to our Old Notes offering. In addition, net income for 2001
included an extraordinary loss of $2.8 million after tax. Included in net income
for 2000 is an $8 million after tax charge for the provision of uncollectible
accounts, $2.2 million after tax write-off of a note receivable and $1.1 million
after tax expense related to merger costs.

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 2000

  SERVICE FEE REVENUE

     Revenue from contracted radiology practices and diagnostic imaging centers,
net of contractual allowances, increased $58.1 million from $286.8 million in
1999 to $344.9 million in 2000. Service fee revenue increased $47 million, to
$246.7 million in 2000 from $199.7 million in 1999. Of the increase from 1999 to
2000, $17.6 million resulted from a 9.3% increase in revenues from same store
facilities. Same store facilities are facilities that were owned and operated by
us during the twelve months ended December 31, 1999 and 2000. This increase was
primarily due to increased procedure volume, a shift in the mix to "high-end"
procedures and the addition of new reading contracts and agreements with managed
care organizations. Of the remaining increase from 1999 to 2000, $24.2 million
resulted from facilities acquired and developed in 1999 and 2000, and $5.2
million resulted from "tuck-in" acquisitions of imaging centers during the
period.

  SALARIES AND BENEFITS

     Salaries and benefits increased $13.8 million, from $52.8 million in 1999
to $66.6 million in 2000. Of the increase from 1999 to 2000, $7.8 million
resulted from a same store facilities increase of 15.4%. An increase of $4.8
million resulted from facilities acquired and developed in 1999 and 2000, and
the remaining $1.2 million increase resulted from "tuck-in" acquisitions of
imaging centers during 2000. As a percentage of service fee revenue, these costs
were 26.5% and 27.0% in 1999 and 2000, respectively.

  FIELD SUPPLIES

     Field supplies increased $1.7 million, from $11.6 million in 1999 to $13.3
million in 2000. Of the increase from 1999 to 2000, $451,000 resulted from a
same store facilities increase of 4.1%. An increase of $780,000 resulted from
facilities acquired and developed in 2000, and the remaining $404,000 resulted
from "tuck-in" acquisitions of imaging centers during the period. As a
percentage of service fee revenue, these costs were 5.8% and 5.4% in 1999 and
2000, respectively.

  FIELD RENT AND LEASE EXPENSE

     Field rent and lease expense increased $11.8 million, from $18.4 million in
1999 to $30.2 million in 2000. Of the increase from 1999 to 2000, $4.9 million
resulted from a same store facilities increase of 30.1%. The increase is
primarily the result of the additional equipment leases entered into during the
year and at December 1999. An increase of $5.6 million resulted from facilities
acquired and developed in 2000, and the remaining $1.3 million resulted from
"tuck-in" acquisitions of imaging centers in 1999 and 2000. As a percentage of
service fee revenue, these costs were 9.2% and 12.2% in 1999 and 2000,
respectively.

  OTHER FIELD EXPENSES

     Other field expenses increased $13.6 million, from $32.3 million in 1999 to
$45.9 million in 2000. Of the increase from 1999 to 2000, $8.6 million resulted
from existing facilities representing a 28.7% same

                                        38


store increase. An increase of $4.1 million resulted from facilities acquired
and developed in 1999 and 2000, and $898,000 resulted from "tuck-in"
acquisitions of imaging centers in 1999 and 2000. As a percentage of service fee
revenue, these costs were 18.6% and 16.2% in 2000 and 1999, respectively. Other
field expenses include a $3.7 million write-off of a note receivable during the
fourth quarter of 2000. The note receivable was due from one of the contracted
radiology practices and was determined to no longer be collectible. As a result
of the write-off, we have adjusted this contracted radiology group's incentive
technical bonus potential. In addition, other field expenses include repairs and
maintenance, service contracts, utilities and communication costs.

  BAD DEBT EXPENSE

     Bad debt expense increased $15.6 million, from $18.8 million in 1999 to
$34.4 million in 2000. As a percentage of service fee revenue, these costs were
13.9% and 9.4% in 2000 and 1999, respectively. Since service fee revenue
represents contracted radiology practices' and diagnostic imaging centers'
revenue less amounts retained by contracted radiology practices, these
percentages are inherently at a higher stated value. Therefore, bad debt expense
should be compared for 2000 and 2001 as a percentage of the revenue of the
contracted radiology practice rather than as a percentage of service fee
revenue. As a percentage of revenue of the contracted radiology practice and
diagnostic imaging centers, bad debt expense was 6.6% and 10.0% in 1999 and
2000, respectively. This increase was primarily due to a $13.3 million charge
recorded in the fourth quarter of 2000 for the provision of uncollectible
accounts. During the fourth quarter of 2000, we performed an extensive review of
our accounts receivable and collection experience utilizing reports and analyses
not previously available. Based on this review, we believed that the estimation
process of determining contractual allowances for billed charges needed to be
revised and that a portion of our accounts receivable was no longer collectible.
The review allowed us to better analyze old accounts receivable, however it did
not indicate what our historical collection rates would have been if newly
implemented collection policies and procedures had been in place. Accordingly,
the adjustment for an increase in the provision for uncollectible accounts was
recognized as a bad debt expense as opposed to an increase in contractual
allowances. We recognized the $13.3 million charge in the fourth quarter as a
change in accounting estimate when the information became known.

  MERGER RELATED COSTS

     During the fourth quarter of 2000, we incurred a $1.8 million charge for
the write-off of transaction costs incurred in connection with the proposed
merger with SKM.

  CORPORATE GENERAL AND ADMINISTRATIVE

     Corporate general and administrative expenses decreased $600,000, from
$11.2 million in 1999 to $10.6 million in 2000. As a percentage of service fee
revenue, these costs were 5.6% and 4.3% in 1999 and 2000, respectively.

  DEPRECIATION AND AMORTIZATION

     Depreciation and amortization expense increased $3.7 million, from $18.4
million in 1999 to $22.1 million in 2000. This increase was principally due to
amortization of intangible assets resulting from our acquisition of additional
facilities and practices. In addition, we have continued to buy new equipment to
replace older equipment, and this upgrade of equipment resulted in increased
depreciation expense. As a percentage of service fee revenue, these costs were
9.2% and 9.0% in 1999 and 2000, respectively.

  INTEREST EXPENSE, NET

     Interest expense, net, increased $5.7 million, from $12.3 million in 1999
to $18 million in 2000. As a percentage of service fee revenue, these costs were
6.2% and 7.3% in 1999 and 2000, respectively. The percentage increase is a
result of our acquisitions throughout 1999, an increase in days sales
outstanding in accounts receivable and the issuance of $20 million of
convertible notes in August 1999 (see Note 5 to

                                        39


consolidated financial statements incorporated by reference herein) to fund the
Questar transaction, all of which resulted in us carrying higher debt levels.

  INCOME TAX EXPENSE

     Our effective tax rate for 2000 increased to 40.0% from 39.2% in 1999. The
increase is primarily due to the non-deductible amortization of goodwill and a
shift in state income taxes based on our recent expansions.

  NET INCOME

     Net income decreased from $16.1 million in 1999 to $4.3 million in 2000.
Net income as a percentage of revenue was 1.8% in 2000 compared to 8% in 1999.
Included in net income for 2000, is a $8 million after tax charge for the
provision of uncollectible accounts, $2.2 million after tax write-off of a note
receivable and $1.1 million after tax expense related to merger costs.

SUMMARY OF OPERATIONS BY QUARTER

     The following table presents unaudited quarterly operating results for each
of our last eight fiscal quarters. We believe that all necessary adjustments
have been included in the amounts stated below to present fairly the quarterly
results when read in conjunction with the consolidated financial statements.
Results of operations for any particular quarter are not necessarily indicative
of results of operations for a full year or predictive of future periods.



                                                 2000 QUARTER Ended                            2001 QUARTER ENDED
                                      -----------------------------------------   --------------------------------------------
                                       MAR.      JUNE      SEPT.        DEC.       MAR.      JUNE        SEPT.         DEC.
                                        31        30         30        31(a)        31        30         30(b)        31(c)
                                      -------   -------   --------   ----------   -------   -------   -----------   ----------
                                                               (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                                                                            
Statement of Income Data:
  Service fee revenue...............  $59,251   $61,783   $62,487     $ 63,166    $65,911   $68,236     $69,175      $73,328
  Income (loss) before income taxes
    and extraordinary loss..........   6,784     7,308      7,064      (13,923)    5,830     6,586        6,305        9,060
  Extraordinary loss................      --        --         --           --        --        --           --       (2,838)
  Net income (loss).................  $4,070    $4,385    $ 4,246     $ (8,368)   $3,498    $3,952      $ 3,782      $ 2,599
  Income (loss) per share before
    extraordinary loss
    Basic...........................  $ 0.21    $ 0.22    $  0.22     $  (0.43)   $ 0.18    $ 0.20      $  0.19      $  0.28
    Diluted.........................  $ 0.20    $ 0.21    $  0.20     $  (0.43)   $ 0.17    $ 0.19      $  0.18      $  0.24
  Net Income (Loss) Per Share:
    Basic...........................  $ 0.21    $ 0.22    $  0.22     $  (0.43)   $ 0.18    $ 0.20      $  0.19      $  0.13
    Diluted.........................  $ 0.20    $ 0.21    $  0.20     $  (0.43)   $ 0.17    $ 0.19      $  0.18      $  0.12
  Weighted Average Shares
    outstanding:
    Basic...........................  19,463    19,502     19,506       19,507    19,507    19,507       19,578       19,643
    Diluted.........................  22,084    22,067     22,143       19,507    22,171    22,047       22,817       23,584


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

(a)  Net loss for the quarter ended December 31, 2000 includes a $13.3 million
     charge for the provision of uncollectible accounts, $3.7 million charge for
     the write-off of a note receivable and a $1.8 million charge for
     transaction related costs. See Note 2 to consolidated financial statements
     incorporated by reference herein.

(b)  Net income for the quarter ended September 30, 2001 includes $1 million in
     merger related costs. See Note 11 to consolidated financial statements
     incorporated by reference herein.

(c)  Net income for the quarter ended December 31, 2001 includes $615,000 in
     supplemental incentive compensation in connection with our senior notes
     offering and $1.3 million of non-operating income as partial consideration
     for early termination of management services provided at certain imaging
     sites not owned or operated by us. In addition, net income for the quarter
     ended December 31, 2001
                                        40


     includes a $4.7 million ($2.8 million net of tax) extraordinary charge for
     the early extinguishment of debt. See Notes 5 and 11 to consolidated
     financial statements incorporated by reference herein.

LIQUIDITY AND CAPITAL RESOURCES

     Liquidity for the year ended December 31, 2001 was derived principally from
net cash proceeds from operating activities, as well as borrowings under our
credit facility and Old Notes. As of December 31, 2001, we had net working
capital of $55.2 million, including cash and cash equivalents of $10.8 million.
We had current liabilities of $40.4 million, including current maturities of
$5.5 million. For the year ended December 31, 2001, we generated $41 million in
net operating cash flow, invested $19.1 million and used cash of $14.8 million
in financing activities.

     Net cash from operating activities for the year ended December 31, 2001
increased $27.7 million, from $13.3 million in 2000 to $41 million in 2001. The
increase in cash from operating activities is primarily due to improved
collections of accounts receivable which resulted in a decrease in accounts
receivable days outstanding from 76 days at December 31, 2000 to 69 days at
December 31, 2001, as well as the implementation of certain cash management
strategies. In addition, cash paid for income taxes was only $7.5 million in
2001 compared to $11.5 million in 2000. For the year ended December 31, 1999,
net cash used in operating activities was $1.5 million. For the year ended
December 31, 1999, cash used of $14.7 million for other receivables and other
assets included a $4.2 million income tax receivable, a $3.8 million note due
from an affiliated joint venture and a $4 million note receivable due from a
contracted radiology practice.

     Net cash used in investing activities for the years ended December 31,
1999, 2000, and 2001 was $45 million, $23.1 million, and $19.1 million,
respectively. Purchases of property and equipment during the years ended
December 31, 1999, 2000 and 2001 were $31.5 million, $14 million, and $7.2
million, respectively. In addition, for the year ended December 2001, $13.9
million was used to buy out certain operating leases of equipment. Proceeds from
the sale of equipment during the year ended December 31, 1999 were $10 million.
For the years ended December 31, 1999, 2000 and 2001, we paid $25.4 million,
$10.1 million, and $906,000, respectively, for acquisitions and affiliations. In
August 1999, we acquired all the outstanding stock of Questar, a private
operator of primarily MRI radiology centers. The total consideration for the
transaction was $18.9 million in cash, plus the assumption of $16.8 million in
liabilities. The total consideration for all other 1999 acquisitions and
affiliations was approximately $6.5 million in cash, 50,264 shares of our common
stock valued at approximately $304,000, plus the assumption of $3.2 million in
liabilities. In March 2000, we completed an acquisition of an imaging center in
Osceola, Florida for total consideration of approximately $2.7 million. During
2000, we continued to complete the development of imaging centers of Questar for
total consideration of approximately $5.9 million. Total consideration paid for
all other acquisitions and affiliations were approximately $1.5 million. In
November 2001, we completed the acquisition of an imaging center in Laurel,
Maryland for total consideration of $906,000.

     Net cash flows from financing activities for the years ended December 31,
1999 and 2000 were $44.2 million and $9.1 million, respectively. Net cash used
in financing activities for the year ended December 31, 2001 was $14.8 million.
Borrowings of long-term debt for the years ended December 31, 1999, 2000 and
2001 were used to enter into contractual arrangements with radiology practices
and the acquisition of Questar, for purchases of equipment and capital
improvements, as well as for working capital needs. At December 31, 2001, we had
outstanding borrowings of $160 million under our Old Notes, $24.2 million
outstanding under our convertible debt obligations and an additional $13 million
in other debt obligations.

     On March 30, 2001, we amended our $160 million senior credit facility with
our existing banks. Under the terms of the amended senior credit facility,
borrowings consisted of a $100 million term loan and a $60 million revolving
credit facility, including a $5 million swing line facility. Under the
amendment, we made $4 million of scheduled principal installments on June 29,
2001 and September 28, 2001. Scheduled principal installments for the fiscal
year ended 2001 had been reduced from $48 million under

                                        41


the prior agreement to $12 million under the new amendment. Each of the
facilities would terminate on November 26, 2003. The interest rate was (i) an
adjusted LIBOR rate, plus an applicable margin which could vary from 3.0% to
4.0% dependent on certain financial ratios or (ii) the prime rate, plus an
applicable margin which could vary from 2.0% to 3.0%. In each case, the
applicable margin varied based on financial ratios maintained by us. The senior
credit facility included certain restrictive covenants including prohibitions on
the payment of dividends, limitations on capital expenditures and the
maintenance of certain financial ratios (including minimum fixed charge coverage
ratio and maximum leverage ratio, as defined). Borrowings under the senior
credit facility were secured by all service agreements to which we were a party,
a pledge of the stock of our subsidiaries and all of our assets.

     In December 2001, we terminated our senior credit facility with proceeds
from the issuance, of the Old Notes. In connection with the redemption, we
recorded an extraordinary loss from the early extinguishment of our senior
credit facility debt in the amount of $4.7 million, $2.8 million after tax. The
Old Notes bear interest at an annual rate of 10 1/2% payable semiannually in
arrears on June 15 and December 15 of each year, commencing June 15, 2002. The
Old Notes are redeemable on or after December 15, 2005 at various redemption
prices, plus accrued and unpaid interest to the date of redemption. The Old
Notes are unsecured obligations which rank senior in right of payment to all of
our subordinated indebtedness and equal in right of payment with all other
senior indebtedness. The Old Notes are unconditionally guaranteed on a senior
unsecured basis by certain restricted existing and future subsidiaries.

     In addition to the Old Notes issuance in December 2001, we entered into a
credit facility whereby we can borrow up to $35 million. At December 31, 2001,
no borrowings were outstanding under the credit facility. Under the credit
facility the interest rate is (i) an adjusted LIBOR rate, plus an applicable
margin, which can vary from 3.0% to 3.5%, or (ii) the prime rate, plus an
applicable margin, which can vary from 1.75% to 2.25%. In each case, the
applicable margin varies based on financial ratios maintained by us. The credit
facility includes certain restrictive covenants, including prohibitions on the
payment of dividends, limitations or capital expenditures and the maintenance of
certain financial ratios (including minimum fixed charge to coverage ratio and
maximum leverage ratio, as defined). Borrowings under the credit facility are
secured by all service agreements to which we are a party, a pledge of the stock
of our subsidiaries and all of our assets.

     The contractual obligations of long-term debt, including capital lease
obligations and noncancellable operating leases are as follows (in millions):



                                                             PAYMENTS DUE BY PERIOD
                                                       -----------------------------------
                                                       LESS THAN    1-3     4-5    AFTER 5
                                              TOTAL     1 YEAR     YEARS   YEARS    YEARS
                                              ------   ---------   -----   -----   -------
                                                                    
Long term debt..............................  $184.2     $  --     $  --   $ --    $184.2
Capital lease obligations...................    13.0       5.5       7.5     --        --
Operating leases............................    59.4      18.1      37.5    3.8        --
                                              ------     -----     -----   ----    ------
          Total contractual cash
            obligations.....................  $256.6     $23.6     $45.0   $3.8    $184.2
                                              ======     =====     =====   ====    ======


     On December 30, 1999, we entered into a sale-leaseback transaction in which
radiology equipment with a net book value of approximately $10 million was sold
for $10 million and leased back for five years. The operating lease bears
interest at 9.96%, and equal monthly payments began in July 2000. In December
2001, we repurchased some of this equipment and other equipment previously held
under operating leases for approximately $13.9 million. Future minimum lease
payments under these operating leases would have been $3.6 million for years
2002 through 2004 and $2.3 million for 2005.

     We operate in a capital intensive, high fixed-cost industry that requires
significant amounts of capital to fund operations, particularly the initial
start-up and development expense of new diagnostic imaging centers and the
acquisition of additional centers and new diagnostic imaging equipment. To the
extent we are unable to generate sufficient cash from our operations, funds are
not available under our senior credit facility or we are unable to structure or
obtain operating leases, we may be unable to meet our capital

                                        42


expenditure requirements. Furthermore, we may not be able to raise any necessary
additional funds through bank financing or the issuance of equity or debt
securities on terms acceptable to us, if at all.

CRITICAL ACCOUNTING POLICIES

     The preparation of financial statements requires the use of judgments and
estimates. Our critical accounting policies are described below to provide a
better understanding of how we develop our judgments about future events and
related estimations and how they can impact our financial statements. A critical
accounting policy is one that requires our most difficult, subjective or complex
estimates and assessments and is fundamental to our results of operations. We
identified our most critical accounting policies to be:

     - estimation of contractual allowances and bad debts of accounts
       receivable; and

     - evaluation of intangible and long-lived asset for impairment.

  CONTRACTUAL ALLOWANCES AND BAD DEBT

     Revenue of the contracted radiology practices and diagnostic imaging
centers is recorded when services are rendered by the contracted radiology
practice and diagnostic imaging center based on established charges and reduced
by estimated contractual allowances. Service fee revenue is recorded net of
estimated contractual allowances and amounts retained by the contracted
radiology practices under the terms of the service agreements. We estimate
contractual allowances based on the patient mix at each contracted radiology
practice and diagnostic imaging center, impact of managed care contract pricing,
and historical collection information. We operate 120 imaging centers in 18
different states, each of which has multiple managed care contracts and a
differing patient mix. We review monthly the estimated contractual allowance
rates for each contracted radiology practice and diagnostic imaging center. The
contractual allowance rate is adjusted as changes to the factors discussed above
become known. We record bad debt expense based on historical collection rates
and our evaluation of each contracted radiology practice and diagnostic imaging
center.

  IMPAIRMENT OF INTANGIBLE AND LONG-LIVED ASSETS

     Subsequent to an acquisition, we continually evaluate whether events and
circumstances have occurred that indicate the remaining balance of the
intangible assets and property and equipment may not be recoverable or that the
remaining useful lives may warrant revision. We evaluate the potential
impairment of intangibles separately from property and equipment. When factors
indicate that intangible assets or property and equipment should be evaluated
for possible impairment, we determine whether the intangible assets or property
and equipment are recoverable or if impairment exists, in which case an
adjustment is made to the carrying value of the related asset. In making this
determination, we use an estimate of the related contracted radiology practices'
and diagnostic imaging services' undiscounted cash flows over the remaining
lives of the intangible assets or the property and equipment and compare it to
the contracted radiology practices' and diagnostic imaging centers' intangible
assets or property and equipment balances. When an adjustment is required, we
evaluate the remaining amortization periods. An impairment loss recognized would
be measured as the amount by which the carrying amount of the asset exceeds the
fair value of the asset. We recorded no impairment charges during 1999, 2000 or
2001.

     Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS No. 142"), became effective for us on January 1, 2002.
SFAS No. 142 requires that goodwill and other intangible assets with an
indefinite useful life no longer be amortized as expenses of operations, but
rather carried on the balance sheet as permanent assets. These intangible assets
are to be subject to at least annual assessments for impairment by applying a
fair-value-based test. Amortization of goodwill and other indefinite-lived
intangible assets amounted to $1.2 million ($749,900 on an after tax basis) for
the year ended December 31, 2001. These expense amounts, under SFAS 142, will
not be recorded in years after fiscal 2001. We are developing plans to determine
fair values of our operations in which goodwill and other indefinite-lived
intangibles have been recorded and will assess whether an impairment charge is
                                        43


warranted as of January 1, 2002, or at any other assessment dates. Our service
agreements, included in the consolidated balance sheets as intangible assets,
net, are not considered to have an indefinite useful life and will continue to
be amortized over a useful life of 25 years.

     This discussion and analysis should be read in conjunction with our
consolidated financial statements and related notes incorporated by reference
herein.

                                        44


               CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS

     Throughout this prospectus we make "forward-looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking
statements include words such as "may," "will," "would," "could," "likely,"
"estimate," "intend," "plan," "continue," "believe," "expect" or "anticipate"
and other similar words and include all discussions about our acquisition and
development plans. We do not guarantee that the transactions and events
described in this prospectus will happen as described or that any positive
trends noted in this prospectus will continue. The forward-looking statements
contained in this prospectus are generally located in the material set forth
under the headings "Risk Factors," "Capitalization," "Management's Discussion
and Analysis of Operations and Financial Condition," "The Diagnostic Imaging
Services Industry" and "Business," but may be found in other locations as well.
These forward-looking statements generally relate to our plans, objectives and
expectations for future operations and are based upon management's reasonable
estimates of future results or trends. Although we believe that our plans and
objectives reflected in or suggested by such forward-looking statements are
reasonable, we may not achieve such plans or objectives. You should read this
prospectus completely and with the understanding that actual future results may
be materially different from what we expect. We will not update forward-looking
statements even though our situation may change in the future.

     SPECIFIC FACTORS THAT MIGHT CAUSE ACTUAL RESULTS TO DIFFER FROM OUR
EXPECTATIONS, MAY AFFECT OUR ABILITY TO PAY TIMELY AMOUNTS DUE UNDER THE NOTES
OR MAY AFFECT THE VALUE OF THE NOTES, INCLUDE, BUT ARE NOT LIMITED TO:

     - economic, competitive, demographic, business and other conditions in our
       markets;

     - a decline in patient referrals;

     - changes in the rates or methods of third-party reimbursement for
       diagnostic imaging services;

     - the termination of our contracts with radiology practices;

     - the availability of additional capital to fund capital expenditure
       requirements;

     - burdensome lawsuits against our contracted radiology practices and us;

     - reduced operating margins due to our managed care contracts and capitated
       fee arrangements;

     - any failure by us to comply with state and federal anti-kickback and
       anti-self referral laws or any other applicable healthcare regulations;

     - our substantial indebtedness, debt service requirements and liquidity
       constraints;

     - risks related to the notes and healthcare securities generally; and

     - other factors discussed elsewhere in this prospectus.

     All future written and verbal forward-looking statements attributable to us
or any person acting on our behalf are expressly qualified in their entirety by
the cautionary statements contained or referred to in this section. In light of
these risks, uncertainties and assumptions, the forward-looking events discussed
in this prospectus might not occur.

                            DESCRIPTION OF NEW NOTES

     The Old Notes are, and the New Notes will be, governed by an indenture,
dated December 12, 2001, by and among Radiologix, Inc., the Guarantors and U.S.
Bank National Association, as trustee.

     The following summaries of certain provisions of the indenture are
summaries only, do not purport to be complete and are qualified in their
entirety by reference to all of the provisions of the indenture and the
registration rights agreement.

                                        45


     You can find the definitions of certain capitalized terms in this section
under the subheading "-- Certain Definitions." For purposes of this section,
references to "Company" or "we," "our," or "us" include only Radiologix, Inc.
and its successors in accordance with the terms of the indenture and, except
pursuant to the terms of the guarantees, not its Subsidiaries.

     The terms of the New Notes include those stated in the indenture and those
made part of the indenture by reference to the Trust Indenture Act of 1939, as
amended. The New Notes are subject to all such terms, and holders of New Notes
are referred to the indenture and the Trust Indenture Act of 1939 for a
statement thereof. A copy of the form of indenture is available from the trustee
upon request.

     The following description is a summary of the material provisions of the
indenture. It does not restate the indenture in its entirety. We urge you to
read the indenture because it, and not this description, defines your rights as
a holder of the New Notes.

BRIEF DESCRIPTION OF THE NEW NOTES AND THE GUARANTEES

  THE NEW NOTES

     The terms of the New Notes are identical in all material respects to the
terms of the Old Notes, except that the transfer restrictions and registration
rights provisions of the Old Notes do not apply to the New Notes. The New Notes
are:

     - our unsecured general obligations;

     - ranked senior in right of payment to all of our existing and future
       Subordinated Indebtedness; and

     - unconditionally guaranteed by the Guarantors.

     The New Notes will be issued in fully registered form only, without
coupons, in denominations of $1,000 and integral multiples thereof. The New
Notes will constitute "Designated Senior Indebtedness" under the terms of the
Convertible Note.

     The term "Subsidiaries" as used in this Description of New Notes does not
include Unrestricted Subsidiaries. Under certain circumstances, we will be able
to designate current or future Subsidiaries as Unrestricted Subsidiaries.
Unrestricted Subsidiaries will not be subject to the restrictive covenants set
forth in the indenture.

  THE GUARANTEES

     The New Notes will be jointly and severally irrevocably and unconditionally
guaranteed on a senior basis by each of our present and future Subsidiaries (the
"Guarantors"). Some of our Subsidiaries were designated as Unrestricted
Subsidiaries as of December 12, 2001 and will not be Guarantors. For the year
ended December 31, 2001, our Subsidiaries that are not Guarantors generated 7.4%
of our total service fee revenue and 8.5% of our EBITDA. The obligations of each
Guarantor under its guarantee, however, will be limited in a manner intended to
avoid it being deemed a fraudulent conveyance under applicable law. See "Certain
Bankruptcy Limitations" and "Certain Covenants -- Subsidiary Guarantors" and
"-- Release of Guarantors" below.

PRINCIPAL, MATURITY AND INTEREST; ADDITIONAL NOTES

     The New Notes will be initially limited to a maximum aggregate principal
amount of $160.0 million. The indenture provides, in addition to the $160.0
million maximum aggregate principal amount of New Notes, for the issuance of
Additional Notes having identical terms and conditions to the New Notes offered
hereby (the "Additional Notes"), subject to compliance with the terms of the
indenture, including the covenant "Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock." Interest will accrue on the
Additional Notes issued pursuant to the indenture from and including the date of
issuance of such Additional Notes. Any such Additional Notes would be issued on
the same terms as the New Notes and would constitute part of the same series of
securities as the New Notes and would

                                        46


vote together as one series on all matters with respect to the Old Notes and the
New Notes. All references to New Notes herein includes the Additional Notes,
except as stated otherwise.

     The New Notes will mature on December 15, 2008. The New Notes will bear
interest at the rate of 10.5% per annum from the most recent date to which
interest has been paid on the Old Notes (the "Interest Payment Date") or, if no
interest has been paid, from the Issue Date, payable semi-annually in arrears on
June 15 and December 15 of each year, commencing June 15, 2002 to the Persons in
whose names such New Notes are registered at the close of business on the June 1
or December 1 immediately preceding such Interest Payment Date. Interest will be
calculated on the basis of a 360-day year consisting of 12 30-day months.

METHODS OF RECEIVING PAYMENTS ON THE NEW NOTES

     Principal of, premium, if any, and interest on the New Notes will be
payable, and the New Notes may be presented for registration of transfer or
exchange, at our office or agency maintained for such purpose, which office or
agency shall be maintained in the Borough of Manhattan, The City of New York.
Except as set forth below, at our option, payment of interest may be made by
check mailed to the holders of the New Notes at the addresses set forth upon our
registry books. (See "Book-Entry, Delivery and Form -- Same Day Settlement and
Payment"). No service charge will be made for any registration of transfer or
exchange of New Notes, but we may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith. Until
otherwise designated by us, our office or agency will be the corporate trust
office of the trustee presently located at the office of the trustee in the
Borough of Manhattan, The City of New York.

CERTAIN BANKRUPTCY LIMITATIONS

     We are a holding company, conducting all of our business through our
Subsidiaries, which will guarantee our obligations under the New Notes, and our
Unrestricted Subsidiaries, which will not guarantee our obligations under the
New Notes. Accordingly, our ability to meet our cash obligations is dependent
upon the ability of our subsidiaries to make cash distributions to us.
Furthermore, any right we have to receive the assets of any such subsidiary upon
such subsidiary's liquidation or reorganization (and the consequent right of the
holders of the New Notes to participate in the distribution of the proceeds of
those assets) effectively will be subordinated by operation of law to the claims
of such subsidiary's creditors (including trade creditors) and holders of its
preferred stock, except to the extent that we are recognized as a creditor or
preferred stockholder of such subsidiary in which case our claims would still be
subordinate to any indebtedness or preferred stock of such subsidiary senior in
right of payment to that held by us.

     Holders of the New Notes will be direct creditors of each Guarantor by
virtue of its guarantee. Nonetheless, in the event of the bankruptcy or
financial difficulty of a Guarantor, such Guarantor's obligations under its
guarantee may be subject to review and avoidance under state and federal
fraudulent transfer laws. Among other things, such obligations may be avoided if
a court concludes that such obligations were incurred for less than reasonably
equivalent value or fair consideration at a time when the Guarantor was
insolvent, was rendered insolvent, or was left with inadequate capital to
conduct its business. A court would likely conclude that a Guarantor did not
receive reasonably equivalent value or fair consideration to the extent that the
aggregate amount of its liability on its guarantee exceeds the economic benefits
it receives in connection with the issuance of the New Notes. The obligations of
each Guarantor under its guarantee will be limited in a manner intended to cause
it not to be a fraudulent conveyance under applicable law, although no assurance
can be given that a court would give the holder the benefit of such provision.

     If the obligations of a Guarantor under its guarantee were avoided, holders
of New Notes would have to look to the assets of any remaining Guarantors for
payment. There can be no assurance in that event that such assets would suffice
to pay the outstanding principal and interest on the New Notes.

                                        47


OPTIONAL REDEMPTION

     We will not have the right to redeem any New Notes prior to December 15,
2005, other than out of the Net Cash Proceeds of any Public Equity Offering of
our common stock, as described below.

     At any time on or after December 15, 2005 we may redeem the New Notes for
cash at our option, in whole or in part, upon not less than 30 days nor more
than 60 days notice to each holder of New Notes, at the following redemption
prices (expressed as percentages of the principal amount) if redeemed during the
12-month period commencing December 15 of the years indicated below, in each
case together with accrued and unpaid interest thereon to the date of redemption
of the New Notes:



TABLE                                                          PERCENTAGE
- -----                                                          ----------
                                                            
2005........................................................    105.250%
2006........................................................    102.625%
2007 and thereafter.........................................    100.000%


     At any time or from time to time on or prior to December 15, 2004, upon any
Public Equity Offering of our common stock for cash, up to 35% of the aggregate
principal amount of the Old Notes and the New Notes issued pursuant to the
indenture may be redeemed at our option within 90 days of such Public Equity
Offering, on not less than 30 days, but not more than 60 days, notice to each
holder of the Old Notes or the New Notes to be redeemed, with cash received by
us from the Net Cash Proceeds of such Public Equity Offering, at a redemption
price equal to 110.500% of principal, together with accrued and unpaid interest
thereon to the redemption date; provided, however, that immediately following
such redemption not less than 65% of the aggregate principal amount of the Old
Notes and the New Notes originally issued pursuant to the indenture remain
outstanding.

     If the redemption date hereunder is on or after an interest payment record
date ("Record Date") on which the holders of record have a right to receive the
corresponding interest due, and on or before the associated Interest Payment
Date, any accrued and unpaid interest, due on such Interest Payment Date will be
paid to the Person in whose name a New Note is registered at the close of
business on such Record Date.

MANDATORY REDEMPTION

     The New Notes will not have the benefit of any sinking fund and we will not
be required to make any mandatory redemption payments with respect to the New
Notes.

SELECTION AND NOTICE

     In the case of a partial redemption, the trustee shall select the New Notes
or portions thereof for redemption on a pro rata basis, by lot or in such other
manner it deems appropriate and fair. The New Notes may be redeemed in part in
multiples of $1,000 only.

     Notice of any redemption will be sent, by first class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption to the
holder of each New Note to be redeemed to such holder's last address as then
shown upon the registry books of our registrar. Any notice which relates to a
New Note to be redeemed in part only must state the portion of the principal
amount equal to the unredeemed portion thereof and must state that on and after
the date of redemption, upon surrender of such New Note, another New Note or New
Notes in a principal amount equal to the unredeemed portion thereof will be
issued. On and after the date of redemption, interest will cease to accrue on
the New Notes or portions thereof called for redemption, unless we default in
the payment thereof.

                                        48


REPURCHASE AT THE OPTION OF HOLDERS

  REPURCHASE OF NEW NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL

     The indenture provides that in the event that a Change of Control has
occurred, each holder of New Notes will have the right, at such holder's option,
pursuant to an offer (subject only to conditions required by applicable law, if
any) by us (the "Change of Control Offer"), to require us to repurchase all or
any part of such holder's New Notes (provided, that the principal amount of such
New Notes must be $1,000 or an integral multiple thereof) on a date (the "Change
of Control Purchase Date") that is no later than 60 days after the occurrence of
such Change of Control, at a cash price equal to 101% of the principal amount
thereof (the "Change of Control Purchase Price"), together with accrued and
unpaid interest to the Change of Control Purchase Date.

     The Change of Control Offer shall be made within 30 days following a Change
of Control and shall remain open for 20 Business Days following its commencement
(the "Change of Control Offer Period"). Upon expiration of the Change of Control
Offer Period, we shall promptly purchase all New Notes properly tendered in
response to the Change of Control Offer.

     As used herein, a "Change of Control" means:

          (1) any sale, transfer, conveyance or other disposition (other than by
     way of merger or consolidation) of all or substantially all of our assets,
     on a consolidated basis, in one transaction or a series of related
     transactions, to any "person" (including any group that is deemed to be a
     "person");

          (2) the consummation of any transaction, including, without
     limitation, any merger or consolidation, whereby any "person" (including
     any group that is deemed to be a "person") is or becomes the "beneficial
     owner," directly or indirectly, of more than 35% of the aggregate Voting
     Equity Interests of the transferee(s) or surviving entity or entities;

          (3) the Continuing Directors cease for any reason to constitute a
     majority of our Board of Directors then in office; or

          (4) we adopt a plan of liquidation.

     As used in this covenant, "person" (including any group that is deemed to
be a "person") has the meaning given by Section 13(d) of the Exchange Act,
whether or not applicable.

     Notwithstanding the foregoing, we will not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance with the
requirements set forth in the indenture applicable to a Change of Control Offer
made by us and purchases all New Notes validly tendered and not withdrawn under
such Change of Control Offer. In addition, if the Convertible Note is
outstanding on the date of a Change of Control that also constitutes a "Change
of Control" as defined in the Convertible Note, the Change of Control notice
delivered to holders pursuant to the indenture shall include a statement that
the Company will prepay or redeem the Convertible Note upon the completion of
the Change of Control Offer in accordance with clause (z) of the covenant
"Limitation on Restricted Payments."

     On or before the Change of Control Purchase Date, we will:

          (1) accept for payment New Notes or portions thereof properly tendered
     pursuant to the Change of Control Offer;

          (2) deposit with the paying agent for us (the "Paying Agent") cash
     sufficient to pay the Change of Control Purchase Price (together with
     accrued and unpaid interest) of all New Notes so tendered; and

          (3) deliver to the trustee the New Notes so accepted together with an
     Officers' Certificate listing the New Notes or portions thereof being
     purchased by us.

                                        49


     The Paying Agent promptly will pay the holders of New Notes so accepted an
amount equal to the Change of Control Purchase Price (together with accrued and
unpaid interest) and the trustee promptly will authenticate and deliver to such
holders a New Note equal in principal amount to any unpurchased portion of the
New Note surrendered. Any New Notes not so accepted will be delivered promptly
by us to the holder thereof. We publicly will announce the results of the Change
of Control Offer on or as soon as practicable after the Change of Control
Purchase Date.

     The Change of Control purchase feature of the New Notes may make more
difficult or discourage a takeover of us, and, thus, the removal of incumbent
management.

     The phrase "all or substantially all" of our assets will likely be
interpreted under applicable state law and will be dependent upon particular
facts and circumstances. As a result, there may be a degree of uncertainty in
ascertaining whether a sale or transfer of "all or substantially all" of our
assets has occurred. In addition, no assurances can be given that we will be
able to acquire New Notes tendered upon the occurrence of a Change of Control.

     Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this covenant, our compliance or
compliance by any of the Guarantors with such laws and regulations shall not in
and of itself cause a breach of their obligations under such covenant.

     If the Change of Control Purchase Date hereunder is on or after an interest
payment Record Date and on or before the associated Interest Payment Date, any
accrued and unpaid interest due on such Interest Payment Date will be paid to
the Person in whose name a New Note is registered at the close of business on
such Record Date.

  SALE OF ASSETS AND SUBSIDIARY STOCK

     The indenture provides that we will not and the Guarantors will not, and
neither we nor the Guarantors will permit any of our Subsidiaries to, in one or
a series of related transactions, convey, sell, transfer, assign or otherwise
dispose of, directly or indirectly, any of their property, business or assets,
including by merger or consolidation (in the case of a Guarantor or one of our
Subsidiaries), and including any sale or other transfer or issuance of any
Equity Interests of any of our Subsidiaries or Unrestricted Subsidiaries,
whether by us or one of our Subsidiaries or through the issuance, sale or
transfer of Equity Interests by one of our Subsidiaries and including any sale
and leaseback transaction (any of the foregoing, an "Asset Sale"), unless:

          (1) at least 75% of the total consideration for such Asset Sale or
     series of related Asset Sales consists of cash or Cash Equivalents; and

          (2) we receive or such Subsidiary receives, as applicable, fair market
     value for such Asset Sale, such determination to be made in good faith by
     our Board of Directors for Asset Sales exceeding $2.0 million.

     Solely for purposes of (1) above, (a) any Indebtedness (other than
Subordinated Indebtedness) of the Company or such Subsidiary that is expressly
assumed by the transferee in such Asset Sale and with respect to which we are
and our Subsidiaries are fully and unconditionally released from any and all
obligations in connection therewith, (b) property that within 30 days of such
Asset Sale is converted into cash or Cash Equivalents; provided, that such cash
and Cash Equivalents shall be treated as Net Cash Proceeds attributable to the
original Asset Sale for which such property was received, and (c) the fair
market value, as determined in good faith by the Board of Directors, of any
asset (other than securities) received by us or any Subsidiary that, in the good
faith reasonable judgment of our Board of Directors, will immediately constitute
or be a part of a Related Business shall be deemed to be cash or Cash
Equivalents.

                                        50


     The indenture provides that within 360 days following such Asset Sale, the
Net Cash Proceeds therefrom are:

          (a) invested in fixed assets and property (other than notes, bonds,
     obligations and other securities, except in connection with the acquisition
     of a Guarantor in a Related Business) that in the good faith reasonable
     judgment of our Board of Directors will immediately constitute or be a part
     of a Related Business of the Company or such Subsidiary (if it continues to
     be a Subsidiary) immediately following such transaction; or

          (b) used to retire Purchase Money Indebtedness secured by the asset
     that was the subject of the Asset Sale or to permanently reduce the amount
     of Indebtedness outstanding under the Credit Agreement; or

          (c) applied to the optional redemption of the New Notes in accordance
     with the terms of the indenture and our other Indebtedness ranking on a
     parity with the New Notes and with similar provisions requiring us to
     redeem such Indebtedness with the proceeds from such Asset Sale, including
     the Old Notes, pro rata in proportion to the respective principal amounts
     (or accreted values in the case of Indebtedness issued with an original
     issue discount) of the New Notes and such other Indebtedness then
     outstanding.

     Pending the final application of any Net Cash Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest the Net Cash
Proceeds in any manner that is not prohibited by the indenture.

     The accumulated Net Cash Proceeds from Asset Sales not applied as set forth
in (a), (b) or (c) of the preceding paragraph shall constitute "Excess
Proceeds". Within 30 days after the date that the amount of Excess Proceeds
exceeds $10.0 million, the Company shall apply the Excess Proceeds (the "Asset
Sale Offer Amount") to the repurchase of the New Notes and such other
Indebtedness ranking on a parity with the New Notes and with similar provisions
requiring us to make an offer to purchase such Indebtedness with the proceeds
from such Asset Sale pursuant to a cash offer, including the Old Notes (subject
only to conditions required by applicable law, if any) (pro rata in proportion
to the respective principal amounts (or accreted values in the case of
Indebtedness issued with an original issue discount) of the New Notes and such
other Indebtedness then outstanding) (the "Asset Sale Offer") at a purchase
price of 100% of the principal amount (or accreted value in the case of
Indebtedness issued with an original issue discount) (the "Asset Sale Offer
Price") together with accrued and unpaid interest to the date of payment. Each
Asset Sale Offer shall remain open for 20 Business Days following its
commencement (the "Asset Sale Offer Period").

     Upon expiration of the Asset Sale Offer Period, we shall apply the Asset
Sale Offer Amount plus an amount equal to accrued and unpaid interest to the
purchase of all Indebtedness properly tendered in accordance with the provisions
hereof (on a pro rata basis if the Asset Sale Offer Amount is insufficient to
purchase all Indebtedness so tendered) at the Asset Sale Offer Price (together
with accrued interest). To the extent that the aggregate amount of New Notes and
such other pari passu Indebtedness tendered pursuant to an Asset Sale Offer is
less than the Asset Sale Offer Amount, we may use any remaining Net Cash
Proceeds as otherwise permitted by the indenture (other than for making
Restricted Payments that are not Investments) and following the consummation of
each Asset Sale Offer the Excess Proceeds amount shall be reset to zero.

     Notwithstanding, and without complying with, the provisions of this
covenant:

          (1) we may and our Subsidiaries may, in the ordinary course of
     business, (a) convey, sell, transfer, assign or otherwise dispose of
     inventory and other assets acquired and held for resale in the ordinary
     course of business and (b) liquidate Cash Equivalents;

          (2) we may and our Subsidiaries may convey, sell, transfer, assign or
     otherwise dispose of assets pursuant to and in accordance with the covenant
     "Limitation on Merger, Sale or Consolidation";

                                        51


          (3) we may and our Subsidiaries may sell or dispose of damaged, worn
     out or other obsolete personal property in the ordinary course of business
     so long as such property is no longer necessary for the proper conduct of
     our business or the business of such Subsidiary, as applicable;

          (4) the Guarantors may convey, sell, transfer, assign or otherwise
     dispose of assets to us or any Guarantor;

          (5) we may and our Subsidiaries may convey, sell, transfer, assign, or
     otherwise dispose of assets (or related assets or in related transactions)
     with a fair market value of less than $250,000;

          (6) we may and each of our Subsidiaries may surrender or waive
     contract rights or settle, release or surrender contract, tort or other
     litigation claims in the ordinary course of business or grant (or permit
     realization of) Liens not prohibited by the indenture;

          (7) we may and our Subsidiaries may make Permitted Investments
     (excluding clause (o) in the definition thereof) and Restricted Investments
     under the covenant "Limitation on Restricted Payments"; and

          (8) we may and our Subsidiaries may exchange assets held by us or such
     Subsidiaries for assets held by any Person or entity; provided, that (a)
     the assets received by us or such Subsidiaries in any such exchange in the
     good faith reasonable judgment of our Board of Directors will immediately
     constitute, be a part of, or be used in, a Related Business of the Company
     or such Subsidiaries, (b) our Board of Directors has determined that the
     terms of any exchange are fair and reasonable, (c) any such exchange shall
     be deemed to be an Asset Sale to the extent that we or any of our
     Subsidiaries receives cash or Cash Equivalents in such exchange, and (d)
     that, in the case of a transaction exceeding $10.0 million of consideration
     to any party thereto, we shall have obtained a favorable written opinion by
     an independent financial advisor of national reputation in the United
     States as to the fairness from a financial point of view to us or such
     Subsidiary of the proposed transaction.

     In addition to the foregoing and notwithstanding anything herein to the
contrary, (A) we will not, and will not permit any of our Subsidiaries to,
directly or indirectly make any Asset Sale of any of the Equity Interests of any
of our Subsidiaries (other than to us or to a Guarantor) except (i) pursuant to
an Asset Sale of all the Equity Interests of such Subsidiary, (ii) for an Asset
Sale of Equity Interests with no preferences or special rights or privileges and
with no redemption or prepayment provisions, provided, that after such sale we
or our Subsidiaries own a majority of the voting and economic Equity Interests
of such Subsidiary, (iii) to the extent such shares represent directors'
qualifying shares or shares required by applicable law to be held by a Person
other than the Company or a Wholly Owned Subsidiary of the Company, and (B) in
the event of the transfer of substantially all (but not all) of the assets of
the Company and its Subsidiaries as an entirety to a Person in a transaction
covered by and effected in accordance with the covenant "Limitation on Merger,
Sale or Consolidation," the successor corporation shall be deemed to have sold
for cash at fair market value the assets of the Company and its Subsidiaries not
so transferred for purposes of this covenant, and shall comply with the
provisions of this covenant with respect to such deemed sale as if it were an
Asset Sale (with such fair market value being deemed to be Net Cash Proceeds for
such purpose).

     Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this covenant, our
compliance or the compliance of any of our Subsidiaries with such laws and
regulations shall not in and of itself cause a breach of our obligations under
such covenant.

     If the payment date in connection with an Asset Sale Offer hereunder is on
or after an interest payment Record Date and on or before the associated
Interest Payment Date, any accrued and unpaid interest due on such Interest
Payment Date will be paid to the Person in whose name a New Note is registered
at the close of business on such Record Date.
                                        52


CERTAIN COVENANTS

     The indenture contains certain covenants that will, among other things,
restrict our ability to borrow money, pay dividends on or repurchase capital
stock, make investments and sell assets or enter into mergers or consolidations.
The following summary of certain covenants of the indenture are summaries only,
do not purport to be complete and are qualified in their entirety by reference
to all of the provisions of the indenture. We urge you to read the indenture
because it, and not this description, details your rights as a holder of the New
Notes.

  LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND DISQUALIFIED CAPITAL
  STOCK

     The indenture provides that, except as set forth in this covenant, we will
not and the Guarantors will not, and neither we nor the Guarantors will permit
any of our Subsidiaries to, directly or indirectly, issue, assume, guaranty,
incur, become directly or indirectly liable with respect to (including as a
result of an Acquisition), or otherwise become responsible for, contingently or
otherwise (individually and collectively, to "incur" or, as appropriate, an
"incurrence"), any Indebtedness (including Disqualified Capital Stock and
Acquired Indebtedness), other than Permitted Indebtedness.

     Notwithstanding the foregoing if:

          (1) no Default or Event of Default shall have occurred and be
     continuing at the time of, or would occur after giving effect on a pro
     forma basis to, such incurrence of Indebtedness, and

          (2) on the date of such incurrence (the "Incurrence Date"), our
     Consolidated Coverage Ratio for the Reference Period immediately preceding
     the Incurrence Date, after giving effect on a pro forma basis to such
     incurrence of such Indebtedness and, to the extent set forth in the
     definition of Consolidated Coverage Ratio, the use of proceeds thereof,
     would be at least (x) 2.5 to 1.0, if the incurrence occurs prior to January
     1, 2004, and (y) 2.75 to 1.0, if the incurrence occurs thereafter (the
     "Debt Incurrence Ratio"), then we and the Guarantors may incur such
     Indebtedness (including Disqualified Capital Stock).

     In addition, the foregoing limitations of the first paragraph of this
covenant will not prohibit:

          (a) our incurrence or the incurrence by any Guarantor of Purchase
     Money Indebtedness; provided, that:

             (1) the aggregate amount of such Indebtedness incurred and
        outstanding at any time pursuant to this paragraph (a) (plus any
        Refinancing Indebtedness issued to retire, defease, refinance, replace
        or refund such Indebtedness) shall not exceed $10.0 million; and

             (2) in each case, such Indebtedness shall not constitute more than
        100% of our cost or the cost to such Guarantor (determined in accordance
        with GAAP), as applicable, of the property so purchased, constructed,
        improved or leased;

          (b) if no Event of Default shall have occurred and be continuing, our
     incurrence or the incurrence by any Guarantor of Indebtedness in an
     aggregate amount incurred and outstanding at any time pursuant to this
     paragraph (b) (plus any Refinancing Indebtedness incurred to retire,
     defease, refinance, replace or refund such Indebtedness) of up to $17.5
     million; and

          (c) our incurrence or the incurrence by any Guarantor of Indebtedness
     pursuant to the Credit Agreement in an aggregate amount incurred and
     outstanding at any time pursuant to this paragraph (c) (plus any
     Refinancing Indebtedness incurred to retire, defease, refinance, replace or
     refund such Indebtedness) of up to $35.0 million, minus the amount of any
     such Indebtedness (1) retired with the Net Cash Proceeds from any Asset
     Sale applied to permanently reduce the outstanding amounts or the
     commitments with respect to such Indebtedness pursuant to clause (b) of the
     second paragraph of the section "Repurchase at the Option of
     Holders -- Sale of Assets and Subsidiary Stock" or (2) assumed by a
     transferee in an Asset Sale so long as neither the Company nor such
     Guarantor continues to be an obligor under such Indebtedness.

                                        53


     Indebtedness (including Disqualified Capital Stock) of any Person which is
outstanding at the time such Person becomes one of our Subsidiaries (including
upon designation of any subsidiary or other Person as a Subsidiary) or is merged
with or into or consolidated with us or one of our Subsidiaries shall be deemed
to have been incurred at the time such Person becomes or is designated one of
our Subsidiaries or is merged with or into or consolidated with us or one of our
Subsidiaries as applicable.

     Notwithstanding any other provision of this covenant, but only to avoid
duplication, a guarantee of our Indebtedness or of the Indebtedness of another
Guarantor incurred in accordance with the terms of the indenture issued at the
time such Indebtedness was incurred or if later at the time the guarantor
thereof became one of our Subsidiaries will not constitute a separate
incurrence, or amount outstanding, of Indebtedness. Upon each incurrence we may
designate pursuant to which provision of this covenant such Indebtedness is
being incurred and we may subdivide an amount of Indebtedness and designate more
than one provision pursuant to which such amount of Indebtedness is being
incurred and such Indebtedness shall not be deemed to have been incurred or
outstanding under any other provision of this covenant, except as stated
otherwise in the foregoing provisions.

  LIMITATION ON RESTRICTED PAYMENTS

     The indenture provides that we will not and the Guarantors will not, and
neither we nor the Guarantors will permit any of our Subsidiaries to, directly
or indirectly, make any Restricted Payment if, after giving effect to such
Restricted Payment on a pro forma basis:

          (1) a Default or an Event of Default shall have occurred and be
     continuing;

          (2) we are not permitted to incur at least $1.00 of additional
     Indebtedness pursuant to the Debt Incurrence Ratio in the covenant
     "Limitation on Incurrence of Additional Indebtedness and Disqualified
     Capital Stock"; or

          (3) the aggregate amount of all Restricted Payments made by us and our
     Subsidiaries, including after giving effect to such proposed Restricted
     Payment, on and after the Issue Date, would exceed, without duplication,
     the sum of:

             (a) 50% of our aggregate Consolidated Net Income for the period
        (taken as one accounting period), commencing on the first day of the
        first full fiscal quarter commencing after the Issue Date, to and
        including the last day of the fiscal quarter ended immediately prior to
        the date of each such calculation for which our consolidated financial
        statements are required to be delivered to the trustee or, if sooner,
        filed with the SEC (or, in the event Consolidated Net Income for such
        period is a deficit, then minus 100% of such deficit); plus

             (b) the aggregate Net Cash Proceeds received by us from the
        issuance or sale of our Qualified Capital Stock (other than (i) to one
        of our Subsidiaries and (ii) to the extent applied in connection with a
        Qualified Exchange or, to avoid duplication, otherwise given credit for
        in any provision of the following paragraph), after the Issue Date; plus

             (c) except in each case, in order to avoid duplication, to the
        extent any such payment or proceeds have been included in the
        calculation of Consolidated Net Income, an amount equal to the net
        reduction in Investments (other than returns of or from Permitted
        Investments) in any Person resulting from cash distributions on or cash
        repayments of any Investments, including payments of interest on
        Indebtedness, dividends, repayments of loans or advances, or other
        distributions or other transfers of assets, in each case to the Company
        or any Subsidiary or from the Net Cash Proceeds from the sale of any
        such Investment or from redesignations of Unrestricted Subsidiaries as
        Subsidiaries (valued in each case as provided in the definition of
        "Investments"), not to exceed, in each case, the amount of Investments
        previously made by the Company or any Subsidiary in such Person,
        including, if applicable, such Unrestricted Subsidiary, less the cost of
        disposition.

                                        54


     The foregoing clauses (2) and (3) of the immediately preceding paragraph,
however, will not prohibit:

          (u) repurchases of Capital Stock from our employees or directors (or
     their heirs or estates) or employees or directors (or their heirs or
     estates) of our Subsidiaries upon the death, disability or termination of
     employment in an aggregate amount to all employees or directors (or their
     heirs or estates) not to exceed in the aggregate $1.0 million per calendar
     year;

          (v) Restricted Payments in an aggregate amount not to exceed $5.0
     million, and the provisions of the immediately preceding paragraph will not
     prohibit:

          (w) any dividend, distribution or other payments by any of our
     Subsidiaries on its Equity Interests that is paid pro rata to all holders
     of such Equity Interests;

          (x) a Qualified Exchange;

          (y) the payment of any dividend on Qualified Capital Stock within 60
     days after the date of its declaration if such dividend could have been
     made on the date of such declaration in compliance with the foregoing
     provisions; or

          (z) in the event of a Change of Control that also constitutes a
     "Change of Control" as defined in the Convertible Note, the prepayment or
     redemption of the Convertible Note in accordance with Section 4 thereof
     (Mandatory Prepayment/Redemption) as in effect on the Issue Date; provided,
     that no such prepayment or redemption may be made under this clause (z)
     until the Company has made a Change of Control Offer in accordance with the
     section "Repurchase at the Option of Holders -- Repurchase of New Notes at
     the Option of the Holder Upon a Change of Control" and any Old Notes and
     New Notes tendered pursuant thereto have been purchased in accordance
     therewith on or prior to the Change of Control Purchase Date; and provided
     further, that the Company shall include in the Change of Control Offer
     notice delivered to holders a statement that the Company will prepay or
     redeem the Convertible Note upon the completion of the Change of Control
     Offer in accordance with this clause (z).

     The full amount of any Restricted Payment made pursuant to the foregoing
clauses (u), (w) (to avoid duplication, exclusive of amounts that reduced
Consolidated Net Income), (y) and (z) (but not pursuant to clause (v) or (x)) of
the immediately preceding sentence, however, will be counted as Restricted
Payments made for purposes of the calculation of the aggregate amount of
Restricted Payments available to be made referred to in clause (3) of the first
paragraph under the covenant "Limitation on Restricted Payments."

     For purposes of this covenant, the amount of any Restricted Payment made or
returned, if other than in cash, shall be the fair market value thereof, as
determined in the good faith reasonable judgment of our Board of Directors,
unless stated otherwise, at the time made or returned, as applicable.
Additionally, on the date of each Restricted Payment, we shall deliver an
Officers' Certificate to the trustee describing in reasonable detail the nature
of such Restricted Payment in excess of $10.0 million that is not a Restricted
Investment, stating the amount of such Restricted Payment, stating in reasonable
detail the provisions of the indenture pursuant to which such Restricted Payment
was made and certifying that such Restricted Payment was made in compliance with
the terms of the indenture.

  LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES

     The indenture provides that we will not and the Guarantors will not, and
neither we nor the Guarantors will permit any of our Subsidiaries to, directly
or indirectly, create, assume or suffer to exist any consensual restriction on
the ability of any of our Subsidiaries to pay dividends or make other
distributions to or on behalf of, or to pay any obligation to or on behalf of,
or otherwise to transfer assets

                                        55


or property to or on behalf of, or make or pay loans or advances to or on behalf
of, us or any of our Subsidiaries, except:

          (1) restrictions imposed by the New Notes or the indenture or by our
     other Indebtedness (which may also be guaranteed by the Guarantors);
     provided, that such restrictions are not materially more restrictive than
     those imposed by the indenture and the New Notes;

          (2) restrictions imposed by applicable law;

          (3) existing restrictions under Existing Indebtedness;

          (4) restrictions under any Acquired Indebtedness not incurred in
     violation of the indenture or any agreement (including any Equity Interest)
     relating to any property, asset, or business acquired by us or any of our
     Subsidiaries, which restrictions in each case existed at the time of
     acquisition, were not put in place in connection with or in anticipation of
     such acquisition and are not applicable to any Person, other than the
     Person acquired, or to any property, asset or business, other than the
     property, assets and business so acquired;

          (5) any restriction imposed by Indebtedness incurred under the Credit
     Agreement pursuant to clause (c) of the covenant "Limitation on Incurrence
     of Additional Indebtedness and Disqualified Capital Stock"; provided, that
     such restriction or requirement is no more restrictive than that imposed by
     the Credit Agreement as of the Issue Date;

          (6) restrictions with respect solely to any of our Subsidiaries
     imposed pursuant to a binding agreement which has been entered into for the
     sale or disposition of all of the Equity Interests or assets of such
     Subsidiary; provided, that such restrictions apply solely to the Equity
     Interests or assets of such Subsidiary which are being sold;

          (7) restrictions on transfer contained in Purchase Money Indebtedness
     incurred pursuant to clause (a) of the covenant "Limitation on Incurrence
     of Additional Indebtedness and Disqualified Capital Stock"; provided, that
     such restrictions relate only to the transfer of the property acquired with
     the proceeds of such Purchase Money Indebtedness;

          (8) in connection with and pursuant to permitted Refinancings,
     replacements of restrictions imposed pursuant to clauses (1), (3), (4) or
     (7) or this clause (8) of this paragraph that are not materially more
     restrictive than those being replaced and do not apply to any other Person
     or assets than those that would have been covered by the restrictions in
     the Indebtedness so refinanced; and

          (9) customary provisions in partnership agreements, limited liability
     company organizational governance documents, joint venture agreements and
     other similar agreements entered into in the ordinary course of business
     that restrict the transfer of ownership interests in such partnership,
     limited liability company, joint venture or similar Person.

     Notwithstanding the foregoing, (a) customary provisions restricting
subletting or assignment of any lease entered into in the ordinary course of
business, consistent with industry practice and (b) any asset subject to a Lien
which is not prohibited to exist with respect to such asset pursuant to the
terms of the indenture may be subject to customary restrictions on the transfer
or disposition thereof pursuant to such Lien.

  LIMITATIONS ON LAYERING INDEBTEDNESS

     We will not and the Guarantors will not, and neither we nor the Guarantors
will permit any of our Subsidiaries to, directly or indirectly, incur any
Indebtedness that is contractually subordinate to any of our other Indebtedness
or the other Indebtedness of any Guarantor unless, by its terms, such
Indebtedness is made at least as contractually subordinate to the New Notes and
the guarantees, as applicable.

                                        56


  LIMITATION ON LIENS

     We will not and the Guarantors will not, and neither we nor the Guarantors
will permit any of our Subsidiaries to, create, incur, assume or suffer to exist
any Lien of any kind, other than Permitted Liens, upon any of their respective
assets now owned or acquired on or after the date of the indenture or upon any
income or profits therefrom, unless we provide, and cause our Subsidiaries to
provide, concurrently therewith, that the New Notes and the applicable
guarantees are equally and ratably so secured; provided that if such
Indebtedness is Subordinated Indebtedness, the Lien securing such Subordinated
Indebtedness shall be contractually subordinate and junior to the Lien securing
the New Notes (and any related applicable guarantees) with the same relative
priority as such Subordinated Indebtedness shall have with respect to the New
Notes (and any related applicable guarantees).

  SALE AND LEASEBACK TRANSACTIONS

     The Company will not, and will not permit any of its Subsidiaries to, enter
into any sale and leaseback transaction; provided that the Company and its
Subsidiaries may enter into a sale and leaseback transaction if:

          (1) the Company or such Subsidiary could have (a) incurred
     Indebtedness in an amount equal to the Attributable Indebtedness relating
     to such sale and leaseback transaction under the Debt Incurrence Ratio in
     the second paragraph of the covenant described above under the covenant
     "Limitation on Incurrence of Additional Indebtedness and Disqualified
     Capital Stock" and (b) incurred a Lien to secure such Indebtedness pursuant
     to the covenant described above under the covenant "Limitation on Liens";

          (2) the gross cash proceeds of such sale and leaseback transaction are
     at least equal to the fair market value, as determined in good faith by the
     Board of Directors and set forth in an Officers' Certificate delivered to
     the trustee, of the property that is the subject of such sale and leaseback
     transaction; and

          (3) the transfer of assets in such sale and leaseback transaction is
     permitted by, and the Company applies the proceeds of such transaction in
     compliance with, the covenant described above under the section "Repurchase
     of New Notes at the Option of Holders -- Sale of Assets and Subsidiary
     Stock."

  LIMITATION ON TRANSACTIONS WITH AFFILIATES

     The indenture provides that neither we nor any of our Subsidiaries will be
permitted to enter into or suffer to exist any contract, agreement, arrangement
or transaction with any Affiliate (an "Affiliate Transaction"), or any series of
related Affiliate Transactions, (other than Exempted Affiliate Transactions),
(1) unless it is determined that the terms of such Affiliate Transaction are
fair and reasonable to us, and no less favorable to us than could have been
obtained in an arm's length transaction with a non-Affiliate, and (2) if
involving consideration to either party in excess of $2.0 million, unless such
Affiliate Transaction(s) has been approved by a majority of the members of our
Board of Directors that are disinterested in such transaction, if there are any
directors who are so disinterested, and (3) if involving consideration to either
party in excess of $10.0 million, or $2.0 million if there are no disinterested
directors for such transaction, unless, in addition we, prior to the
consummation thereof, obtain a written favorable opinion as to the fairness of
such transaction to us from a financial point of view from an independent
investment banking firm of national reputation in the United States or, if
pertaining to a matter for which such investment banking firms do not
customarily render such opinions, an appraisal or valuation firm of national
reputation in the United States. Within 5 days of any Affiliate Transaction(s)
involving consideration to either party of $2.0 million or more, the Company
shall deliver to the trustee an Officers' Certificate certifying that such
Affiliate Transaction (or Transactions) complied with clause (1), (2), and (3),
as applicable.

                                        57


  LIMITATION ON MERGER, SALE OR CONSOLIDATION

     The indenture provides that we will not consolidate with or merge with or
into another Person or, directly or indirectly, sell, lease, convey or transfer
all or substantially all of our assets (such amounts to be computed on a
consolidated basis), whether in a single transaction or a series of related
transactions, to another Person or group of affiliated Persons, or adopt a plan
of liquidation, unless:

          (1) either (a) we are the continuing entity or (b) the resulting,
     surviving or transferee entity or, in the case of a plan of liquidation,
     the entity which receives the greatest value from such plan of liquidation,
     is a corporation organized under the laws of the United States, any state
     thereof or the District of Columbia and expressly assumes by supplemental
     indenture all of our obligations in connection with the New Notes and the
     indenture;

          (2) no Default or Event of Default shall exist or shall occur
     immediately after giving effect on a pro forma basis to such transaction;

          (3) immediately after giving effect to such transaction on a pro forma
     basis, the Consolidated Net Worth of the consolidated surviving or
     transferee entity or, in the case of a plan of liquidation, the entity
     which receives the greatest value from such plan of liquidation, is at
     least equal to our Consolidated Net Worth immediately prior to such
     transaction;

          (4) unless such transaction is solely the merger of us and one of our
     previously existing Guarantors for the purpose of reincorporation into
     another jurisdiction and which transaction is not for the purpose of
     evading this provision and not in connection with any other transaction,
     immediately after giving effect to such transaction on a pro forma basis,
     the consolidated resulting, surviving or transferee entity or, in the case
     of a plan of liquidation, the entity which receives the greatest value from
     such plan of liquidation, would immediately thereafter be permitted to
     incur at least $1.00 of additional Indebtedness pursuant to the Debt
     Incurrence Ratio set forth in the covenant "Limitation on Incurrence of
     Additional Indebtedness and Disqualified Capital Stock"; and

          (5) each Guarantor, shall have by amendment to its guarantee and the
     indenture confirmed in writing that its guarantee shall apply to the
     obligations of the Company or the surviving entity in accordance with the
     New Notes and the indenture.

     Upon any consolidation or merger or any transfer of all or substantially
all of our assets in accordance with the foregoing, the successor entity formed
by such consolidation or into which we are merged or to which such transfer is
made shall succeed to and (except in the case of a lease or any transfer of all
or substantially all of our assets) be substituted for, and may exercise every
right and power of, the Company under the indenture with the same effect as if
such successor entity had been named therein as the Company, and (except in the
case of a lease or any transfer or all or substantially all of our assets) we
shall be released from the obligations under the New Notes and the indenture,
except with respect to any obligations that arise from, or are related to, such
transaction.

     For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, our interest in which constitutes all or substantially all of
our properties and assets, shall be deemed to be the transfer of all or
substantially all of our properties and assets.

  LIMITATION ON CASH INTEREST PAYMENTS ON CONVERTIBLE NOTE

     Scheduled interest payments in respect of the Convertible Note shall be
paid in kind pursuant to the terms thereof, unless our Consolidated Coverage
Ratio for the Reference Period immediately preceding the date of such interest
payment is at least equal to the Debt Incurrence Ratio, in which case, such
scheduled interest payments shall be payable, at the Company's option, in cash
pursuant to the terms thereof.

                                        58


  LIMITATION ON LINES OF BUSINESS

     The indenture provides that neither we nor any of our Subsidiaries will
directly or indirectly engage to any substantial extent in any line or lines of
business activity other than that which, in the reasonable good faith judgment
of our Board of Directors, is a Related Business.

  SUBSIDIARY GUARANTORS

     The indenture provides that all of our present and future Subsidiaries
jointly and severally will guarantee all principal, premium, if any, and
interest on the Old Notes and the New Notes on a senior basis. The term
Subsidiary does not include Unrestricted Subsidiaries.

     Notwithstanding anything herein or in the indenture to the contrary, if any
of our Subsidiaries that is not a Guarantor guarantees any of our other
Indebtedness or any other Indebtedness of any of our Subsidiaries, or we or any
of our Subsidiaries, individually or collectively, pledges more than 65% of the
Voting Equity Interests of a Subsidiary (including Foreign Subsidiaries) that is
not a Guarantor to a lender to secure our Indebtedness or any Indebtedness of
any Guarantor, then such Subsidiary must become a Guarantor.

  RELEASE OF GUARANTORS

     The indenture provides that no Guarantor will consolidate or merge with or
into (whether or not such Guarantor is the surviving Person) another Person
unless, (1) subject to the provisions of the following paragraph and the other
provisions of the indenture, the Person formed by or surviving any such
consolidation or merger (if other than such Guarantor) assumes all the
obligations of such Guarantor pursuant to a supplemental indenture in form
reasonably satisfactory to the trustee, pursuant to which such Person shall
guarantee, on a senior basis, all of such Guarantor's obligations under such
Guarantor's guarantee on the terms set forth in the indenture; (2) immediately
before and immediately after giving effect to such transaction on a pro forma
basis, no Default or Event of Default shall have occurred or be continuing; and
(3) immediately after giving effect to such transaction on a pro forma basis,
the Company could incur at least $1.00 of additional Indebtedness pursuant to
the Debt Incurrence Ratio set forth in the covenant "Limitation on Incurrence of
Additional Indebtedness and Disqualified Capital Stock." The provisions of the
covenant shall not apply to the merger of any Guarantor with and into another
Guarantor or with or into us.

     Upon the sale or disposition (including by merger or stock purchase) of a
Guarantor (as an entirety) to an entity which is not and is not required to
become a Guarantor, or the designation of a Subsidiary to become an Unrestricted
Subsidiary, which transaction is otherwise in compliance with the indenture
(including, without limitation, the provisions of the section "Repurchase at the
Option of Holders -- Sale of Assets and Subsidiary Stock"), such Guarantor will
be deemed released from its obligations under its guarantee of the New Notes;
provided, however, that any such release shall occur only to the extent that all
obligations of such Guarantor under all of its guarantees of, and under all of
its pledges of assets or other security interests which secure, any of our
Indebtedness or any Indebtedness of any other of our Subsidiaries shall also
terminate upon such release, sale or transfer and none of its Equity Interests
are pledged for the benefit of any holder of any of our Indebtedness or any
Indebtedness of any of our Subsidiaries.

  DESIGNATION OF UNRESTRICTED SUBSIDIARIES

     (1) The Board of Directors of the Company may designate any Subsidiary
(including any newly acquired or newly formed Subsidiary) that does not
directly, indirectly or beneficially own any Capital Stock of, or Subordinated
Indebtedness of, or own or hold any Lien on any property of, the Company or any
other Subsidiary of the Company, to be an Unrestricted Subsidiary so long as (a)
such Subsidiary at the time of such designation: (i) has no Indebtedness other
than Non-Recourse Indebtedness; provided, that the Company or a Subsidiary of
the Company may guarantee Indebtedness of an Unrestricted Subsidiary so long as
any such guarantee constitutes an Investment made pursuant to clause (f) of the
                                        59


definition of Permitted Investment; (ii) is not party to any agreement,
contract, arrangement or understanding with the Company or any Subsidiary of the
Company unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Subsidiary than those
that might be obtained at the time from Persons who are not Affiliates of the
Company; (iii) is a Person with respect to which neither the Company nor any of
its Subsidiaries has any direct or indirect obligation (x) to subscribe for
additional Equity Interests, except to the extent that any such Investment made
for such purpose constitutes an Investment made pursuant to clause (f) of the
definition of Permitted Investment, or (y) to maintain or preserve such Person's
financial condition or to cause such Person to achieve any specified levels of
operating results; and (iv) has not guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of the Company or any of
its Subsidiaries; and (b) each Subsidiary of such Subsidiary shall also be
designated an Unrestricted Subsidiary and shall comply with clause (a) above.

     (2) The Board of Directors of the Company may designate any Unrestricted
Subsidiary to be a Subsidiary, provided, that (a) no Default or Event of Default
is existing or will occur as a consequence thereof and (b) immediately after
giving effect to such designation, on a pro forma basis, the Company could incur
at least $1.00 of Indebtedness pursuant to the Debt Incurrence Ratio of the
covenant "Limitation on Incurrence of Additional Indebtedness and Disqualified
Capital Stock."

     (3) Each such designation shall be evidenced by filing with the trustee a
certified copy of the resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.

  LIMITATION ON STATUS AS INVESTMENT COMPANY

     The indenture prohibits us and our Subsidiaries from being required to
register as an "investment company" (as that term is defined in the Investment
Company Act of 1940, as amended), or from otherwise becoming subject to
regulation under the Investment Company Act.

REPORTS

     The indenture provides that whether or not we are subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, we will deliver to the
trustee, to each holder and to prospective purchasers of New Notes identified to
us by an initial purchaser, within 5 days after we are or would have been (if we
were subject to such reporting obligations) required to file such with the SEC,
annual and quarterly financial statements substantially equivalent to financial
statements that would have been included in reports filed with the SEC, if we
were subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by our
certified independent public accountants as such would be required in such
reports to the SEC, and, in each case, together with a management's discussion
and analysis of financial condition and results of operations which would be so
required and, unless the SEC will not accept such reports, file with the SEC the
annual, quarterly and other reports which it is or would have been required to
file with the SEC.

EVENTS OF DEFAULT AND REMEDIES

     The indenture defines an "Event of Default" as:

          (1) our failure to pay any installment of interest on the Old Notes or
     the New Notes as and when the same becomes due and payable and the
     continuance of any such failure for 30 days;

          (2) our failure to pay all or any part of the principal, or premium,
     if any, on the Old Notes or the New Notes when and as the same becomes due
     and payable at maturity, redemption, by acceleration or otherwise,
     including, without limitation, payment of the Change of Control Purchase
     Price or the Asset Sale Offer Price, on Old Notes or New Notes validly
     tendered and not properly withdrawn pursuant to a Change of Control Offer
     or Asset Sale Offer, as applicable;

                                        60


          (3) our failure or the failure by any of our Subsidiaries to observe
     or perform any other covenant or agreement contained in the Old Notes, the
     New Notes or the indenture and, except for the provisions under "Repurchase
     at the Option of Holders -- Repurchase of New Notes at the Option of the
     Holder Upon a Change of Control" and "-- Sale of Assets and Subsidiary
     Stock," and "Certain Covenants -- Limitation on Merger, Sale or
     Consolidation" and "-- Limitation on Restricted Payments," the continuance
     of such failure for a period of 60 days after written notice is given to us
     by the trustee or to us and the trustee by the holders of at least 25% in
     aggregate principal amount of the Old Notes and the New Notes outstanding;

          (4) certain events of bankruptcy, insolvency or reorganization in
     respect of us or any of our Significant Subsidiaries;

          (5) a default in our Indebtedness or the Indebtedness any of our
     Subsidiaries with an aggregate amount outstanding in excess of $10.0
     million (a) resulting from the failure to pay principal at maturity or (b)
     as a result of which the maturity of such Indebtedness has been accelerated
     prior to its stated maturity;

          (6) final unsatisfied judgments not covered by insurance aggregating
     in excess of $5.0 million, at any one time rendered against us or any of
     our Subsidiaries and not stayed, bonded or discharged within 60 days; and

          (7) any guarantee of a Guarantor that is a Significant Subsidiary
     ceases to be in full force and effect or becomes unenforceable or invalid
     or is declared null and void (other than in accordance with the terms of
     the guarantee and the indenture) or any Guarantor denies or disaffirms its
     obligations under its guarantee.

     The indenture provides that if a Default occurs and is continuing, the
trustee must, within 90 days after the occurrence of such Default, give to the
holders notice of such Default.

     If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (4) above relating to us or any of our Significant
Subsidiaries,) then in every such case, unless the principal of all of the Old
Notes and the New Notes shall have already become due and payable, either the
trustee or the holders of at least 25% in aggregate principal amount of the Old
Notes and the New Notes then outstanding, by notice in writing to us (and to the
trustee if given by holders) (an "Acceleration Notice"), may declare all
principal, determined as set forth below, and accrued interest thereon to be due
and payable immediately.

     If an Event of Default specified in clause (4), above, relating to us or
any of our Significant Subsidiaries occurs, all principal and accrued interest
thereon will be immediately due and payable on all outstanding Old Notes and New
Notes without any declaration or other act on the part of the trustee or the
holders. The holders of a majority in aggregate principal amount of Old Notes
and New Notes generally are authorized to rescind such acceleration if all
existing Events of Default, other than the non-payment of the principal of,
premium, if any, and interest on the Old Notes and New Notes which have become
due solely by such acceleration and except a Default with respect to any
provision requiring a supermajority approval to amend, which Default may only be
waived by such a supermajority, have been cured or waived.

     Prior to the declaration of acceleration of the maturity of the Old Notes
and New Notes, the holders of a majority in aggregate principal amount of the
Old Notes and New Notes at the time outstanding may waive on behalf of all the
holders any Default, except a Default with respect to any provision requiring a
supermajority approval to amend, which Default may only be waived by such a
supermajority, and except a Default in the payment of principal of or interest
on any New Note not yet cured or a Default with respect to any covenant or
provision which cannot be modified or amended without the consent of the holder
of each outstanding New Note affected. Subject to the provisions of the
indenture relating to the duties of the trustee, the trustee will be under no
obligation to exercise any of its rights or powers under the indenture at the
request, order or direction of any of the holders, unless such holders have
offered to the trustee reasonable security or indemnity.
                                        61


     Subject to all provisions of the indenture and applicable law, the holders
of a majority in aggregate principal amount of the Old Notes and New Notes at
the time outstanding will have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the trustee, or exercising
any trust or power conferred on the trustee.

LEGAL DEFEASANCE AND COVENANT DEFEASANCE

     The indenture provides that we may, at our option and at any time, elect to
discharge our obligations and the Guarantors' obligations with respect to the
outstanding Old Notes and New Notes ("Legal Defeasance"). If Legal Defeasance
occurs, we shall be deemed to have paid and discharged all amounts owed under
the Old Notes and the New Notes, and the indenture shall cease to be of further
effect as to the Old Notes and the New Notes and guarantees, except that:

          (1) Holders will be entitled to receive timely payments for the
     principal of, premium, if any, and interest on the Old Notes and the New
     Notes, from the funds deposited for that purpose (as explained below);

          (2) Our obligations will continue with respect to the issuance of
     temporary Old Notes and New Notes, the registration of Old Notes and New
     Notes, and the replacement of mutilated, destroyed, lost or stolen Old
     Notes and New Notes;

          (3) The trustee will retain its rights, powers, duties, and
     immunities, and we will retain our obligations in connection therewith; and

          (4) Other Legal Defeasance provisions of the indenture will remain in
     effect.

In addition, we may, at our option and at any time, elect to cause the release
of our obligations and the Guarantors' with respect to most of the covenants in
the indenture (except as described otherwise therein) ("Covenant Defeasance").
If Covenant Defeasance occurs, certain events (not including non-payment and
bankruptcy, receivership, rehabilitation and insolvency events) relating to us
or any Significant Subsidiary described under "Events of Default" will no longer
constitute Events of Default with respect to the Old Notes and the New Notes. We
may exercise Legal Defeasance regardless of whether we previously exercised
Covenant Defeasance.

     In order to exercise either Legal Defeasance or Covenant Defeasance (each,
a "Defeasance"):

          (1) We must irrevocably deposit with the trustee, in trust, for the
     benefit of holders of the Old Notes and the New Notes, U.S. legal tender,
     U.S. Government Obligations or a combination thereof, in amounts that will
     be sufficient, in the opinion of a nationally recognized firm of
     independent public accountants selected by us, to pay the principal of,
     premium, if any, and interest on the Old Notes and the New Notes on the
     stated date for payment or any redemption date thereof, and the trustee
     must have, for the benefit of holders of the Old Notes and the New Notes, a
     valid, perfected, exclusive security interest in the trust;

          (2) In the case of Legal Defeasance, we must deliver to the trustee an
     opinion of counsel in the United States reasonably acceptable to the
     trustee confirming that:

             (A) we have received from, or there has been published by the
        Internal Revenue Service, a ruling or

             (B) since the date of the indenture, there has been a change in the
        applicable federal income tax law,

        in either case to the effect that holders of Old Notes or New Notes will
        not recognize income, gain or loss for federal income tax purposes as a
        result of the Defeasance and will be subject to federal income tax on
        the same amounts, in the same manner and at the same times as would have
        been the case if the Defeasance had not occurred;

                                        62


          (3) In the case of Covenant Defeasance, we must deliver to the trustee
     an opinion of counsel in the United States reasonably acceptable to the
     trustee confirming that holders of Old Notes or New Notes will not
     recognize income, gain or loss for federal income tax purposes as a result
     of the Defeasance and will be subject to federal income tax on the same
     amounts, in the same manner and at the same times as would have been the
     case if the Defeasance had not occurred;

          (4) No Default or Event of Default may have occurred and be continuing
     on the date of the deposit (other than a Default resulting from the
     borrowing of funds to be applied to such deposit and the grant of any Lien
     securing such borrowing). In addition, no Event of Default relating to
     bankruptcy or insolvency may occur at any time from the date of the deposit
     to the 91st calendar day thereafter;

          (5) The Defeasance may not result in a breach or violation of, or
     constitute a default under the indenture or any other material agreement or
     instrument to which we or any of our Subsidiaries are a party or by which
     we or any of our Subsidiaries are bound;

          (6) We must deliver to the trustee an Officers' Certificate stating
     that the deposit was not made by us with the intent to hinder, delay or
     defraud any other of our creditors; and

          (7) We must deliver to the trustee an Officers' Certificate confirming
     the satisfaction of conditions in clauses (1) through (6) above, and an
     opinion of counsel confirming the satisfaction of the conditions in clauses
     (1) (with respect to the validity and perfection of the security interest),
     (2), (3) and (5) above.

     The Defeasance will be effective on the earlier of (i) the 91st day after
the deposit, and (ii) the day on which all the conditions above have been
satisfied.

     If the amount deposited with the trustee to effect a Defeasance is
insufficient to pay the principal of, premium, if any, and interest on the Old
Notes and the New Notes when due, or if any court enters an order directing the
repayment of the deposit to us or otherwise making the deposit unavailable to
make payments under the Old Notes and the New Notes when due, then (so long as
the insufficiency exists or the order remains in effect) our and the Guarantors'
obligations under the indenture and the Old Notes and the New Notes will be
revived, and the Defeasance will be deemed not to have occurred.

SATISFACTION AND DISCHARGE

     The indenture will be discharged and will cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of New
Notes) as to all outstanding New Notes when either:

          (a) All outstanding New Notes have been delivered to the trustee for
     cancellation; or

          (b)(1) we have given irrevocable and unconditional notice of
     redemption for all of the outstanding New Notes under the indenture's
     redemption provisions, or all outstanding New Notes have otherwise become
     due and payable, and we have irrevocably deposited or caused to be
     deposited with the trustee an amount of money sufficient to pay and
     discharge the entire indebtedness (including all principal, premium, if
     any, and accrued interest) on all outstanding New Notes,

             (2) we have delivered irrevocable instructions to the trustee to
        apply the deposited money toward the payment of the New Notes at
        maturity or the redemption date, as the case may be,

             (3) the trustee, for the benefit of the holders of the New Notes,
        has a valid, perfected, exclusive security interest in the trust,

             (4) the deposit does not and will not result in a breach or
        violation of, or constitute a default under the indenture or any other
        material agreement or instrument to which we or any of our Subsidiaries
        are a party or are otherwise bound,

             (5) we have paid all other amounts payable by us under the
        indenture, and

                                        63


             (6) we have delivered to the trustee an Officers' Certificate
        stating that the deposit was not made by us with intent to hinder,
        delay, or defraud any other of our creditors.

     We must also deliver to the trustee an Officers' Certificate and an opinion
of counsel confirming the satisfaction of the conditions in clauses (3) (with
respect to the validity and perfection of the security interest) and (4) above.

AMENDMENTS AND SUPPLEMENTS

     The indenture contains provisions permitting us, the Guarantors and the
trustee to enter into a supplemental indenture for certain limited purposes
without the consent of the holders to (a) cure any ambiguity, defect, or
inconsistency, (b) add to the covenants of the Company or the Guarantors for the
benefit of the holders, or to surrender any right or power conferred upon the
Company or the Guarantors by the indenture or the New Notes, (c) provide for
collateral for or additional Guarantors of the New Notes, (d) evidence the
succession of another Person to the Company, and the assumption by any such
successor of the obligations of the Company under the indenture and the New
Notes in accordance with the terms of the indenture, (e) comply with the Trust
Indenture Act, (f) evidence the succession of another corporation to any
Guarantor and assumption by any such successor of the guarantee of such
Guarantor pursuant to the indenture, (g) evidence the release of any Guarantor,
(h) evidence and provide for the acceptance of appointment of a successor
trustee with respect to the New Notes, or (i) provide for the issuance and
authorization of any Additional Notes in accordance with the limitations set
forth in the indenture.

     With the consent of the holders of not less than a majority in aggregate
principal amount of the Old Notes and the New Notes at the time outstanding, we,
the Guarantors and the trustee are permitted to amend or supplement the
indenture or any supplemental indenture or modify the rights of the holders;
provided, that no such modification may, without the consent of holders of at
least 66 2/3% in aggregate principal amount of Old Notes and New Notes at the
time outstanding, modify the provisions (including the defined terms used
therein) governing the terms of the guarantees or, except as set forth in clause
(1) below, the provisions (including the defined terms used therein) of the
section "Repurchase at the Option of Holders -- Repurchase of New Notes at the
Option of the Holder Upon a Change of Control," in either case in a manner
adverse to the holders and provided, that no such modification may, without the
consent of each holder affected thereby:

          (1) change the Stated Maturity on any New Note, or reduce the
     principal amount thereof or the rate (or extend the time for payment) of
     interest thereon or any premium payable upon the redemption thereof at our
     option, or change the city of payment where, or the coin or currency in
     which, any New Note or any premium or the interest thereon is payable, or
     impair the right to institute suit for the enforcement of any such payment
     on or after the Stated Maturity thereof (or, in the case of redemption at
     our option, on or after the Redemption Date), or after an Asset Sale or
     Change of Control has occurred, reduce the Change of Control Purchase Price
     or the Asset Sale Offer Price with respect to the corresponding Asset Sale
     or Change of Control or alter the provisions (including the defined terms
     used therein) regarding our right to redeem the New Notes as a right, or at
     our option, in a manner adverse to the holders; or

          (2) reduce the percentage in principal amount of the outstanding New
     Notes, the consent of whose holders is required for any such amendment,
     supplemental indenture or waiver provided for in the indenture; or

          (3) modify any of the waiver provisions, except to increase any
     required percentage or to provide that certain other provisions of the
     indenture cannot be modified or waived without the consent of the holder of
     each outstanding New Note affected thereby; or

          (4) cause the New Notes or any guarantee to become subordinate in
     right of payment to any other Indebtedness.

                                        64


GOVERNING LAW

     The indenture provides that it and the New Notes will be governed by, and
construed in accordance with, the laws of the State of New York including,
without limitation, Sections 5-1401 and 5-1402 of the New York General
Obligations Law and New York Civil Practice Laws and Rules 327(b).

NO PERSONAL LIABILITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS, DIRECTORS

     The indenture provides that no direct or indirect incorporator,
stockholder, employee, officer or director, as such, past, present or future of
the Company, the Guarantors or any successor entity shall have any personal
liability in respect of our obligations or the obligations of the Guarantors
under the indenture or the New Notes solely by reason of his or its status as
such incorporator, stockholder, employee, officer or director, except that this
provision shall in no way limit the obligation of any Guarantor pursuant to any
guarantee of the New Notes.

CERTAIN DEFINITIONS

     "Acquired Indebtedness" means Indebtedness (including Disqualified Capital
Stock) of any Person existing at the time such Person becomes a Subsidiary of
the Company, including by designation, or is merged or consolidated into or with
the Company or one of its Subsidiaries.

     "Acquisition" means the purchase or other acquisition of any Person or all
or substantially all the assets of any Person by any other Person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.

     "Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise; provided, that with respect to ownership interest in the Company
and its Subsidiaries, a Beneficial Owner of 10% or more of the total voting
power normally entitled to vote in the election of directors, managers or
trustees, as applicable, shall for such purposes be deemed to possess control.
Notwithstanding the foregoing, Affiliate shall not include Subsidiaries.

     "Attributable Indebtedness" in respect of a sale and leaseback transaction
means, at the time of determination, the present value of the obligation of the
lessee for net rental payments during the remaining term of the lease included
in such sale and leaseback transaction including any period for which such lease
has been extended or may, at the option of the lessor, be extended. Such present
value shall be calculated using a discount rate equal to the rate of interest
implicit in such transaction, determined in accordance with GAAP.

     "Average Life" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (1) the sum of the
products (a) of the number of years from the date of determination to the date
or dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (2) the sum of all such principal (or redemption)
payments.

     "Beneficial Owner" or "beneficial owner" for purposes of the definition of
Change of Control and Affiliate has the meaning attributed to it in Rules 13d-3
and 13d-5 under the Exchange Act (as in effect on the Issue Date), whether or
not applicable.

     "Board of Directors" means, with respect to any Person, the board of
directors (or if such Person is not a corporation, the equivalent board of
managers or members or body performing similar functions for such Person) of
such Person or any committee of the board of directors of such Person
authorized, with respect to any particular matter, to exercise the power of the
board of directors of such Person.

                                        65


     "Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.

     "Capitalized Lease Obligation" means, as to any Person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.

     "Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness that is not itself otherwise capital stock), warrants, options,
participations or other equivalents of or interests (however designated) in
stock issued by that corporation.

     "Cash Equivalent" means:

          (1) securities issued or directly and fully guaranteed or insured by
     the United States of America or any agency or instrumentality thereof
     (provided, that the full faith and credit of the United States of America
     is pledged in support thereof); or

          (2) demand and time deposits and certificates of deposit and
     commercial paper issued by the parent corporation of any domestic
     commercial bank of recognized standing having capital and surplus in excess
     of $500 million; or

          (3) commercial paper issued by others rated at least A-2 or the
     equivalent thereof by Standard & Poor's Corporation or at least P-2 or the
     equivalent thereof by Moody's Investors Service, Inc.; or

          (4) repurchase obligations with a term of not more than seven days for
     underlying securities of the types described in clause (1) above entered
     into with any commercial bank meeting the specifications of clause (2)
     above; or

          (5) investments in money market or other mutual funds substantially
     all of whose assets comprise securities of the types described in clauses
     (1) through (4) above; and in the case of each of (1), (2), and (3)
     maturing within one year after the date of acquisition.

     "Consolidation" means, with respect to the Company, the consolidation of
the accounts of the Subsidiaries with those of the Company, all in accordance
with GAAP; provided, that "consolidation" will not include consolidation of the
accounts of any Unrestricted Subsidiary with the accounts of the Company. The
term "consolidated" has a correlative meaning to the foregoing.

     "Consolidated Coverage Ratio" of any Person on any date of determination
(the "Transaction Date") means the ratio, on a pro forma basis, of (a) the
aggregate amount of Consolidated EBITDA of such Person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such Person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such Person's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period; provided, that for purposes of
such calculation:

          (1) Acquisitions which occurred during the Reference Period or
     subsequent to the Reference Period and on or prior to the Transaction Date
     shall be assumed to have occurred on the first day of the Reference Period;

          (2) transactions giving rise to the need to calculate the Consolidated
     Coverage Ratio shall be assumed to have occurred on the first day of the
     Reference Period;

                                        66


          (3) other than Indebtedness incurred under any revolving credit
     facility, the incurrence of any Indebtedness (including the issuance of any
     Disqualified Capital Stock) during the Reference Period or subsequent to
     the Reference Period and on or prior to the Transaction Date (and the
     application of the proceeds therefrom to the extent used to refinance or
     retire other Indebtedness) shall be assumed to have occurred on the first
     day of the Reference Period; and

          (4) the Consolidated Fixed Charges of such Person attributable to
     interest on any Indebtedness or dividends on any Disqualified Capital Stock
     bearing a floating interest (or dividend) rate shall be computed on a pro
     forma basis as if the average rate in effect from the beginning of the
     Reference Period to the Transaction Date had been the applicable rate for
     the entire period, unless such Person or any of its Subsidiaries is a party
     to an Interest Swap or Hedging Obligation (which shall remain in effect for
     the 12-month period immediately following the Transaction Date) that has
     the effect of fixing the interest rate on the date of computation, in which
     case such rate (whether higher or lower) shall be used.

     "Consolidated EBITDA" means, with respect to any Person, for any period,
the Consolidated Net Income of such Person for such period adjusted to add
thereto (to the extent deducted from net revenues in determining Consolidated
Net Income), without duplication, the sum of:

          (1) Consolidated income tax expense (except to the extent attributable
     to items of extraordinary or nonrecurring gain or loss as described in
     clause (a) of the definition of Consolidated Net Income);

          (2) Consolidated depreciation and amortization expense;

          (3) Consolidated Fixed Charges;

          (4) all other non-cash charges required to be reflected as expenses on
     the books and records of such Person and its Consolidated Subsidiaries; and

          (5) the amount of any earn-out payment or bonus paid by the Company or
     any Subsidiary of the Company for such period to the seller(s) of any
     Capital Stock or business acquired by the Company or any such Subsidiary,
     which payment is made pursuant to the terms of a purchase or similar
     agreement entered into at the time of the acquisition;

     less the amount of all cash payments made by such Person or any of its
     Subsidiaries during such period to the extent such payments relate to
     non-cash charges that were added back in determining Consolidated EBITDA
     for such period or any prior period; provided, that consolidated income tax
     expense and depreciation and amortization of a Subsidiary that is a less
     than Wholly Owned Subsidiary shall only be added to the extent of the
     equity interest of the Company in such Subsidiary.

     "Consolidated Fixed Charges" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of:

          (a) interest expensed or capitalized, paid, accrued, or scheduled to
     be paid or accrued (including, in accordance with the following sentence,
     interest attributable to Capitalized Lease Obligations and imputed interest
     on Attributable Indebtedness) of such Person and its Consolidated
     Subsidiaries during such period, including (1) original issue discount and
     non-cash interest payments or accruals on any Indebtedness, (2)
     amortization of Indebtedness discount or premium, (3) the interest portion
     of all deferred payment obligations, (4) all commissions, discounts and
     other fees and charges owed with respect to bankers' acceptances and
     letters of credit financings and currency and Interest Swap and Hedging
     Obligations, in each case to the extent attributable to such period, and
     (5) all interest payable with respect to discontinued operations;

          (b) the amount of dividends accrued or payable (or guaranteed) by such
     Person or any of its Consolidated Subsidiaries in respect of Preferred
     Stock (other than by Subsidiaries of such Person to such Person or such
     Person's Wholly Owned Subsidiaries) multiplied by a fraction, the numerator
     of which is one and the denominator of which is one minus the then current
     combined federal, state and local statutory tax rate of the Company and its
     Subsidiaries, expressed as a decimal.

                                        67


     For purposes of this definition, (x) interest on a Capitalized Lease
Obligation shall be deemed to accrue at an interest rate reasonably determined
in good faith by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guarantee by such Person or
a Subsidiary of such Person of an obligation of another Person shall be deemed
to be the interest expense attributable to the Indebtedness guaranteed.

     "Consolidated Net Income" means, with respect to any Person for any period,
the net income (or loss) of such Person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication):

          (a) all gains and losses, together with any related provision for
     taxes on such gains or losses, that are either extraordinary (as determined
     in accordance with GAAP) or are nonrecurring (including any gain or loss
     from the sale or other disposition of assets outside the ordinary course of
     business or from the issuance or sale of any capital stock);

          (b) the net income, if positive, of any Person, other than a
     Consolidated Subsidiary, in which such Person or any of its Consolidated
     Subsidiaries has an interest, except to the extent of the amount of any
     dividends or distributions actually paid in cash to such Person or a
     Consolidated Subsidiary of such Person during such period, but in any case
     not in excess of such Person's pro rata share of such Person's net income
     for such period;

          (c) the net income or loss of any Person acquired in a pooling of
     interests transaction for any period prior to the date of such acquisition;

          (d) the net income, if positive, of any of such Person's Consolidated
     Subsidiaries to the extent that the declaration or payment of dividends or
     similar distributions is not at the time permitted by operation of the
     terms of its charter or bylaws or any other agreement, instrument,
     judgment, decree, order, statute, rule or governmental regulation
     applicable to such Consolidated Subsidiary; and

          (e) solely for the purpose of calculating Consolidated Net Income with
     respect to paragraph (3)(a) of the covenant "Limitation on Restricted
     Payments," the amount of any goodwill impairment and valuation losses, as
     reflected in the Company's consolidated financial statements.

     "Consolidated Net Worth" of any Person at any date means the aggregate
consolidated stockholders' equity of such Person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such Person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such Person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such Person or a Consolidated Subsidiary of such Person
subsequent to the Issue Date, and (c) all investments in subsidiaries that are
not Consolidated Subsidiaries and in Persons that are not Subsidiaries.

     "Consolidated Subsidiary" means, for any Person, each Subsidiary of such
Person (whether now existing or hereafter created or acquired) the financial
statements of which are consolidated for financial statement reporting purposes
with the financial statements of such Person in accordance with GAAP.

     "Consolidated Tangible Assets" means, as of the date of determination, the
total assets, less goodwill and other intangibles, shown on the balance sheet of
the Company and its Consolidated Subsidiaries as of the most recent date for
which such a balance sheet is available, determined on a consolidated basis in
accordance with GAAP.

     "Continuing Directors" means during any period of 12 consecutive months
after the Issue Date, individuals who at the beginning of any such 12-month
period constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of a majority
of the
                                        68


directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved, including new directors designated in or provided for in an agreement
regarding the merger, consolidation or sale, transfer or other conveyance, of
all or substantially all of the assets of the Company, if such agreement was
approved by a vote of such majority of directors).

     "Convertible Note" means that certain Convertible Junior Subordinated
Promissory Note due July 31, 2009, made by the Company in favor of BT Capital
Partners SBIC, L.P., dated August 1, 1999, as the same may be amended in a
manner not prohibited by the indenture.

     "Credit Agreement" means the credit agreement by and among the Company,
certain of our Subsidiaries, certain financial institutions and General Electric
Capital Corporation, as agent, providing for an aggregate $35.0 million
revolving credit facility, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, as such
credit agreement and/or related documents may be amended, restated,
supplemented, renewed, replaced or otherwise modified from time to time whether
or not with the same agent, trustee, representative lenders or holders, and,
subject to the proviso to the next succeeding sentence, irrespective of any
changes in the terms and conditions thereof. Without limiting the generality of
the foregoing, the term "Credit Agreement" shall include any amendment,
amendment and restatement, renewal, extension, restructuring, supplement or
modification to any Credit Agreement and all refundings, refinancings and
replacements of any Credit Agreement, including any Credit Agreement:

          (1) extending the maturity of any Indebtedness incurred thereunder or
     contemplated thereby;

          (2) adding or deleting borrowers or guarantors thereunder, so long as
     borrowers and issuers include one or more of the Company and its
     Subsidiaries and their respective successors and assigns;

          (3) increasing the amount of Indebtedness incurred thereunder or
     available to be borrowed thereunder; provided, that on the date such
     Indebtedness is incurred it would not be prohibited by the covenant
     "Limitation on Incurrence of Additional Indebtedness and Disqualified
     Capital Stock"; or

          (4) otherwise altering the terms and conditions thereof in a manner
     not prohibited by the terms of the indenture.

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

     "Disqualified Capital Stock" means with respect to any Person, (a) Equity
Interests of such Person that, by its terms or by the terms of any security into
which it is convertible, exercisable or exchangeable, is, or upon the happening
of an event or the passage of time or both would be, required to be redeemed or
repurchased including at the option of the holder thereof by such Person or any
of its Subsidiaries, in whole or in part, on or prior to 91 days following the
Stated Maturity of the New Notes and (b) any Equity Interests of any Subsidiary
of such Person other than any common equity with no preferences, privileges, and
no redemption or repayment provisions. Notwithstanding the foregoing, any Equity
Interests that would constitute Disqualified Capital Stock solely because the
holders thereof have the right to require the Company to repurchase such Equity
Interests upon the occurrence of a change of control or an asset sale shall not
constitute Disqualified Capital Stock if the terms of such Equity Interests
provide that the Company may not repurchase or redeem any such Equity Interests
pursuant to such provisions prior to the Company's purchase of the New Notes as
are required to be purchased pursuant to the provisions of the indenture as
described under "Repurchase at the Option of Holders."

     "Equity Interests" means Capital Stock or partnership, participation or
membership interests and all warrants, options or other rights to acquire
Capital Stock or partnership, participation or membership interests (but
excluding any debt security that is convertible into, or exchangeable for,
Capital Stock or partnership, participation or membership interests).

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

                                        69


     "Exempted Affiliate Transaction" means (a) customary employee compensation
arrangements approved by a majority of independent (as to such transactions)
members of the Board of Directors of the Company, (b) dividends permitted under
the terms of the covenant "Limitation on Restricted Payments" above and payable,
in form and amount, on a pro rata basis to all holders of common stock of the
Company, (c) transactions solely between or among the Company and any of its
Consolidated Subsidiaries or solely among Consolidated Subsidiaries of the
Company, and (d) transactions in respect of the Convertible Note between the
Company and the holder of the Convertible Note (other than an increase in the
amount of principal or interest payable thereon), including any amendments or
modifications to the conversion provisions thereof (and any related
definitions).

     "Existing Indebtedness" means the Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the Issue Date, reduced to the extent such amounts are repaid, refinanced or
retired.

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

     "Guarantor" means each of the Company's present and future Subsidiaries
that at the time are guarantors of the New Notes in accordance with the
indenture.

     "Indebtedness" of any Person means, without duplication,

          (a) all liabilities and obligations, contingent or otherwise, of such
     Person, to the extent such liabilities and obligations would appear as a
     liability upon the consolidated balance sheet of such Person in accordance
     with GAAP, (1) in respect of borrowed money (whether or not the recourse of
     the lender is to the whole of the assets of such Person or only to a
     portion thereof), (2) evidenced by bonds, notes, debentures or similar
     instruments, (3) representing the balance deferred and unpaid of the
     purchase price of any property or services, except those incurred in the
     ordinary course of its business that would constitute ordinarily a trade
     payable to trade creditors;

          (b) all liabilities and obligations, contingent or otherwise, of such
     Person (1) evidenced by bankers' acceptances or similar instruments issued
     or accepted by banks, (2) relating to any Capitalized Lease Obligation, or
     (3) evidenced by a letter of credit or a reimbursement obligation of such
     Person with respect to any letter of credit;

          (c) all net obligations of such Person under Interest Swap and Hedging
     Obligations;

          (d) all liabilities and obligations of others of the kind described in
     the preceding clause (a), (b) or (c) that such Person has guaranteed or
     provided credit support or that is otherwise its legal liability or which
     are secured by any assets or property of such Person;

          (e) any and all deferrals, renewals, extensions, refinancing and
     refundings (whether direct or indirect) of, or amendments, modifications or
     supplements to, any liability of the kind described in any of the preceding
     clauses (a), (b), (c) or (d), or this clause (e), whether or not between or
     among the same parties;

          (f) all Disqualified Capital Stock of such Person (measured at the
     greater of its voluntary or involuntary maximum fixed repurchase price plus
     accrued and unpaid dividends); and

          (g) all Attributable Indebtedness.

For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to the indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value to be determined in
                                        70


good faith by the Board of Directors of the issuer (or managing general partner
of the issuer) of such Disqualified Capital Stock.

     The amount of any Indebtedness outstanding as of any date shall be (1) the
accreted value thereof, in the case of any Indebtedness issued with original
issue discount, but the accretion of original issue discount in accordance with
the original terms of Indebtedness issued with an original issue discount will
not be deemed to be an incurrence and (2) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.

     "Interest Swap and Hedging Obligation" means any obligation of any Person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such Person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payments made by such Person calculated by applying a
fixed or floating rate of interest on the same notional amount.

     "Investment" by any Person in any other Person means (without duplication):

          (a) the acquisition (whether by purchase, merger, consolidation or
     otherwise) by such Person (whether for cash, property, services, securities
     or otherwise) of Equity Interests, capital stock, bonds, notes, debentures,
     partnership or other ownership interests or other securities, including any
     options or warrants, of such other Person or any agreement to make any such
     acquisition;

          (b) the making by such Person of any deposit with, or advance, loan or
     other extension of credit to, such other Person (including the purchase of
     property from another Person subject to an understanding or agreement,
     contingent or otherwise, to resell such property to such other Person) or
     any commitment to make any such advance, loan or extension (but excluding
     accounts receivable, endorsements for collection or deposits arising in the
     ordinary course of business);

          (c) other than guarantees of Indebtedness of the Company or any
     Guarantor to the extent permitted by the covenant "Limitation on Incurrence
     of Additional Indebtedness and Disqualified Capital Stock," the entering
     into by such Person of any guarantee of, or other credit support or
     contingent obligation with respect to, Indebtedness or other liability of
     such other Person;

          (d) the making of any capital contribution by such Person to such
     other Person; and

          (e) the designation by the Board of Directors of the Company of any
     Person to be an Unrestricted Subsidiary.

     The Company shall be deemed to make an Investment in an amount equal to the
fair market value of the net assets of any subsidiary (or, if neither the
Company nor any of its Subsidiaries has theretofore made an Investment in such
subsidiary, in an amount equal to the Investments being made), at the time that
such subsidiary is designated an Unrestricted Subsidiary, and any property
transferred to an Unrestricted Subsidiary from the Company or a Subsidiary of
the Company shall be deemed an Investment valued at its fair market value at the
time of such transfer. The Company or any of its Subsidiaries shall be deemed to
have made an Investment in a Person that is or was required to be a Guarantor
if, upon the issuance, sale or other disposition of any portion of the Company's
or the Subsidiary's ownership in the Capital Stock of such Person, such Person
ceases to be a Guarantor. The fair market value of each Investment shall be
measured at the time made or returned, as applicable.

     "Issue Date" means December 12, 2001, the date of first issuance of the Old
Notes under the indenture.

     "Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.

                                        71


     "Net Cash Proceeds" means the aggregate amount of cash or Cash Equivalents
received by the Company in the case of a sale of Qualified Capital Stock and by
the Company and its Subsidiaries in respect of an Asset Sale plus, in the case
of an issuance of Qualified Capital Stock upon any exercise, exchange or
conversion of securities (including options, warrants, rights and convertible or
exchangeable debt) of the Company that were issued for cash on or after the
Issue Date, the amount of cash originally received by the Company upon the
issuance of such securities (including options, warrants, rights and convertible
or exchangeable debt) less, in each case, the sum of all payments, fees,
commissions and (in the case of Asset Sales, reasonable and customary), expenses
(including, without limitation, the fees and expenses of legal counsel and
investment banking fees and expenses) incurred in connection with such Asset
Sale or sale of Qualified Capital Stock, and, in the case of an Asset Sale only,
less (a) the amount (estimated reasonably and in good faith by the Company) of
income, franchise, sales and other applicable taxes required to be paid by the
Company or any of its respective Subsidiaries in connection with such Asset Sale
in the taxable year that such sale is consummated or in the immediately
succeeding taxable year, the computation of which shall take into account the
reduction in tax liability resulting from any available operating losses and net
operating loss carryovers, tax credits and tax credit carryforwards, and similar
tax attributes, and (b) appropriate amounts to be provided by the Company or any
of its Subsidiaries, as the case may be, as a reserve required in accordance
with GAAP against any liabilities associated with such Asset Sale and retained
by the Company or any such Subsidiary, as the case may be, after such Asset
Sale, including pensions and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected in
an Officers' Certificate delivered to the trustee; provided, however, that any
amounts remaining after adjustments, revaluations or liquidations of such
reserves shall constitute Net Cash Proceeds.

     "Non-Recourse Indebtedness" means Indebtedness (a) as to which neither the
Company nor any of its Subsidiaries (1) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (2) is directly or indirectly liable (as a guarantor or
otherwise), or (3) constitutes the lender, and (b) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.

     "Officers' Certificate" means the officers' certificate to be delivered
upon the occurrence of certain events as set forth in the indenture.

     "Permitted Indebtedness" means that:

          (a) the Company and the Guarantors may incur Indebtedness evidenced by
     the Old Notes, New Notes and the guarantees issued pursuant to the
     indenture up to the amounts issued on the original Issue Date, less any
     amounts repaid or retired;

          (b) the Company and the Guarantors, as applicable, may incur
     Refinancing Indebtedness with respect to any Existing Indebtedness or any
     Indebtedness (including Disqualified Capital Stock), described in clause
     (a) above or clause (a) of the third paragraph of, or incurred pursuant to
     the Debt Incurrence Ratio test of, the covenant "Limitation on Incurrence
     of Additional Indebtedness and Disqualified Capital Stock," or which was
     refinanced pursuant to this clause (b);

          (c) the Company and its Subsidiaries may incur Indebtedness solely in
     respect of bankers acceptances, letters of credit and performance bonds (to
     the extent that such incurrence does not result in the incurrence of any
     obligation to repay any obligation relating to borrowed money or other
     Indebtedness), all in the ordinary course of business in accordance with
     customary industry practices, in amounts and for the purposes customary in
     the Company's industry;

          (d) the Company may incur Indebtedness owed to (borrowed from) any
     Subsidiary, and any Subsidiary may incur Indebtedness owed to (borrowed
     from) any other Subsidiary or the Company;

                                        72


     provided, that in the case of Indebtedness of the Company, such obligations
     shall be unsecured and contractually subordinated in all respects to the
     Company's obligations pursuant to the Old Notes and the New Notes and any
     event that causes such Subsidiary no longer to be a Subsidiary respectively
     (including by designation to be an Unrestricted Subsidiary) shall be deemed
     to be a new incurrence by such issuer of such Indebtedness and any
     guarantor thereof subject to the covenant "Limitation on Incurrence of
     Additional Indebtedness and Disqualified Stock";

          (e) any Guarantor may guarantee any Indebtedness of the Company or
     another Guarantor that was permitted to be incurred pursuant to the
     indenture, substantially concurrently with such incurrence or at the time
     such Person becomes a Subsidiary;

          (f) the Company and the Guarantors may incur Interest Swap and Hedging
     Obligations that are incurred for the purpose of fixing or hedging interest
     rate or currency risk with respect to any fixed or floating rate
     Indebtedness that is permitted by the indenture to be outstanding or any
     receivable or liability the payment of which is determined by reference to
     a foreign currency; provided, that the notional amount of any such Interest
     Swap and Hedging Obligation does not exceed the principal amount of
     Indebtedness to which such Interest Swap and Hedging Obligation relates;

          (g) Indebtedness arising from the honoring by a bank or other
     financial institution of a check, draft or similar instrument inadvertently
     (except in the case of daylight overdrafts) drawn against insufficient
     funds in the ordinary course of business; provided, however, that such
     Indebtedness if extinguished within five business days of incurrence;

          (h) Indebtedness arising in connection with endorsement of instruments
     for deposit in the ordinary course of business; and

          (i) Indebtedness arising from the payment of interest on the
     Convertible Note in the form of additional like securities with a principal
     amount equal to the amount of accrued but unpaid interest due thereon in
     accordance with the terms of Section 1 (Interest) of the Convertible Note.

     "Permitted Investment" means:

          (a) any Investment in any of the Old Notes or the New Notes;

          (b) any Investment in Cash Equivalents;

          (c) intercompany notes to the extent permitted under clause (d) of the
     definition of "Permitted Indebtedness";

          (d) any Investment by the Company or any Guarantor in a Person in a
     Related Business if as a result of such Investment such Person immediately
     becomes a Guarantor or such Person is immediately merged with or into the
     Company or a Guarantor;

          (e) any Investment by the Company or any Subsidiary of the Company in
     the Company or in any Guarantor;

          (f) any Investment by the Company or any Subsidiary of the Company in
     Permitted Joint Ventures made after the Reference Date having an aggregate
     fair market value, when taken together with all other Investments made
     pursuant to this clause (f) that are at the time outstanding, not exceeding
     the greater of (i) $25.0 million and (ii) 10% of the Consolidated Tangible
     Assets of the Company as of the last day of the most recent full fiscal
     quarter ended immediately prior to the date of such Investment (with the
     fair market value of each Investment being measured at the time made and
     without giving effect to subsequent changes in value);

          (g) any asset exchange permitted by clause (8) of "Repurchase at the
     Option of Holders -- Sale of Assets and Subsidiary Stock";

          (h) loans and advances to directors, employees and officers of the
     Company and its Subsidiaries for bona fide business purposes not in excess
     of $2.0 million at any one time outstanding;

                                        73


          (i) receivables owing to the Company or any Subsidiary of the Company
     if created or acquired in the ordinary course of business and payable or
     dischargeable in accordance with customary trade terms; provided, however,
     that such trade terms may include such concessionary trade terms as the
     Company or any such Subsidiary deems reasonable under the circumstances;

          (j) lease, utility and other similar deposits in the ordinary course
     of business;

          (k) Investments in securities of trade creditors or customers received
     pursuant to any plan of reorganization or similar arrangement upon the
     bankruptcy or insolvency of such trade creditors or customers;

          (l) Interest Swap and Hedging Obligations to the extent permitted
     under clause (f) of the definition of "Permitted Indebtedness";

          (m) advances to radiology practice groups made pursuant to service
     agreements in effect on the Issue Date or pursuant to service agreements
     similar to service agreements in effect on the Issue Date in the ordinary
     course of business consistent with past practice;

          (n) stock, obligations or securities received in settlement of debts
     created in the ordinary course of business and owing to the Company or any
     of its Subsidiaries or in satisfaction of judgments;

          (o) any Investment made as a result of the receipt of non-cash
     consideration from an Asset Sale that was made pursuant to and in
     compliance with the covenant described above under the section "Repurchase
     at the Option of Holders -- Sale of Assets and Subsidiary Stock"; and

          (p) any Investment acquired solely in exchange for Qualified Capital
     Stock.

     "Permitted Joint Venture" means any joint venture, partnership or other
Person designated by the Board of Directors of the Company as a Permitted Joint
Venture and (i) at least 20% of whose Voting Equity Interests is at the time
owned (beneficially or directly) by the Company and/or by one or more
Subsidiaries of the Company and if such Permitted Joint Venture is a Subsidiary
of the Company, such Permitted Joint Venture has been designated as an
Unrestricted Subsidiary of the Company in accordance with the covenant "Certain
Covenants -- Designation of Unrestricted Subsidiaries," and (ii) is engaged in a
Related Business; provided that each of our joint ventures existing on the Issue
Date shall be deemed to be a Permitted Joint Venture as of the Issue Date. Any
such designation (other than with respect to the Persons identified in the
preceding sentence) shall be evidenced to the trustee by promptly filing with
the trustee a copy of the resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.

     "Permitted Lien" means:

          (a) Liens existing on the Issue Date;

          (b) Liens imposed by governmental authorities for taxes, assessments
     or other charges not yet subject to penalty or which are being contested in
     good faith and by appropriate proceedings, if adequate reserves with
     respect thereto are maintained on the books of the Company in accordance
     with GAAP;

          (c) statutory liens of carriers, warehousemen, mechanics, material
     men, landlords, repairmen or other like Liens arising by operation of law
     in the ordinary course of business provided that (1) the underlying
     obligations are not overdue for a period of more than 60 days, or (2) such
     Liens are being contested in good faith and by appropriate proceedings and
     adequate reserves with respect thereto are maintained on the books of the
     Company in accordance with GAAP;

          (d) Liens securing the performance of bids, trade contracts (other
     than borrowed money), leases, statutory obligations, surety and appeal
     bonds, performance bonds and other obligations of a like nature incurred in
     the ordinary course of business;

          (e) easements, rights-of-way, zoning, similar restrictions and other
     similar encumbrances or title defects which, singly or in the aggregate, do
     not in any case materially detract from the value of the
                                        74


     property, subject thereto (as such property is used by the Company or any
     of its Subsidiaries) or interfere with the ordinary conduct of the business
     of the Company or any of its Subsidiaries;

          (f) Liens arising by operation of law in connection with judgments,
     only to the extent, for an amount and for a period not resulting in an
     Event of Default with respect thereto;

          (g) pledges or deposits made in the ordinary course of business in
     connection with workers' compensation, unemployment insurance and other
     types of social security legislation;

          (h) Liens securing the Old Notes or the New Notes;

          (i) Liens securing Indebtedness of a Person existing at the time such
     Person becomes a Subsidiary or is merged with or into the Company or a
     Subsidiary or Liens securing Indebtedness incurred in connection with an
     Acquisition, provided, that such Liens were in existence prior to the date
     of such acquisition, merger or consolidation, were not incurred in
     anticipation thereof, and do not extend to any other assets;

          (j) Liens arising from Purchase Money Indebtedness permitted to be
     incurred pursuant to clause (a) of the covenant "Limitation on Incurrence
     of Additional Indebtedness and Disqualified Capital Stock" provided such
     Liens relate solely to the property which is subject to such Purchase Money
     Indebtedness;

          (k) leases or subleases granted to other Persons in the ordinary
     course of business not materially interfering with the conduct of the
     business of the Company or any of its Subsidiaries or materially detracting
     from the value of the related assets of the Company or any Subsidiary;

          (l) Liens arising from precautionary Uniform Commercial Code financing
     statement filings regarding operating leases entered into by the Company or
     any of its Subsidiaries in the ordinary course of business;

          (m) Liens securing Refinancing Indebtedness incurred to refinance any
     Indebtedness that was previously so secured, provided that the Indebtedness
     secured is not increased and the Lien is not extended to any additional
     assets or property that would not have been security for the Indebtedness
     refinanced;

          (n) Liens securing Indebtedness incurred under the Credit Agreement in
     accordance with the covenant "Limitation on Incurrence of Additional
     Indebtedness and Disqualified Capital Stock";

          (o) Liens in favor of the Company or any Guarantor;

          (p) Liens upon specific items of inventory or other goods and proceeds
     of any Person securing such Person's obligations in respect of bankers'
     acceptances issued or created for the account of such Person to facilitate
     the purchase, shipment or storage of such inventory or other goods;

          (q) Liens to secure Attributable Indebtedness and that are permitted
     to be incurred pursuant to the covenant "Sale and Leaseback Transactions";
     provided that any such Lien shall not extend to or cover any assets of the
     Company or any Subsidiary other than the assets that are the subject of the
     sale and leaseback transaction in which the Attributable Indebtedness is
     incurred; and

          (r) Liens incurred in the ordinary course of business of the Company
     or any Subsidiary with respect to obligations (other than Indebtedness)
     that do not in the aggregate exceed $7.0 million at any one time
     outstanding.

     "Person" or "person" means any corporation, individual, limited liability
company, joint stock company, joint venture, partnership, limited liability
company, unincorporated association, governmental regulatory entity, country,
state or political subdivision thereof, trust, municipality or other entity.

     "Preferred Stock" means any Equity Interest of any class or classes of a
Person (however designated) which is preferred as to payments of dividends, or
as to distributions upon any liquidation or dissolution, over Equity Interests
of any other class of such Person.

                                        75


     "Pro Forma" or "pro forma" shall have the meaning set forth in Regulation
S-X of the Securities Act of 1933, as amended, unless otherwise specifically
stated herein.

     "Public Equity Offering" means an underwritten public offering pursuant to
a registration statement filed with the SEC in accordance with the Securities
Act of 1933, as amended, of Qualified Capital Stock of the Company.

     "Purchase Money Indebtedness" of any Person means any Indebtedness of such
Person to any seller or other Person incurred solely to finance the acquisition
(including in the case of a Capitalized Lease Obligation, the lease),
construction, installation or improvement of any after acquired real or personal
tangible property which is directly related to a Related Business of the Company
and which is incurred within 180 days of such acquisition, construction,
installation or improvement and is secured only by the assets so financed.

     "Qualified Capital Stock" means any Capital Stock of the Company that is
not Disqualified Capital Stock.

     "Qualified Exchange" means:

          (1) any legal defeasance, redemption, retirement, repurchase or other
     acquisition of Capital Stock or Indebtedness of the Company with the Net
     Cash Proceeds received by the Company from the substantially concurrent
     sale of its Qualified Capital Stock (other than to a Subsidiary); or

          (2) any issuance of Qualified Capital Stock of the Company solely in
     exchange for any Capital Stock or Indebtedness of the Company.

     "Reference Period" with regard to any Person means the four full fiscal
quarters ended immediately preceding any date upon which any determination is to
be made pursuant to the terms of the New Notes or the indenture.

     "Refinancing Indebtedness" means Indebtedness (including Disqualified
Capital Stock) (a) issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in part,
or (b) constituting an amendment, modification or supplement to, or a deferral
or renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness (including Disqualified Capital Stock) in a principal amount or, in
the case of Disqualified Capital Stock, liquidation preference, not to exceed
(after deduction of reasonable and customary fees and expenses incurred in
connection with the Refinancing plus the amount of any premium paid in
connection with such Refinancing in accordance with the terms of the documents
governing the Indebtedness refinanced without giving effect to any modification
thereof made in connection with or in contemplation of such refinancing) the
lesser of (1) the principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, of the Indebtedness (including Disqualified
Capital Stock) so Refinanced and (2) if such Indebtedness being Refinanced was
issued with an original issue discount, the accreted value thereof (as
determined in accordance with GAAP) at the time of such Refinancing; provided,
that (A) such Refinancing Indebtedness shall only be used to refinance
outstanding Indebtedness (including Disqualified Capital Stock) of such Person
issuing such Refinancing Indebtedness, (B) such Refinancing Indebtedness shall
(x) not have an Average Life shorter than the Indebtedness (including
Disqualified Capital Stock) to be so refinanced at the time of such Refinancing
and (y) in all respects, be no less contractually subordinated or junior, if
applicable, to the rights of holders of the Old Notes and the New Notes than was
the Indebtedness (including Disqualified Capital Stock) to be refinanced, (C)
such Refinancing Indebtedness shall have a final stated maturity or redemption
date, as applicable, no earlier than the final stated maturity or redemption
date, as applicable, of the Indebtedness (including Disqualified Capital Stock)
to be so refinanced or, if sooner, 91 days after the Stated Maturity of the Old
Notes and the New Notes, and (D) such Refinancing Indebtedness shall be secured
(if secured) in a manner no more adverse to the holders of the Old Notes and the
New Notes than the terms of the Liens (if any) securing such refinanced
Indebtedness.

                                        76


     "Related Business" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.

     "Restricted Investment" means, in one or a series of related transactions,
any Investment, other than Permitted Investments.

     "Restricted Payment" means, with respect to any Person:

          (a) the declaration or payment of any dividend or other distribution
     in respect of Equity Interests of such Person;

          (b) any payment (except to the extent with Qualified Capital Stock) on
     account of the purchase, redemption or other acquisition or retirement for
     value of Equity Interests of such Person;

          (c) other than with the proceeds from the substantially concurrent
     sale of, or in exchange for, Refinancing Indebtedness, any purchase,
     redemption, or other acquisition or retirement for value of, any payment in
     respect of any amendment of the terms of or any defeasance of, any
     Subordinated Indebtedness, directly or indirectly, by such Person or a
     Subsidiary of such Person prior to the scheduled maturity, any scheduled
     repayment of principal, or scheduled sinking fund payment, as the case may
     be, of such Subordinated Indebtedness; and

          (d) any Restricted Investment by such Person;

     provided, however, that the term "Restricted Payment" does not include (1)
     any dividend, distribution or other payment on or with respect to Equity
     Interests of an issuer to the extent payable solely in shares of Qualified
     Capital Stock of such issuer, or (2) any dividend, distribution or other
     payment to the Company, or to any Guarantor, by any Subsidiary of the
     Company.

     "Significant Subsidiary" shall have the meaning provided under Regulation
S-X of the Securities Act, as in effect on the Issue Date.

     "Stated Maturity," when used with respect to any New Note, means December
15, 2008.

     "Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor that is subordinated in right of payment by its terms or the terms of
any document or instrument relating thereto ("contractually") to the Old Notes
and the New Notes or such guarantee, as applicable, in any respect.

     "Subsidiary," with respect to any Person, means (1) any corporation a
majority of whose Equity Interests with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, (2) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination thereof has a majority ownership interest, and (3)
any partnership in which such Person or a Subsidiary of such Person is, at the
time, a general partner. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be a Subsidiary of the Company or of any Subsidiary of the
Company. Unless the context requires otherwise, Subsidiary means each direct and
indirect Subsidiary of the Company.

     "Unrestricted Subsidiary" means (1) each of our joint ventures existing on
the Issue Date and (2) any Subsidiary of the Company that is designated as such
in accordance with the covenant "Designation of Unrestricted Subsidiaries."

     "U.S. Government Obligations" means direct non-callable obligations of, or
noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.

     "Voting Equity Interests" means Equity Interests which at the time are
entitled to vote in the election of, as applicable, directors, members or
partners generally.

                                        77


     "Wholly Owned Subsidiary" means a Subsidiary all the Equity Interests of
which (other than directors' qualifying Shares) are owned by the Company or one
or more Wholly Owned Subsidiaries of the Company or a combination thereof.

BOOK-ENTRY, DELIVERY AND FORM

     Except as set forth below, New Notes will be issued in minimum
denominations of $1,000 and integral multiples of $1,000 in excess thereof.

     The New Notes will be represented by one or more notes in registered,
global form without interest coupons (collectively, the "Global Notes"). The
Global Notes will be deposited upon issuance with the trustee as custodian for
The Depository Trust Company ("DTC"), in New York, New York, and registered in
the name of Cede & Co., as nominee of DTC, for credit to the accounts of Direct
Participants and Indirect Participants (both as defined below) in DTC, including
the Euroclear System ("Euroclear") and Clearstream Banking, S.A.
("Clearstream").

     Except in certain limited circumstances, the Global Notes may be
transferred, in whole and not in part, only to another nominee of DTC or to a
successor of DTC or its nominee. Transfers of beneficial interests in the Global
Notes are subject to the applicable rules and procedures of DTC and its Direct
or Indirect Participants, including, if applicable, those of Euroclear and
Clearstream, which may change from time to time. Beneficial interests in the
Global Notes may not be exchanged for New Notes in certificated form, except in
certain limited circumstances. See "-- Exchange of Interests in Global Notes for
Certificated Notes."

     Initially, the trustee will act as Paying Agent and Registrar. The New
Notes may be presented for registration of transfer and exchange at the offices
of the Registrar.

  DEPOSITORY PROCEDURES

     The following description of the operations and procedures of DTC,
Euroclear and Clearstream is provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to change by them from time to time. Neither
we, the Guarantors nor the trustee takes any responsibility for these operations
and procedures, and we urge investors to contact the applicable system or its
participants directly to discuss these matters.

     DTC has advised us that DTC is a limited-purpose trust company created to
hold securities for its participating organizations (collectively, the "Direct
Participants") and to facilitate the clearance and settlement of transactions in
those securities between Direct Participants through electronic book-entry
changes in accounts of Direct Participants. The Direct Participants include
securities brokers and dealers, banks, trust companies, clearing corporations
and certain other organizations, including Euroclear and Clearstream. Access to
DTC's system is also available to other entities such as securities brokers and
dealers, banks and trust companies that clear through or maintain a direct or
indirect custodial relationship with a Direct Participant (collectively, the
"Indirect Participants").

     We expect that pursuant to procedures established by DTC:

          (a) upon deposit of the Global Notes, DTC will credit the accounts of
     Direct Participants designated by the exchange agent with portions of the
     principal amount of the Global Notes; and

          (b) ownership of the New Notes evidenced by the Global Notes will be
     shown on, and the transfer of ownership thereof will be effected only
     through, records maintained by DTC (with respect to the interests of the
     Direct Participants), the Direct Participants and the Indirect
     Participants.

     Holders of interests in the Global Notes may hold their interests therein
directly through DTC if they are Direct Participants in such system or
indirectly through organizations that are Direct Participants in such system.

                                        78


     The laws of some states require that certain persons take physical delivery
in definitive, certified form of securities that they own. This may limit or
curtail the ability to transfer beneficial interests in the Global Notes to such
persons. Because DTC can act only on behalf of Direct Participants, which in
turn on behalf of Indirect Participants and others, the ability of a person
having a beneficial interest in the Global Notes to pledge such interest to
persons or entities that are not Direct Participants in the DTC system, or to
otherwise take actions in respect of such interest, may be affected by the lack
of a physical certificate evidencing such interest.

     So long as the Global Notes holder is the registered owner of any New
Notes, the Global Notes holder will be considered the sole holder under the
indenture of the New Notes evidenced by the Global Notes. Beneficial owners of
New Notes evidenced by the Global Notes will not be considered the owners or
holders thereof under the indenture for any purpose, including with respect to
receiving any payments or the giving of any directions, instructions or
approvals to the trustee thereunder. Neither we nor the trustee will have any
responsibility or liability for any aspect of the records of DTC or for
maintaining, supervising or reviewing any records of DTC relating to the New
Notes.

     Payments in respect of the principal of, premium, if any, and interest, on
any New Notes registered in the name of the Global Notes holder on the
applicable record date will be payable by the trustee to DTC or its nominee
trustee to or at the direction of the Global Notes holder in its capacity as the
registered holder under the Indenture. Consequently, neither we, the Guarantors,
the trustee nor any of our, the Guarantors' or the trustee's agents has or will
have any responsibility or liability for (i) any aspect of DTC's records or any
Direct Participant's or Indirect Participant's records relating to or payments
made on account of beneficial ownership interests in the Global Notes, or for
maintaining, supervising or reviewing any of DTC's records or any Direct
Participant's or Indirect Participant's records relating to the beneficial
ownership interests in any of the Global Notes or (ii) any other matter relating
to the actions and practices of DTC or any of its Direct Participants or
Indirect Participants.

     DTC has advised us that its current practices, upon receipt of any payment
in respect of securities such as the New Notes (including principal, premium, if
any, interest) is to credit the accounts of the relevant Direct Participants
with such payment on the payment date, in amounts proportionate to such Direct
Participant's respective ownership interests in the Global Notes as shown on the
records of DTC. Payments by Direct Participants and Indirect Participants to the
beneficial owners of New Notes will be governed by standing instructions and
customary practices between them and will not be the responsibility of DTC, the
trustee, us or the Guarantors. Neither we, the Guarantors nor the trustee will
be liable for any delay by DTC, its Direct Participants or its Indirect
Participants in identifying the beneficial owners of the New Notes, and we, the
Guarantors and the trustee may conclusively rely on and will be protected in
relying on instructions from DTC or its nominee as the registered owner of the
New Notes for all purposes.

     DTC has further advised us that it will take any action permitted to be
taken by a holder of New Notes only at the direction of one or more Direct
Participants to whose account DTC has credited interests in the Global Notes and
only in respect of such portion of the aggregate principal amount of the New
Notes as to which such Direct Participant or Direct Participants has or have
given direction. However, if there is any Event of Default under the New Notes,
DTC reserves the right to exchange Global Notes (without the direction of one or
more of its Direct Participants) for legended New Notes in certificated form,
and to distribute such certificated forms of New Notes to its Direct
Participants. See "-- Exchange of Interests in Global Notes for Certificated
Notes."

     The information in this section concerning DTC and its book-entry system
has been obtained from sources that we believe to be reliable, but we take no
responsibility for the accuracy thereof.

     Neither we, the Guarantors, any of the Initial Purchasers nor the trustee
will have any responsibility for the performance by DTC, Euroclear or
Clearstream or their Direct Participants or Indirect Participants of their
respective obligations under the rules and procedures governing their
operations.

                                        79


  EXCHANGE OF INTERESTS IN GLOBAL NOTES FOR CERTIFICATED NOTES

     A Global Note is exchangeable for definitive New Notes in registered,
certificated form without interest coupons ("Certificated Notes") if (i) DTC (x)
notifies us that it is unwilling or unable to continue as depositary for the
Global Note and we thereupon fail to appoint a successor depositary within 90
days or (y) has ceased to be a clearing agency registered under the Exchange
Act, (ii) we, at our option, notify the trustee in writing that we elect to
cause the issuance of Certificated Notes or (iii) there shall have occurred and
be continuing a Default or an Event of Default with respect to the New Notes. In
any such case, we will notify the trustee in writing that, upon surrender by the
Direct and Indirect Participants of their interests in such Global Note,
Certificated Notes will be issued to each person that such Direct and Indirect
Participants and the DTC identify as being the beneficial owner of the related
New Notes.

     Beneficial interests in Global Notes held by any Direct Participant may be
exchanged for Certificated Notes upon request to DTC by such Direct Participant
(for itself or on behalf of an Indirect Participant), but only upon at least 20
days' prior written notice given to the trustee by or on behalf of DTC in
accordance with customary procedures. Certificated Notes delivered in exchange
for any Global Note or beneficial interest therein will be registered in the
names, and issued in any approved denominations, requested by DTC on behalf of
such Direct Participant (in accordance with DTC's customary procedures).

     In all cases described herein, such Certificated Notes will bear the
restrictive legend referred to in the "Notice to Investors" section of this
prospectus unless we determine otherwise in compliance with applicable law.

  CERTIFICATED NOTES

     Certificated Notes may only be transferred or exchanged for a beneficial
interest in any Global Note if the transferor first delivers to the trustee a
written certificate (and, in certain circumstances, an opinion of counsel)
confirming that, in connection with such transfer, it has complied with the
restrictions on transfer described in the "Notice to Investors" section of this
prospectus.

  SAME DAY SETTLEMENT AND PAYMENT

     The indenture requires that payments in respect of the New Notes
represented by the Global Notes (including principal, premium, if any, and
interest) be made by wire transfer of immediately available same day funds to
the accounts specified by the holder of interests in such Global Note. With
respect to Certificated Notes, we will make all payments of principal, premium,
if any, and interest, if any, by wire transfer of immediately available same day
funds to the accounts specified by the holders thereof or, if no such account is
specified, by mailing a check to each such holder's registered address. We
expect that secondary trading in the Certificated Notes will also be settled in
immediately available funds.

                                        80


                               THE EXCHANGE OFFER

PURPOSE AND EFFECT OF THE EXCHANGE OFFER

     The Old Notes were sold by us on December 12, 2001 to Jefferies & Company,
Inc. and Deutsche Banc Alex. Brown Inc., the initial purchasers, pursuant to a
purchase agreement, dated December 7, 2001, between us and the initial
purchasers. The initial purchasers subsequently sold the Old Notes to "qualified
institutional buyers," as defined in Rule 144A under the Securities Act, in
reliance on Rule 144A and outside the United States to certain persons in
reliance on Regulation S under the Securities Act. As a condition to the initial
sale of the Old Notes, we and the initial purchasers entered into a registration
rights agreement. Under the registration rights agreement, we agreed that we
would:

     - file with the SEC, on or prior to April 11, 2002, a registration
       statement under the Securities Act to offer to exchange the New Notes for
       the Old Notes; and

     - use our best efforts to cause that registration statement to become
       effective under the Securities Act as soon as practicable, but not later
       than June 10, 2002.

     We agreed to issue and exchange New Notes for all Old Notes validly
tendered and not withdrawn before the expiration of the exchange offer. A copy
of the registration rights agreement has been filed as an exhibit to the
registration statement of which this prospectus is a part. This registration
statement is intended to satisfy our obligations under the registration rights
agreement and the purchase agreement.

     In the event that due to a change in current interpretations by the SEC, we
are not permitted to effect this exchange offer, we will instead file a shelf
registration statement covering resales by the holders of the Old Notes and will
use our best efforts to cause such shelf registration statement to become
effective no later than 90 days after filing and to keep the shelf registration
statement effective for a maximum of two years after the shelf registration
becomes effective.

TERMS OF THE EXCHANGE OFFER

     Upon the terms and subject to the conditions described in this prospectus
and in the letter of transmittal, we will accept for exchange any and all Old
Notes validly tendered and not withdrawn prior to the expiration date of the
exchange offer. For each $1,000 principal amount of Old Notes properly tendered
and not withdrawn before the expiration date of the exchange offer, we will
issue you $1,000 principal amount of New Notes.

     The form and terms of the New Notes are the same as the form and terms of
the Old Notes except that:

     - the exchange offer is registered under the Securities Act and, therefore,
       the New Notes will not bear legends restricting the transfer thereof; and

     - holders of the New Notes will not be entitled to any of the exchange,
       registration or liquidated damages rights of holders of Old Notes under
       the registration rights agreement, which rights will terminate upon the
       consummation of the exchange offer.

     The New Notes will evidence the same indebtedness as the Old Notes, which
they replace, and will be issued under, and be entitled to the benefits of, the
same indenture under which we issued the Old Notes. The New Notes and the Old
Notes will be treated as a single class of securities under the indenture. As of
the date of this prospectus, $160,000,000 of Old Notes are outstanding, all of
which are registered in the name of Cede & Co., as nominee for DTC, for credit
to an account of a direct or indirect participant in DTC, including Euroclear
and Clearstream.

     Solely for reasons of administration, we have fixed the close of business
on [            ], 2002 as the record date for the exchange offer for purposes
of determining the persons to whom this prospectus and the letter of transmittal
will be mailed initially. There will be no fixed record date for determining
holders of the Old Notes entitled to participate in the exchange offer.

                                        81


     Holders of the Old Notes do not have any appraisal or dissenters' rights
under the General Corporation Law of Delaware or the indenture in connection
with the exchange offer. We intend to conduct the exchange offer in accordance
with the provisions of the registration rights agreement and the applicable
requirements of the Securities Act and the rules and regulations of the SEC
thereunder.

     We shall be deemed to have accepted validly tendered Old Notes when, and
if, we have given oral or written notice thereof to U.S. Bank National
Association, as the exchange agent. The exchange agent will act as agent for the
tendering holders of Old Notes for the purpose of receiving the New Notes from
us.

     Holders who tender Old Notes in the exchange offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes. We will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the exchange offer.
See "The Exchange Offer -- Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

     The exchange offer will expire at 5:00 p.m., New York City time, on
[            ], 2002, unless we, in our sole discretion, extend the exchange
offer, in which case the exchange offer will expire at the latest date and time
to which we extend the exchange offer.

     If we determine to extend the exchange offer, we will, prior to 9:00 a.m.,
New York City time, on the next business day after the previously scheduled
expiration date:

     - notify the exchange agent of any extension by oral or written notice; and

     - issue a press release or other public announcement which shall include
       disclosure of the approximate number of Old Notes tendered to date.

     We reserve the right, in our sole discretion:

     - to delay accepting any Old Notes;

     - to extend the exchange offer; or

     - if, in the opinion of our counsel, the consummation of the exchange offer
       would violate any applicable law, rule or regulation or any applicable
       interpretation of the staff of the SEC, to terminate or amend the
       exchange offer by giving oral or written notice of such delay, extension,
       termination or amendment to the exchange agent. Any such delay in
       acceptance, extension, termination or amendment will be followed as
       promptly as practicable by a press release or other public announcement
       thereof.

     If the exchange offer is amended in a manner determined by us to constitute
a material change, we will promptly disclose such amendment by means of a
prospectus supplement that will be distributed to the registered holders of the
Old Notes, and we will extend the exchange offer for a period of five to ten
business days, depending upon the significance of the amendment and the manner
of disclosure to the holders, if the exchange offer would otherwise expire
during such five to ten business day period.

     Without limiting the manner in which we may choose to make a public
announcement of any delay, extension, amendment or termination of the exchange
offer, we shall have no obligation to publish, advertise or otherwise
communicate any such public announcement, other than by making a timely release
to an appropriate news agency.

PROCEDURES FOR TENDERING OLD NOTES

     To tender in the exchange offer, a holder of Old Notes must either:

     - complete, sign and date the letter of transmittal or facsimile thereof,
       have the signatures thereon guaranteed if required by the letter of
       transmittal, and mail or otherwise deliver such letter of transmittal or
       such facsimile or any other required documents to the exchange agent; or

                                        82


     - if Old Notes are tendered pursuant to the procedures for book-entry
       transfer set forth below, a holder tendering Old Notes may transmit an
       agent's message (as defined below) to the exchange agent in lieu of the
       letter of transmittal,

in either case for receipt on or prior to the expiration date.

     In addition, either:

     - certificates for Old Notes must be received by the exchange agent along
       with the letter of transmittal;

     - a timely confirmation of a book-entry transfer, called a "book-entry
       confirmation," of the Old Notes into the exchange agent's account at DTC
       pursuant to the procedure for book-entry transfer described below; or

     - the holder must comply with the guaranteed delivery procedures described
       below.

     An agent's message is a message, transmitted to the exchange agent's
account at DTC and received by the exchange agent and forming a part of the
book-entry confirmation, which states that such account has received an express
acknowledgment from the tendering participant that such participant has received
and agrees to be bound by the letter of transmittal and that we may enforce the
letter of transmittal against such participant. To be tendered effectively, the
letter of transmittal and other required documents, or an agent's message in
lieu thereof, must be received by the exchange agent at the address set forth
below under "-- Exchange Agent" prior to expiration of the exchange offer.

     The tender by a holder that is not withdrawn prior to the expiration of the
exchange offer will constitute an agreement between such holder and us in
accordance with the terms and subject to the conditions set forth herein and in
the letter of transmittal.

     THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE, PROPERLY INSURED. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION OF THE EXCHANGE OFFER. DO NOT SEND THE LETTER OF TRANSMITTAL OR ANY
OLD NOTES TO US. YOU MAY REQUEST YOUR BROKER, DEALER, COMMERCIAL BANK, TRUST
COMPANY OR NOMINEE TO EFFECT THE ABOVE TRANSACTIONS FOR YOU.

     Any beneficial owner of the Old Notes whose Old Notes are held through a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such intermediary promptly and instruct such
intermediary to tender on such beneficial owner's behalf. If such beneficial
owner wishes to tender on its own behalf, such owner must, prior to completing
and executing the letter of transmittal and delivering such owner's Old Notes:

     - make appropriate arrangements to register ownership of the Old Notes in
       such owner's name; or

     - obtain a properly completed bond power from the registered holder.

The transfer of registered ownership may take considerable time.

     Signatures on a letter of transmittal or a notice of withdrawal described
below (see "-- Withdrawal of Tenders"), as the case may be, must be guaranteed
by an eligible institution unless the Old Notes are tendered:

     - by a registered holder who has not completed the box titled "Special
       Delivery Instruction" on the letter of transmittal; or

     - for the account of an eligible institution.

     In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, the guarantee
must be made by an eligible institution that is a member firm of a registered
national securities exchange or of the National Association of Securities
Dealers, Inc., a commercial bank or trust company having an office or
correspondent in the United States, or an "eligible
                                        83


guarantor institution" (within the meaning of Rule 17Ad-15 under the Exchange
Act) that is a member of one of the recognized signature guarantee programs
identified in the letter of transmittal.

     If the letter of transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, the Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder exactly as the registered holder's name appears on such Old
Notes.

     In connection with any tender of Old Notes in definitive certified form, if
the letter of transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by us, evidence
satisfactory to us of their authority to so act must be submitted with the
letter of transmittal.

     The exchange agent and DTC have confirmed that any financial institution
that is a participant in DTC's system may utilize DTC's Automated Tender Offer
Program to tender Old Notes.

     All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of tendered Old Notes will be determined by
us in our sole discretion, which determination will be final and binding. We
reserve the absolute right:

     - to reject any and all Old Notes not properly tendered and any Old Notes
       our acceptance of which would, in the opinion of our counsel, be
       unlawful; and

     - to waive any defects, irregularities or conditions of tender as to
       particular Old Notes.

     Our interpretation of the terms and conditions of the exchange offer
(including the instructions in the letter of transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as we shall
determine. Although we intend to notify holders of defects or irregularities in
connection with tenders of Old Notes, neither we, the exchange agent nor any
other person shall incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived.

     While we have no present plan to acquire any Old Notes that are not
tendered in the exchange offer or to file a registration statement to permit
resales of any Old Notes that are not tendered pursuant to the exchange offer,
we reserve the right in our sole discretion to purchase or make offers for any
Old Notes that remain outstanding subsequent to the expiration date and, to the
extent permitted by applicable law, purchase Old Notes in the open market, in
privately negotiated transactions or otherwise. The terms of any such purchases
or offers could differ from the terms of the exchange offer.

     By tendering Old Notes under the exchange offer, each holder of Old Notes
will represent to us that, among other things:

     - the New Notes to be acquired by such holder of Old Notes in connection
       with the exchange offer are being acquired by such holder in the ordinary
       course of business of such holder;

     - such holder is not participating, and has no arrangement or understanding
       with any person to participate in, a distribution of the New Notes;

     - such holder acknowledges and agrees that any person who is participating
       in the exchange offer for the purpose of distributing the New Notes must
       comply with the registration and prospectus delivery requirements of the
       Securities Act in connection with a secondary resale of the New Notes
       acquired by such person and cannot rely on the position of the staff of
       the SEC set forth in certain no-action letters;

                                        84


     - such holder understands that a secondary resale transaction, described
       above, should be covered by an effective registration statement
       containing the selling security holder information required by Item 507
       of Regulation S-K of the SEC; and

     - such holder is not an "affiliate," as defined in Rule 405 under the
       Securities Act, of ours or, if such holder is an "affiliate" of ours,
       that the holder will comply with the registration and prospectus delivery
       requirements of the Securities Act applicable to it.

     If the holder is a broker-dealer that will receive New Notes for such
holder's own account in exchange for Old Notes that were acquired as a result of
market-making or other trading activities, such holder will be required to
acknowledge in the letter of transmittal that such holder will deliver a
prospectus in connection with any resale of such New Notes; however, by so
acknowledging and by delivering a prospectus, such holder will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.

RETURN OF OLD NOTES

     In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the exchange offer will be made only after timely receipt
by the exchange agent of:

     - Old Notes or a timely book-entry confirmation of such Old Notes into the
       exchange agent's account at DTC; and

     - a properly completed and duly executed letter of transmittal and all
       other required documents, or an agent's message in lieu thereof.

     If any tendered Old Notes are not accepted for any reason set forth in the
terms and conditions of the exchange offer or if Old Notes are withdrawn or are
submitted for a greater principal amount than the holders desire to exchange,
such unaccepted, withdrawn or otherwise non-exchanged Old Notes will be returned
without expense to the tendering holder thereof (or, in the case of Old Notes
tendered by book-entry transfer into the exchange agent's account at DTC
pursuant to the book-entry transfer procedures described below, such Old Notes
will be credited to an account maintained with DTC) as promptly as practicable.

BOOK-ENTRY TRANSFER

     The exchange agent will make a request to establish an account at DTC for
purposes of the exchange offer within two business days after the date of this
prospectus, and any financial institution that is a participant in DTC's system
may make book-entry delivery of Old Notes by causing DTC to transfer such Old
Notes into the exchange agent's account at DTC in accordance with DTC's
procedures for transfer. However, although delivery of Old Notes may be effected
through book-entry transfer at DTC, the letter of transmittal or facsimile
thereof, with any required signature guarantees and any other required
documents, or an agent's message in lieu of a letter of transmittal, must, in
any case, be transmitted to and received by the exchange agent at the address
set forth below under "-- Exchange Agent" on or prior to the expiration of the
exchange offer or pursuant to the guaranteed delivery procedures described
below.

GUARANTEED DELIVERY PROCEDURES

     If a holder of the Old Notes desires to tender its Old Notes and the Old
Notes are not immediately available or the holder cannot deliver its Old Notes
(or complete the procedures for book-entry transfer), the letter of transmittal
or any other required documents to the exchange agent prior to the expiration of
the exchange offer, a holder may effect a tender if:

     - the tender is made through an eligible institution;

     - prior to the expiration of the exchange offer, the exchange agent
       receives from such eligible institution (by facsimile, mail or hand
       delivery) a properly completed and duly executed notice of guaranteed
       delivery substantially in the form provided by us setting forth the name
       and address of
                                        85


       the holder, the certificate number(s) of such Old Notes (if applicable)
       and the principal amount of Old Notes tendered, stating that the tender
       is being made thereby and guaranteeing that, within three New York Stock
       Exchange trading days after the expiration date:

      - the letter of transmittal (or a facsimile thereof), or an agent's
        message in lieu thereof;

      - the certificate(s) representing the Old Notes in proper form for
        transfer or a book-entry confirmation, as the case may be; and

      - any other documents required by the letter of transmittal;

     will be deposited by the eligible institution with the exchange agent; and

     - such properly executed letter of transmittal (or facsimile thereof), or
       an agent's message in lieu thereof, as well as the certificate(s)
       representing all tendered Old Notes in proper form for transfer or a
       book-entry confirmation, as the case may be, and all other documents
       required by the letter of transmittal, are received by the exchange agent
       within three New York Stock Exchange trading days after the expiration
       date.

     Upon request to the exchange agent, a form of notice of guaranteed delivery
will be sent to holders who wish to tender their Old Notes according to the
guaranteed delivery procedures described above.

WITHDRAWAL OF TENDERS

     Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to the expiration of the exchange offer.

     To withdraw a tender of Old Notes in the exchange offer, a written or
facsimile transmission notice of withdrawal must be received by the exchange
agent at its address set forth herein prior to the expiration of the exchange
offer. Any such notice of withdrawal must:

     - specify the name of the person having deposited the Old Notes to be
       withdrawn;

     - identify the Old Notes to be withdrawn (including the certificate number
       or numbers, if applicable, and principal amount of such Old Notes); and

     - be signed by the holder in the same manner as the original signature on
       the letter of transmittal by which such Old Notes were tendered
       (including any required signature guarantees).

     If Old Notes have been tendered pursuant to the procedure for book-entry
transfer described above, any notice of withdrawal must specify the name and
number of the account at DTC to be credited with the withdrawn Old Notes and
otherwise comply with the procedures of DTC. All questions as to the validity,
form and eligibility (including time of receipt) of such notices will be
determined by us, in our sole discretion, which determination shall be final and
binding on all parties.

     Any Old Notes so withdrawn will be deemed not to have been validly tendered
for purposes of the exchange offer, and no New Notes will be issued with respect
thereto, unless the Old Notes so withdrawn are validly re-tendered. Properly
withdrawn Old Notes may be re-tendered by following one of the procedures
described above under "-- Procedures for Tendering Old Notes" at any time prior
to the expiration of the exchange offer.

TERMINATION OF CERTAIN RIGHTS

     All exchange, registration and liquidated damages rights accorded to
holders of the Old Notes will terminate upon consummation of the exchange offer.
However, for a period of up to 180 days after the expiration date of the
exchange offer, we will keep the registration statement effective and provide
copies of the latest version of the prospectus solely to any broker-dealer that
requests copies of such prospectus for use in connection with any resale by such
broker-dealer of New Notes received for its own account pursuant to the exchange
offer in exchange for Old Notes acquired for its own account as a result of
market-making or other trading activities. See "Notice to Investors."
                                        86


EXCHANGE AGENT

     U.S. Bank National Association, has been appointed as exchange agent for
the exchange offer. Questions and requests for assistance, requests for
additional copies of this prospectus or the letter of transmittal and requests
for a copy of the notice of guaranteed delivery should be directed to the
exchange agent addressed as follows:

                                            
    By Overnight Courier or Hand Delivery:            By Registered or Certified Mail:
        U.S. Bank National Association                 U.S. Bank National Association
            180 East Fifth Street                          180 East Fifth Street
          St. Paul, Minnesota 55101                      St. Paul, Minnesota 55101
  Attention: Specialized Finance Department      Attention: Specialized Finance Department
           Corporate Trust Services                       Corporate Trust Services
  By Facsimile (eligible institutions only):               Confirm by Telephone:
                (651) 244-1537                                 (800) 934-6802



FEES AND EXPENSES

     The expenses of soliciting tenders will be borne by us. The principal
solicitation is being made by mail; however, additional solicitation may be made
by facsimile, telephone, electronic means or in person by our officers and
regular employees or those of our affiliates.

     We have not retained any dealer-manager in connection with the exchange
offer and will not make any payments to brokers, dealers or others soliciting
acceptances of the exchange offer. We, however, will pay the exchange agent
reasonable and customary fees for its services and will reimburse it for its
reasonable out-of-pocket expenses.

     The expenses to be incurred in connection with the exchange offer,
including registration fees, fees and expenses of the exchange agent and the
trustee, accounting and legal fees, and printing costs, will be paid by us.

     We will pay all transfer taxes, if any, applicable to the exchange of Old
Notes under the exchange offer. If, however, a transfer tax is imposed for any
reason other than the exchange of the Old Notes under the exchange offer, then
the amount of any such transfer taxes (whether imposed on the registered holder
or any other persons) will be payable by the tendering holder. If satisfactory
evidence of payment of such taxes or exemption therefrom is not submitted with
the letter of transmittal, the amount of the transfer taxes will be billed
directly to the tendering holder.

CONSEQUENCE OF FAILURE TO EXCHANGE

     Participation in the exchange offer is voluntary. Holders of the Old Notes
are urged to consult their financial and tax advisors in making their own
decisions on what action to take.

     Old Notes that are not exchanged for the New Notes pursuant to the exchange
offer will remain "restricted securities" within the meaning of Rule
144(a)(3)(iv) under the Securities Act. Accordingly, such Old Notes may not be
offered, sold, pledged or otherwise transferred except:

     - to us;

     - to a person whom the seller reasonably believes is a "qualified
       institutional buyer" within the meaning of Rule 144A purchasing for its
       own account or for the account of a qualified institutional buyer in a
       transaction meeting the requirements of Rule 144A;

     - to an institutional accredited investor that is acquiring the notes for
       its own account or for the account of an institutional accredited
       investor for investment purposes and not with a view to, or for offer or
       sale in connection with, any distribution in violation of the Securities
       Act;

                                        87


     - in an offshore transaction complying with Rule 904 of Regulation S under
       the Securities Act;

     - under an effective registration statement under the Securities Act; or

     - under any other available exemption from the registration requirements of
       the Securities Act, and, in each case, in accordance with all other
       applicable securities laws.

ACCOUNTING TREATMENT

     For accounting purposes, we will recognize no gain or loss as a result of
the exchange offer. The expenses of the exchange offer will be amortized over
the term of the New Notes.

                              PLAN OF DISTRIBUTION

     Except as described below, based on interpretations of the SEC staff set
forth in no-action letters issued to third parties, we believe that the New
Notes issued in exchange for Old Notes may be offered for resale, resold, and
otherwise transferred by a holder without further registration under the
Securities Act and without delivering a prospectus in connection with any resale
of the New Notes, provided that the holder:

     - is acquiring the New Notes in the ordinary course of its business;

     - is not participating, and has no arrangement or understanding with any
       person to participate, in a distribution of the New Notes;

     - is not an "affiliate" of Radiologix within the meaning of Rule 405 under
       the Securities Act; and

     - is not a broker-dealer who holds Old Notes acquired for its own account
       as a result of market-making or other trading activities.

     Holders wishing to tender their Old Notes in the exchange offer must
represent to us that these conditions have been met. See "The Exchange
Offer -- Procedures for Tendering Old Notes."

     Each broker-dealer who holds Old Notes acquired for its own account as a
result of market-making or other trading activities may exchange the Old Notes
pursuant to the exchange offer. However, the broker-dealer may be deemed to be
an "underwriter" within the meaning of the Securities Act and must, therefore,
deliver a prospectus meeting the requirements of the Securities Act in
connection with its initial resale of each New Note received in the exchange
offer. We will not receive any proceeds from any sale of New Notes by
broker-dealers.

     For so long as the registration statement of which this prospectus is a
part is effective under the Securities Act, a broker-dealer may use this
prospectus, as it may be amended or supplemented from time to time, in
connection with its resales of New Notes received for its account in exchange
for Old Notes that were acquired by the broker-dealer as a result of
market-making or other trading activities. For a period of up to 180 days after
the expiration date of the exchange offer, we expect to keep the registration
statement effective under the Securities Act for, and to make this prospectus
available to, broker-dealers who request in the letter of transmittal to use it
in connection with those resales.

     Broker-dealers receiving New Notes for their own account pursuant to the
exchange offer may sell the New Notes from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of these resale
methods, at market prices prevailing at the time of resale or negotiated prices.
Any such resale may be made directly to purchasers or to or through brokers or
dealers who may receive compensation in the form of commissions or concessions
from any such participating broker-dealer.

     We, however, have not sought, and do not intend to seek, our own no-action
letter and there can be no assurance that the SEC staff would make a similar
determination with respect to our exchange offer. Any holder who tenders in the
exchange offer for the purpose of participating in a distribution of the New

                                        88


Notes cannot rely on these interpretations by the SEC staff and must comply with
the registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction.

     We have agreed to pay certain expenses relating to our performance under
the registration rights agreement, including the costs of providing this
prospectus, and to indemnify the holders of Old Notes against certain
liabilities, including liabilities under the Securities Act.

                    CERTAIN U.S. FEDERAL TAX CONSIDERATIONS

     The following is a summary of certain U.S. federal income tax consequences
to U.S. holders and non-U.S. holders relating to the exchange offer and the
ownership and disposition of the New Notes received in the exchange offer. As
used herein, a "U.S. holder" means a beneficial holder of New Notes received in
the exchange offer that is (i) a citizen or resident (within the meaning of
Section 7701(b) of the Code) of the U.S., (ii) a corporation, partnership or
other entity formed under the laws of the U.S. or any political subdivision
thereof, or (iii) an estate the income of which is subject to U.S. federal
income taxation regardless of its source and a trust subject to the primary
supervision of a court within the U.S. and the control of a U.S. fiduciary as
described in Section 7701(a)(30) of the Code. A "non-U.S. holder" is any holder
of a New Note other than a U.S. holder.

     This discussion does not purport to address all aspects of U.S. federal
income taxation that may be relevant to particular holders in light of their
personal circumstances or the effect of any applicable state, local or foreign
tax laws. In addition, this discussion does not deal with persons that are
subject to special tax rules, such as (i) dealers or traders in securities or
currencies, (ii) financial institutions or other U.S. holders that treat income
in respect of the New Notes as financial services income, (iii) insurance
companies, (iv) tax-exempt entities, (v) persons holding New Notes as part of a
straddle, conversion transaction or other arrangement involving more than one
position, or (vi) persons whose functional currency is not the U.S. dollar. This
discussion assumes that the New Notes will be held as "capital assets" within
the meaning of Section 1221 of the Code.

     This discussion is based upon provisions of the Code, the Treasury
Regulations, and judicial and administrative interpretations of the Code and
Treasury Regulations, all as in effect as of the date hereof, and all of which
are subject to change (possibly on a retroactive basis) or different
interpretation. There can be no assurance that the Internal Revenue Service (the
"IRS") will not challenge one or more of the tax consequences described herein.
We have not obtained, nor do we intend to obtain, a ruling from the IRS with
respect to the United States federal income tax consequences of the exchange
offer.

     In considering the exchange of Old Notes in the exchange offer, you are
urged to consult your own tax advisors to determine your particular tax
consequences of exchanging Old Notes in the exchange offer and the ownership and
disposition of the New Notes under U.S. federal and applicable state, local and
foreign tax laws.

U.S. HOLDERS

  EXCHANGE OF OLD NOTES FOR NEW NOTES

     The exchange of the Old Notes for the New Notes in the exchange offer will
not be treated as an "exchange" for federal income tax purposes because the New
Notes will not be considered to differ materially in kind or extent from the Old
Notes. A U.S. holder will have an initial tax basis in the New Notes equal to
the tax basis the holder had in the Old Notes exchanged therefor, and the U.S.
holder's holding period for the New Notes will include the period during which
the U.S. holder held the Old Notes.

  TAXATION OF INTEREST

     You must include interest earned on the New Notes as ordinary income at the
time it is received or accrued, in accordance with your regular method of
accounting for U.S. federal income tax purposes.

                                        89


  TAXATION OF MARKET DISCOUNT

     The market discount rules discussed below apply to any New Note purchased
after original issue at a price less than its stated redemption price at
maturity.

     If you purchase a New Note at a market discount, you generally will be
required to treat any principal payments on, or any gain on the disposition of
such note, as ordinary income to the extent of the accrued market discount (not
previously included in income) at the time of such payment or disposition. In
general, subject to a de minimis exception, market discount is the amount by
which the note's stated redemption price at maturity exceeds your tax basis in
the note immediately after the note is acquired. A note is not treated as
purchased at a market discount, however, if the market discount is less than
0.25 percent of the stated redemption price at maturity of the note multiplied
by the number of complete years to maturity from the date when you acquired the
note. Market discount on a note will accrue on a straight-line basis, unless you
elect to accrue such discount on a constant yield to maturity basis. This
election is irrevocable and applies only to the note for which it is made. You
may also elect to include market discount in income currently as it accrues.
This election, once made, applies to all market discount obligations acquired on
or after the first day of the first taxable year to which the election applies
and may not be revoked without the consent of the IRS. If you acquire a note at
a market discount and dispose of such note in any non-taxable transaction (other
than a nonrecognition transaction defined in section 1276(c) of the Code),
accrued market discount will be includable as ordinary income to you as if you
had sold the note at its fair market value. Even to the extent that it is
otherwise deductible, you may still be required to defer the deduction of all or
a portion of the interest expense attributable to debt incurred or continued to
purchase or carry a note with market discount until the maturity of the note or,
in certain circumstances, its earlier disposition, unless the election to
include the market discount in income on a current basis is made.

  TAXATION OF AMORTIZABLE BOND PREMIUM

     If you purchase a New Note for an amount in excess of its stated redemption
price at maturity, you will generally be considered to have purchased the note
with "amortizable bond premium." The amount of amortizable bond premium is
computed based on the redemption price on an earlier call date if such
computation results in a smaller amortizable bond premium attributable to the
period of such earlier call date. You generally may elect to amortize such
premium using the constant yield to maturity method. The amount amortized in any
year will generally be treated as a reduction of your interest income on the
note. If the amortizable bond premium allocable to a year exceeds the amount of
interest allocable to that year, the excess would be allowed as a deduction for
that year but only to the extent of your prior interest inclusions on the note.
If you do not make such an election, the premium on a note will decrease the
gain or increase the loss otherwise recognized on the sale, redemption,
retirement or other disposition of the note. The election to amortize the
premium on a constant yield to maturity method, once made, generally applies to
all bonds held or subsequently acquired by you on or after the first day of the
first taxable year to which the election applies. You may not revoke this
election without the consent of the IRS.

  SALE, EXCHANGE, OR REDEMPTION OF NOTES

     Upon the sale, exchange or redemption of a New Note, you generally will
recognize capital gain or loss equal to the difference between (i) the amount of
cash proceeds and the fair market value of any property received on the sale,
exchange or redemption (except to the extent such amount is attributable to
accrued interest income not previously included in income, which will be taxable
as ordinary income, or is attributable to accrued interest that was previously
included in income, which amount may be received without generating further
income) and (ii) your adjusted tax basis in the note. Your adjusted tax basis in
a note generally will equal the cost of the note, increased by market discount
previously included in income, if any, and reduced by any bond premium
previously amortized. Subject to the market discount rules discussed above, such
capital gain or loss will be long-term capital gain or loss if your holding
period in the New Note is more than one year at the time of sale, exchange or
redemption. Long-term capital

                                        90


gains recognized by certain noncorporate U.S. holders, including individuals,
will generally be subject to a maximum tax rate of 20%. The deductibility of
capital losses is subject to limitations.

  BACKUP WITHHOLDING AND INFORMATION REPORTING

     Backup withholding of U.S. federal income tax, at a rate of up to 30%, may
apply to payments pursuant to the terms of a New Note if you are a U.S. holder
and not an "exempt recipient" and if you fail to provide certain identifying
information (such as your TIN) in the manner required. Generally, individuals
are not exempt recipients. Corporations are exempt recipients, whereas other
entities may be exempt recipients. Any amount withheld from a payment to you
under the backup withholding rules is allowable as a refund or credit against
your U.S. federal income tax, provided that the required information is
furnished to the IRS in a timely manner.

NON-U.S. HOLDERS

  EXCHANGE OF OLD NOTES FOR NEW NOTES

     The exchange of the Old Notes for the New Notes in the exchange offer will
not be treated as an "exchange" for federal income tax purposes because the New
Notes will not be considered to differ materially in kind or extent from the Old
Notes. A non-U.S. holder will have an initial tax basis in the New Notes equal
to the tax basis the holder had in the Old Notes exchanged therefor, and the
non-U.S. holder's holding period for the New Notes will include the period
during which the non-U.S. holder held the Old Notes.

  TAXATION OF INTEREST

     Payments of principal or interest on the New Notes by us or any paying
agent to a beneficial owner of a New Note that is a non-U.S. holder will not be
subject to U.S. withholding tax, provided that, in the case of interest (i) you
do not own, actually or constructively, 10% or more of the total combined voting
power of all classes of our stock entitled to vote, (ii) you are not a
"controlled foreign corporation" that is related to us directly or indirectly
through stock ownership, (iii) you are not a bank with respect to which the
payments are received on an extension of credit made pursuant to a loan
agreement entered into in the ordinary course of your trade or business and (iv)
certain certification requirements are satisfied.

     To satisfy the certification requirements referred to in (iv) above, either
(a) the beneficial owner of a note must certify, under penalties of perjury, to
us or our paying agent, as the case may be, that such owner is a non-U.S. holder
and must provide such owner's name and address, and U.S. taxpayer identification
number, if any, or (b) a securities clearing organization, bank or other
financial institution that holds customer securities in the ordinary course of
its trade or business (a "Financial Institution") and holds the note on behalf
of the beneficial owner thereof must certify, under penalties of perjury, to us
or our paying agent, as the case may be, that such certificate has been received
from the beneficial owner and must furnish the payor with a copy thereof. Such
requirement will be fulfilled if the beneficial owner of a note certifies on IRS
Form W-8BEN or successor form, under penalties of perjury, that it is a non-U.S.
holder and provides its name and address or any Financial Institution holding
the note on behalf of the beneficial owner files a statement with the
withholding agent to the effect that it has received such a statement from the
beneficial owner (and furnishes the withholding agent with a copy thereof). The
applicable regulations generally also require, in the case of a note held by a
foreign partnership, that (i) the certification described above be provided by
the partners and (ii) the partnership provide certain information, including,
under certain circumstances, a United States taxpayer identification number.
Further, a look-through rule will apply in the case of tiered partnerships.
Prospective investors should consult their tax advisors regarding the
certification requirements for non-U.S. holders.

     Interest on New Notes not excluded from U.S. withholding tax as described
above generally will be subject to U.S. withholding tax at a 30% rate, except
where an applicable U.S. income tax treaty provides for the reduction or
elimination of such withholding tax (and you provide the appropriate
certification) or

                                        91


if interest on the New Notes is effectively connected with your conduct of a
trade or business in the U.S., which is described more fully below.

  SALE, EXCHANGE, OR REDEMPTION OF NOTES

     Provided that we have been at no time within the 5-year period ending on
the date of the exchange a U.S. real property holding corporation within the
meaning of Section 897(c) of the Code, a non-U.S. holder generally will not be
subject to U.S. federal income tax on gain or income realized on the sale,
exchange or retirement of New Notes, unless, (i) in the case of an individual
non-U.S. holder, such holder either (A) is present in the U.S. for 183 days or
more in the year of such sale or (B) has gain from the disposition of New Notes
that is attributable to an office or other fixed place of business in the U.S.,
and (ii) in the case of a corporate non-U.S. holder, such holder has gain from
the disposition of New Notes that is attributable to an office or other fixed
place of business in the U.S.

  INCOME OR GAINS EFFECTIVELY CONNECTED WITH A U.S. TRADE OR BUSINESS

     If you are engaged in a trade or business in the U.S. and if interest on
the New Notes or gain realized on the sale, exchange or other disposition of a
New Note is effectively connected with the conduct of such trade or business
(and, if certain tax treaties apply, is attributable to a U.S. permanent
establishment maintained by you in the U.S.), you, although exempt from U.S.
withholding tax (provided that the certification requirements discussed in the
next sentence are met), will generally be required to pay U.S. federal income
tax on such interest or gain on a net income basis in the same manner as if you
were a U.S. holder. In lieu of the certificate described above, you would be
required, under currently effective Treasury Regulations, to provide us with a
properly executed IRS Form W-8ECI or successor form in order to claim an
exemption from U.S. withholding tax. In addition, if you are a foreign
corporation, you may be subject to a branch profits tax equal to 30% (or such
lower rate provided by an applicable U.S. income tax treaty) of a portion of
your effectively connected earnings and profits for the taxable year.

  U.S. FEDERAL ESTATE TAX

     A New Note held by an individual who at the time of death is not a citizen
or resident of the U.S. (as specially defined for U.S. federal estate tax
purposes) will not be subject to U.S. federal estate tax if the individual did
not actually or constructively own 10% or more of the total combined voting
power of all classes of our stock and, at the time of the individual's death,
payments with respect to such note would not have been effectively connected
with the conduct by such individual of a trade or business in the U.S.

  BACKUP WITHHOLDING AND INFORMATION REPORTING

     In general, backup withholding and information reporting will not apply to
payments made by us or our paying agents, in their capacities as such, to a
non-U.S. holder if the holder has provided the required certification that the
holder is not a U.S. person as described in Section 7701 of the Code, provided
that neither we nor our paying agent has actual knowledge that the holder is a
U.S. person. Payments of the proceeds from a disposition by a non-U.S. holder of
a New Note made to or through a foreign office of a broker will generally not be
subject to information reporting or backup withholding. However, information
reporting will apply to those payments, if the broker is: (i) a U.S. person,
(ii) a controlled foreign corporation for U.S. federal income tax purposes,
(iii) a foreign person 50% or more of whose gross income from all sources is
effectively connected with a U.S. trade or business for a specified three-year
period, or (iv) a foreign partnership, if at any time during its tax year, one
or more of its partners are U.S. persons, as defined in Treasury Regulations,
who in the aggregate hold more than 50% of the income or capital interest in the
partnership or if, at any time during its tax year, the foreign partnership is
engaged in a U.S. trade or business, unless (A) such broker has documentary
evidence in its records that the beneficial owner is not a U.S. person and
certain other conditions are met or (B) the beneficial owner otherwise
establishes an exemption.
                                        92


     Payments of the proceeds from a disposition by a non-U.S. holder of New
Notes made to or through the U.S. office of a broker are subject to information
reporting and backup withholding unless the statement that the payee is not a
U.S. person described above has been received (and the payor does not have
actual knowledge that the beneficial owner is a U.S. person) or the holder or
beneficial owner otherwise establishes an exemption from information reporting
and backup withholding.

     THE PRECEDING DISCUSSION OF CERTAIN U.S. FEDERAL TAX CONSIDERATIONS IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, YOU ARE URGED TO
CONSULT YOUR TAX ADVISORS AS TO THE PARTICULAR CONSEQUENCES TO YOU OF THE
OWNERSHIP AND DISPOSITION OF THE NEW NOTES, INCLUDING THE EFFECT AND
APPLICABILITY OF STATE, LOCAL, FOREIGN OR OTHER TAX LAWS, AS WELL AS THE
CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.

                                 LEGAL MATTERS

     Certain legal matters with regard to the validity of the New Notes will be
passed upon for Radiologix by Haynes and Boone, LLP, Dallas, Texas.

                              INDEPENDENT AUDITORS

     Our consolidated financial statements incorporated in this prospectus by
reference to our Annual Report on Form 10-K for the year ended December 31,
2001, have been incorporated in reliance on the report of Arthur Andersen, LLP,
independent public accountants, given on the authority of said firm as experts
in auditing and accounting.

                   WHERE YOU CAN FIND ADDITIONAL INFORMATION

     We file annual, quarterly and current reports, proxy statements and other
information with the Securities and Exchange Commission. Our SEC filings are
available over the Internet at the SEC's website at http://www.sec.gov. You may
also read and copy any document we file at the SEC's public reference room at
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Please call
1-800-SEC-0330 for further information on the operations of the public reference
room.

     We may "incorporate by reference" in this prospectus the information we
file with the SEC, which means:

     - incorporated documents are considered part of this prospectus;

     - we can disclose important information to you by referring you to those
       documents; and

     - information that we subsequently file with the SEC will automatically
       update and supersede the information in this prospectus and any
       information that was previously incorporated by reference in this
       prospectus. Any statement so updated or superseded shall not be deemed,
       except as so updated or superseded, to constitute part of this
       prospectus.

     You can obtain any of the filings incorporated by reference in this
prospectus through us or from the SEC through the SEC's website or at the
address listed above. Documents incorporated by reference are available from us
without charge, excluding any exhibits to those documents that are not
specifically incorporated by reference in such documents. You can request a copy
of the documents incorporated by reference in this prospectus and a copy of the
indenture, registration rights agreement and other

                                        93


agreements referred to in this prospectus by requesting them in writing or by
telephone from us at the following address:

                                Radiologix, Inc.
                  3600 JP Morgan Chase Tower, 2200 Ross Avenue
                              Dallas, Texas 75201
                         Attention: Investor Relations
                           Telephone: (214) 303-2776

     This prospectus constitutes part of a registration statement on Form S-4 we
filed with the SEC under the Securities Act. This prospectus omits some of the
information contained in the registration statement, as permitted under the
rules and regulations of the SEC. Copies of the registration statement and its
exhibits are on file at the offices of the SEC and may be obtained from the SEC
for a prescribed fee or examined at its offices or on its website, as described
above.

                           INCORPORATION BY REFERENCE

     We incorporate by reference into this prospectus the documents listed
below:

     - our Annual Report on Form 10-K for the year ended December 31, 2001; and

     - all documents filed by us pursuant to Section 13(a), 13(c), 14 or 15(d)
       of the Exchange Act subsequent to the date of this prospectus and prior
       to the termination of the exchange offer.

                                        94


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

     NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS
AN OFFER TO ISSUE ONLY THE NEW NOTES OFFERED HEREBY, BUT ONLY UNDER
CIRCUMSTANCES AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION
CONTAINED IN THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.

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

                               TABLE OF CONTENTS



                                        PAGE
                                        ----
                                     
Notice to Investors...................    i
Summary...............................    1
Risk Factors..........................    5
The Diagnostic Imaging Services
  Industry............................   16
Business..............................   18
No Cash Proceeds to Us................   29
Capitalization........................   30
Selected Consolidated Financial and
  Operating Data......................   31
Management's Discussion and Analysis
  of Operations and Financial
  Condition...........................   33
Cautionary Statement on
  Forward-Looking Statements..........   45
Description of New Notes..............   45
The Exchange Offer....................   81
Plan of Distribution..................   88
Certain U.S. Federal Tax
  Considerations......................   89
Legal Matters.........................   93
Independent Auditors..................   93
Where You Can Find Additional
  Information.........................   93
Incorporation by Reference............   94


             ------------------------------------------------------
             ------------------------------------------------------
             ------------------------------------------------------
             ------------------------------------------------------
                                RADIOLOGIX, INC.
                            OFFER TO EXCHANGE UP TO
                  $160,000,000 10 1/2% SERIES A NOTES DUE 2008

                                      FOR

                  $160,000,000 10 1/2% SERIES B NOTES DUE 2008
                        THAT HAVE BEEN REGISTERED UNDER
                           THE SECURITIES ACT OF 1933
                                          , 2002

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


                                    PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

     Radiologix's bylaws, as amended, provide that Radiologix shall, to the
fullest extent permitted by Section 145 of the Delaware General Corporation Law,
as amended from time to time, indemnify all persons whom it may indemnify
pursuant thereto.

     Section 145 of the Delaware General Corporation Law permits a corporation,
under specified circumstances, to indemnify its directors, officers, employees
or agents against expenses (including attorney's fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by them in
connection with any action, suit or proceedings brought by third parties by
reason of the fact that they were or are directors, officers, employees or
agents of the corporation, if such directors, officers, employees or agents
acted in good faith and in a manner they reasonably believed to be in or not
opposed to the best interests of the corporation and, with respect to any
criminal action or proceeding, had no reason to believe their conduct was
unlawful. In a derivative action, i.e., one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon fairly
and reasonably entitled to indemnify for such expenses despite such adjudication
of liability.

     Article VI of Radiologix's amended and restated certificate of
incorporation provides that Radiologix's directors will not be personally liable
to Radiologix or its stockholders for monetary damages resulting from breaches
of their fiduciary duty as directors except for liability (a) for any breach of
the duty of loyalty to Radiologix or its stockholders, (b) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (c) under Section 174 of the Delaware General Corporation Law or (d) for
any transaction from which the director derived an improper personal benefit.

     Reference is made to Article VIII of Radiologix's amended and restated
bylaws, as filed with the SEC, which provides for indemnification of directors
and officers.

     Radiologix entered into an indemnification agreement with certain of its
directors, pursuant to which Radiologix agreed to indemnify such persons for
losses arising out of any untrue statement or alleged untrue statement of a
material fact contained in this registration statement.

ITEM 21.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES



EXHIBIT
NUMBER                            DESCRIPTION OF EXHIBIT
- -------                           ----------------------
         
   4.1    --   Indenture, dated as of December 12, 2001, between
               Radiologix, Inc., as Issuer, and U.S. Bank National
               Association, as Trustee.
   4.2    --   Form of New Note due 2008.
   4.3    --   Registration Rights Agreement, dated as of December 12,
               2001, between Radiologix, Inc. and Jeffries & Company, Inc.
               and Deutsche Banc Alex. Brown Inc., as representatives of
               the Initial Purchasers.
   5.1    --   Opinion of Haynes and Boone, LLP regarding the validity of
               the New Notes.
  12.1    --   Statement of Computation of Ratio of Earnings to Fixed
               Charges.
  23.1    --   Consent of Haynes and Boone, LLP (included in Exhibit 5.1).
  23.2    --   Consent of Arthur Andersen, LLP.
  24.1    --   Power of Attorney (included on the signature pages of this
               registration statement).


                                       II-1




EXHIBIT
NUMBER                            DESCRIPTION OF EXHIBIT
- -------                           ----------------------
         
  25.1    --   Statement of Eligibility under the Trust Indenture Act of
               1939 on Form T-1 of U.S. Bank National Association, as
               Trustee.
  99.1    --   Form of Letter of Transmittal.
  99.2    --   Form of Notice of Guaranteed Delivery.
  99.3    --   Form of Letter to Clients.
  99.4    --   Form of Letter to Registered Holders.
  99.5    --   Form of Instruction to Registered Holder from Owner.
  99.6    --   Form of Exchange Agent Agreement.


ITEM 22.  UNDERTAKINGS

     The undersigned Registrant hereby undertakes:

          (1) to file, during any period in which offers or sales are being
     made, a post-effective amendment to this Registration Statement:

             (i) to include any prospectus required by Section 10(a)(3) of the
        Securities Act of 1933 (the "Securities Act");

             (ii) to reflect in the prospectus any facts or events arising after
        the effective date of this Registration Statement (or the most recent
        post-effective amendment hereof) which, individually or in the
        aggregate, represent a fundamental change in the information set forth
        in this Registration Statement. Notwithstanding the foregoing, any
        increase or decrease in volume of securities offered (if the total
        dollar value of securities offered would not exceed that which was
        registered) and any deviation from the low or high end of the estimated
        maximum offering range may be reflected in the form of prospectus filed
        with the Securities and Exchange Commission pursuant to rule 424(b) if,
        in the aggregate, the changes in volume and price represent no more than
        a 20% change in the maximum aggregate offering price set forth in the
        "Calculation of Registration Fee" table in this Registration Statement
        when it becomes effective; and

             (iii) to include any material information with respect to the plan
        of distribution not previously disclosed in this Registration Statement
        or any material change to such information in this Registration
        Statement;

          (2) that, for the purpose of determining any liability under the
     Securities Act, each such post-effective amendment shall be deemed to be a
     new registration statement relating to the securities offered therein, and
     the offering of such securities at that time shall be deemed to be the
     initial bona fide offering thereof.

          (3) to remove from registration by means of a post-effective amendment
     any of the securities being registered which remain unsold at the
     termination of the offering.

          (4) that, for the purposes of determining any liability under the
     Securities Act, the information omitted from the form of prospectus filed
     as part of this registration statement in reliance upon Rule 430A and
     contained in a form of prospectus filed by the registrant pursuant to Rule
     424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
     part of this registration statement as of the time it was declared
     effective.

          (5) that, for the purposes of determining any liability under the
     Securities Act, each post-effective amendment that contains a form of
     prospectus shall be deemed to be a new registration statement relating to
     the securities offered there, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.

          (6) that, for the purposes of determining any liability under the
     Securities Act, each filing of the registrant's annual report pursuant to
     Section 13(a) or 15(d) of the Securities Exchange Act of 1934,

                                       II-2


     as amended, that is incorporated by reference in the registration statement
     shall be deemed to be a new registration statement relating to the
     securities offered therein, and the offering of such securities at that
     time shall be deemed to be the initial bona fide offering thereof.

     Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

                                       II-3


                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on this 29th day of March, 2002.

                                          RADIOLOGIX, INC.

                                          By:       /s/ MARK L. WAGAR
                                            ------------------------------------
                                                      Mark L. Wagar
                                                Chairman of the Board and
                                                 Chief Executive Officer

                                       II-4


                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned officers and
directors of Radiologix, Inc., a Delaware corporation, do hereby constitute and
appoint Mark L. Wagar and Paul M. Jolas, and either of them, their true and
lawful attorneys-in-fact and agents or attorney-in-fact and agent, with power
and authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, and any one of them, determine may
be necessary or advisable or required to enable said corporation to comply with
the Securities Act of 1933, as amended, and any rules or regulations or
requirements of the Securities and Exchange Commission in connection with this
registration statement. Without limiting the generality of the foregoing power
and authority, the powers granted include the full power of authority of
substitution and resubstitution, for them and in their name, place and stead, in
any and all capacities, the power and authority to sign the names of the
undersigned officers and directors in the capacities indicated below to this
registration statement, to any and all amendments (including any post-effective
amendments) and supplements thereto, and to any and all instruments or documents
filed as part of or in connection with such registration statement, and each of
the undersigned hereby ratifies and confirms all that said attorneys and agents,
or any of them, shall do or cause to be done by virtue hereof. The Power of
Attorney may be signed in several counterparts.

     IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the 29th day of March, 2002.

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on the 29th day of March, 2002.



                                              SIGNATURE
                                              ---------
                                                



               /s/ MARK L. WAGAR                         Chairman of the Board, Chief Executive
- ------------------------------------------------                  Officer and Director
                 Mark L. Wagar




               /s/ SAMI S. ABBASI                     Executive Vice President and Chief Financial
- ------------------------------------------------                        Officer
                 Sami S. Abbasi




              /s/ PAUL D. FARRELL                                       Director
- ------------------------------------------------
                Paul D. Farrell




              /s/ JOSEPH C. MELLO                                       Director
- ------------------------------------------------
                Joseph C. Mello




          /s/ DERACE L. SCHAFFER, M.D.                                  Director
- ------------------------------------------------
            Derace L. Schaffer, M.D.




          /s/ MICHAEL L. SHERMAN, M.D.                                  Director
- ------------------------------------------------
            Michael L. Sherman, M.D.


                                       II-5


                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Dallas,
State of Texas, on this 29th day of March, 2002.

                                          IDE IMAGING PARTNERS, INC.
                                          PACIFIC IMAGING PARTNERS, INC.
                                          QUESTAR IMAGING, INC.
                                          WB&A IMAGING PARTNERS, INC.
                                          TREASURE COAST IMAGING PARTNERS, INC.
                                          RADIOLOGIX SERVICES, INC.
                                          ADVANCED IMAGING PARTNERS, INC.
                                          MID ROCKLAND IMAGING PARTNERS, INC.
                                          RADIOLOGY AND NUCLEAR MEDICINE IMAGING
                                            PARTNERS, INC.
                                          COMMUNITY IMAGING PARTNERS, INC.
                                          VALLEY IMAGING PARTNERS, INC.
                                          ADVANCED RADIOLOGY, LLC
                                          ADVANCED MEDICAL IMAGING, INC.
                                          M&S IMAGING PARTNERS I, INC.
                                          M&S IMAGING PARTNERS, L.P. (BY M&S
                                            IMAGING PARTNERS, INC., ITS GENERAL
                                            PARTNER)
                                          QUESTAR CLEVELAND, INC.
                                          QUESTAR TAMPA, INC.
                                          QUESTAR ORLANDO, INC.
                                          ROCKY MOUNTAIN OPENSCAN MRI, LLC
                                          PREMIER ADVANCED IMAGING NETWORK, LTD.
                                            (BY QUESTAR ORLANDO, INC., ITS
                                          GENERAL
                                            PARTNER)
                                          QUESTAR KANSAS, INC.
                                          QUESTAR PVH, INC.
                                          QUESTAR SAN FRANCISCO, INC.
                                          QUESTAR HENDERSON, INC.
                                          QUESTAR TRISTATES, INC.
                                          QUESTAR DULUTH, INC.
                                          QUESTAR LINCOLN, INC.
                                          QUESTAR PALM SPRINGS, INC.
                                          QUESTAR LOWER BUCKS, INC.
                                          QUESTAR TOLEDO, INC.
                                          QUESTAR LOS ALAMITOS, INC.
                                          QUESTAR VICTORVILLE, INC.
                                          QUESTAR COLUMBUS, INC.
                                          QUESTAR NAPERVILLE, INC.
                                          QUESTAR QUAKERTOWN, INC.
                                          QUESTAR TUCSON, INC.

                                          By:       /s/ MARK L. WAGAR
                                            ------------------------------------
                                                       Mark L. Wagar
                                                 Chairman of the Board and
                                                  Chief Executive Officer

                                       II-6


                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned officers and
directors of the registrants do hereby constitute and appoint Mark L. Wagar and
Paul M. Jolas, and either of them, their true and lawful attorneys-in-fact and
agents or attorney-in-fact and agent, with power and authority to do any and all
acts and things and to execute any and all instruments which said attorneys and
agents, and any one of them, determine may be necessary or advisable or required
to enable said corporation to comply with the Securities Act of 1933, as
amended, and any rules or regulations or requirements of the Securities and
Exchange Commission in connection with this registration statement. Without
limiting the generality of the foregoing power and authority, the powers granted
include the full power of authority of substitution and resubstitution, for them
and in their name, place and stead, in any and all capacities, the power and
authority to sign the names of the undersigned officers and directors in the
capacities indicated below to this registration statement, to any and all
amendments (including any post-effective amendments) and supplements thereto,
and to any and all instruments or documents filed as part of or in connection
with such registration statement, and each of the undersigned hereby ratifies
and confirms all that said attorneys and agents, or any of them, shall do or
cause to be done by virtue hereof. The Power of Attorney may be signed in
several counterparts.

     IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the 29th day of March, 2002.

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on the 29th day of March, 2002.



                   SIGNATURE                                             TITLE
                   ---------                                             -----
                                                
               /s/ MARK L. WAGAR                                 Chairman of the Board,
- ------------------------------------------------                Chief Executive Officer
                 Mark L. Wagar                                        and Director

               /s/ MARK S. MARTIN                        President and Chief Operating Officer
- ------------------------------------------------
                 Mark S. Martin

               /s/ SAMI S. ABBASI                              Executive Vice President,
- ------------------------------------------------                Chief Financial Officer
                 Sami S. Abbasi                                      and Treasurer

               /s/ PAUL M. JOLAS                       Executive Vice President, General Counsel,
- ------------------------------------------------                 Secretary and Director
                 Paul M. Jolas


                                       II-7


                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of New York,
State of New York, on this 29th day of March, 2002.

                                          M&S IMAGING INVESTMENTS, INC.

                                          By:       /s/ MARK L. WAGAR
                                            ------------------------------------
                                                       Mark L. Wagar
                                                 Chairman of the Board and
                                                  Chief Executive Officer

                                       II-8


                               POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS: That the undersigned officers and
directors of M&S Imaging Investments, Inc., a Delaware Corporation, do hereby
constitute and appoint Mark L. Wagar and Paul M. Jolas, and either of them,
their true and lawful attorneys-in-fact and agents or attorney-in-fact and
agent, with power and authority to do any and all acts and things and to execute
any and all instruments which said attorneys and agents, and any one of them,
determine may be necessary or advisable or required to enable said corporation
to comply with the Securities Act of 1933, as amended, and any rules or
regulations or requirements of the Securities and Exchange Commission in
connection with this registration statement. Without limiting the generality of
the foregoing power and authority, the powers granted include the full power of
authority of substitution and resubstitution, for them and in their name, place
and stead, in any and all capacities, the power and authority to sign the names
of the undersigned officers and directors in the capacities indicated below to
this registration statement, to any and all amendments (including any
post-effective amendments) and supplements thereto, and to any and all
instruments or documents filed as part of or in connection with such
registration statement, and each of the undersigned hereby ratifies and confirms
all that said attorneys and agents, or any of them, shall do or cause to be done
by virtue hereof. The Power of Attorney may be signed in several counterparts.

     IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the 29th day of March, 2002.

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on the 29th day of March, 2002.



                    SIGNATURE                                              TITLE
                    ---------                                              -----
                                               
                /s/ MARK L. WAGAR                                  Chairman of the Board,
 ------------------------------------------------                 Chief Executive Officer
                  Mark L. Wagar                                         and Director

                /s/ MARK S. MARTIN                         President and Chief Operating Officer
 ------------------------------------------------
                  Mark S. Martin

                /s/ SAMI S. ABBASI                               Executive Vice President,
 ------------------------------------------------                 Chief Financial Officer
                  Sami S. Abbasi                                       and Treasurer

                /s/ PAUL M. JOLAS                        Executive Vice President, General Counsel,
 ------------------------------------------------                  Secretary and Director
                  Paul M. Jolas


                                       II-9


                                 EXHIBIT INDEX



EXHIBIT
NUMBER                            DESCRIPTION OF EXHIBIT
- -------                           ----------------------
         
   4.1    --   Indenture, dated as of December 12, 2001, between
               Radiologix, Inc., as Issuer, and U.S. Bank National
               Association, as Trustee.
   4.2    --   Form of New Note due 2008.
   4.3    --   Registration Rights Agreement, dated as of December 12,
               2001, between Radiologix, Inc. and Jeffries & Company, Inc.
               and Deutsche Banc Alex. Brown Inc., as representatives of
               the Initial Purchasers.
   5.1    --   Opinion of Haynes and Boone, LLP regarding the validity of
               the New Notes.
  12.1    --   Statement of Computation of Ratio of Earnings to Fixed
               Charges.
  23.1    --   Consent of Haynes and Boone, LLP (included in Exhibit 5.1).
  23.2    --   Consent of Arthur Andersen, LLP.
  24.1    --   Power of Attorney (included on the signature pages of this
               registration statement).
  25.1    --   Statement of Eligibility under the Trust Indenture Act of
               1939 on Form T-1 of U.S. Bank National Association, as
               Trustee.
  99.1    --   Form of Letter of Transmittal.
  99.2    --   Form of Notice of Guaranteed Delivery.
  99.3    --   Form of Letter to Clients.
  99.4    --   Form of Letter to Registered Holders.
  99.5    --   Form of Instruction to Registered Holder from Owner.
  99.6    --   Form of Exchange Agent Agreement.


                                      II-10

EX-4.1

                                                                     EXHIBIT 4.1

                                RADIOLOGIX, INC.
                                   as Issuer,

                     THE SUBSIDIARY GUARANTORS NAMED HEREIN

                                  $160,000,000

                               10.5% Senior Notes
                              due December 15, 2008

                                   ----------


                                    INDENTURE

                          Dated as of December 12, 2001


                                   ----------


                                 U.S. BANK, N.A.


                                   as Trustee






                                TABLE OF CONTENTS




                                                                                              PAGE
                                                                                              ----

                                                                                           
ARTICLE I

                       DEFINITIONS AND INCORPORATION BY REFERENCE...............................1
     SECTION 1.1.      DEFINITIONS..............................................................1
     SECTION 1.2.      INCORPORATION BY REFERENCE OF TIA.......................................27
     SECTION 1.3.      RULES OF CONSTRUCTION...................................................27

ARTICLE II

                       THE SECURITIES..........................................................28
     SECTION 2.1.      FORM AND DATING.........................................................28
     SECTION 2.2.      EXECUTION AND AUTHENTICATION............................................29
     SECTION 2.3.      REGISTRAR, PAYING AGENT AND DEPOSITARY..................................29
     SECTION 2.4.      PAYING AGENT TO HOLD MONEY IN TRUST.....................................30
     SECTION 2.5.      HOLDER LISTS............................................................30
     SECTION 2.6.      TRANSFER AND EXCHANGE...................................................30
     SECTION 2.7.      REPLACEMENT NOTES.......................................................47
     SECTION 2.8.      OUTSTANDING NOTES.......................................................47
     SECTION 2.9.      TREASURY NOTES..........................................................48
     SECTION 2.10.     TEMPORARY NOTES.........................................................48
     SECTION 2.11.     CANCELLATION............................................................48
     SECTION 2.12.     DEFAULTED INTEREST......................................................48
     SECTION 2.13.     CUSIP NUMBERS...........................................................49
     SECTION 2.14.     ISSUANCE OF ADDITIONAL NOTES............................................50

ARTICLE III

                       REDEMPTION..............................................................50
     SECTION 3.1.      OPTIONAL REDEMPTION.....................................................50
     SECTION 3.2.      NOTICES TO TRUSTEE......................................................51
     SECTION 3.3.      SELECTION OF NOTES TO BE REDEEMED.......................................51
     SECTION 3.4.      NOTICE OF REDEMPTION....................................................52
     SECTION 3.5.      EFFECT OF NOTICE OF REDEMPTION..........................................53
     SECTION 3.6.      DEPOSIT OF REDEMPTION PRICE.............................................53
     SECTION 3.7.      NOTES REDEEMED IN PART..................................................53
     SECTION 3.8.      NO MANDATORY REDEMPTION.................................................54

ARTICLE IV

                       COVENANTS...............................................................54



                                       ii





                                                                                             PAGE
                                                                                             ----

                                                                                          
     SECTION 4.1.      PAYMENT OF NOTES........................................................54
     SECTION 4.2.      MAINTENANCE OF OFFICE OR AGENCY.........................................54
     SECTION 4.3.      LIMITATION ON RESTRICTED PAYMENTS.......................................55
     SECTION 4.4.      CORPORATE AND PARTNERSHIP EXISTENCE.....................................57
     SECTION 4.5.      PAYMENT OF TAXES AND OTHER CLAIMS.......................................57
     SECTION 4.6.      MAINTENANCE OF PROPERTIES AND INSURANCE.................................58
     SECTION 4.7.      COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT...............................58
     SECTION 4.8.      REPORTS.................................................................59
     SECTION 4.9.      LIMITATION ON STATUS AS INVESTMENT COMPANY..............................59
     SECTION 4.10.     LIMITATION ON TRANSACTIONS WITH AFFILIATES..............................59
     SECTION 4.11.     LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS.....................60
     SECTION 4.12.     LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
                       SUBSIDIARIES............................................................62
     SECTION 4.13.     LIMITATIONS ON LAYERING INDEBTEDNESS....................................63
     SECTION 4.14.     LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK......................63
     SECTION 4.15.     WAIVER OF STAY, EXTENSION OR USURY LAWS.................................68
     SECTION 4.16.     LIMITATION ON LIENS SECURING INDEBTEDNESS...............................69
     SECTION 4.17.     LIMITATIONS ON LINES OF BUSINESS........................................69
     SECTION 4.18.     SALE AND LEASEBACK TRANSACTIONS.........................................69
     SECTION 4.19.     LIMITATION ON CASH INTEREST PAYMENTS ON CONVERTIBLE NOTE................70
     SECTION 4.20.     DESIGNATION OF UNRESTRICTED SUBSIDIARIES................................70

ARTICLE V

                       SUCCESSOR CORPORATION...................................................71
     SECTION 5.1.      LIMITATION ON MERGER, SALE OR CONSOLIDATION.............................71
     SECTION 5.2.      SUCCESSOR CORPORATION SUBSTITUTED.......................................72

ARTICLE VI

                       EVENTS OF DEFAULT AND REMEDIES..........................................72
     SECTION 6.1.      EVENTS OF DEFAULT.......................................................72
     SECTION 6.2.      ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT.................74



                                      iii




                                                                                             PAGE
                                                                                             ----
                                                                                         
     SECTION 6.3.      COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.........74
     SECTION 6.4.      TRUSTEE MAY FILE PROOFS OF CLAIM........................................75
     SECTION 6.5.      TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES..................76
     SECTION 6.6.      PRIORITIES..............................................................76
     SECTION 6.7.      LIMITATION ON SUITS.....................................................77
     SECTION 6.8.      UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
                       INTEREST................................................................77
     SECTION 6.9.      RIGHTS AND REMEDIES CUMULATIVE..........................................78
     SECTION 6.10.     DELAY OR OMISSION NOT WAIVER............................................78
     SECTION 6.11.     CONTROL BY HOLDERS......................................................78
     SECTION 6.12.     WAIVER OF EXISTING OR PAST DEFAULT......................................78
     SECTION 6.13.     UNDERTAKING FOR COSTS...................................................79
     SECTION 6.14.     RESTORATION OF RIGHTS AND REMEDIES......................................79

ARTICLE VII
                       TRUSTEE.................................................................80
     SECTION 7.1.      DUTIES OF TRUSTEE.......................................................80
     SECTION 7.2.      RIGHTS OF TRUSTEE.......................................................81
     SECTION 7.3.      INDIVIDUAL RIGHTS OF TRUSTEE............................................82
     SECTION 7.4.      TRUSTEE'S DISCLAIMER....................................................82
     SECTION 7.5.      NOTICE OF DEFAULT.......................................................83
     SECTION 7.6.      REPORTS BY TRUSTEE TO HOLDERS...........................................83
     SECTION 7.7.      COMPENSATION AND INDEMNITY..............................................83
     SECTION 7.8.      REPLACEMENT OF TRUSTEE..................................................84
     SECTION 7.9.      SUCCESSOR TRUSTEE BY MERGER, ETC........................................85
     SECTION 7.10.     ELIGIBILITY; DISQUALIFICATION...........................................85
     SECTION 7.11.     PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.......................85

ARTICLE VIII

                       LEGAL DEFEASANCE AND COVENANT DEFEASANCE AND SATISFACTION
                       AND DISCHARGE...........................................................86
     SECTION 8.1.      OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE................86
     SECTION 8.2.      LEGAL DEFEASANCE AND DISCHARGE..........................................86
     SECTION 8.3.      COVENANT DEFEASANCE.....................................................86
     SECTION 8.4.      CONDITIONS TO LEGAL OR COVENANT DEFEASANCE..............................87


                                       iv







                                                                                             PAGE
                                                                                             ----
                                                                                          
     SECTION 8.5.      DEPOSITED CASH AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST;
                       OTHER MISCELLANEOUS PROVISIONS..........................................88
     SECTION 8.6.      REPAYMENT TO THE COMPANY................................................89
     SECTION 8.7.      REINSTATEMENT...........................................................89
     SECTION 8.8.      SATISFACTION AND DISCHARGE..............................................89

ARTICLE IX

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS.....................................90
     SECTION 9.1.      SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS......................90
     SECTION 9.2.      AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH CONSENT OF
                       HOLDERS.................................................................91
     SECTION 9.3.      COMPLIANCE WITH TIA.....................................................93
     SECTION 9.4.      REVOCATION AND EFFECT OF CONSENTS.......................................93
     SECTION 9.5.      NOTATION ON OR EXCHANGE OF NOTES........................................94
     SECTION 9.6.      TRUSTEE TO SIGN AMENDMENTS, ETC.........................................94

ARTICLE X

                       RIGHT TO REQUIRE REPURCHASE.............................................94
     SECTION 10.1.     REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF
                       CONTROL.................................................................94

ARTICLE XI

                       GUARANTEE...............................................................97
     SECTION 11.1.     GUARANTEE...............................................................97
     SECTION 11.2.     EXECUTION AND DELIVERY OF GUARANTEE.....................................99
     SECTION 11.3.     CERTAIN BANKRUPTCY EVENTS..............................................100
     SECTION 11.4.     LIMITATION ON MERGER OF SUBSIDIARIES AND RELEASE OF GUARANTORS.........100

ARTICLE XII

                       MISCELLANEOUS..........................................................101
     SECTION 12.1.     TIA CONTROLS...........................................................101
     SECTION 12.2.     NOTICES................................................................101
     SECTION 12.3.     COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS...........................102
     SECTION 12.4.     CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.....................102



                                       v







                                                                                             PAGE
                                                                                             ----
                                                                                          
     SECTION 12.5.     STATEMENTS REQUIRED IN CERTIFICATE OR OPINION..........................102
     SECTION 12.6.     RULES BY TRUSTEE, PAYING AGENT, REGISTRAR..............................103
     SECTION 12.7.     LEGAL HOLIDAYS.........................................................103
     SECTION 12.8.     GOVERNING LAW..........................................................103
     SECTION 12.9.     NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS..........................104
     SECTION 12.10.    NO RECOURSE AGAINST OTHERS.............................................104
     SECTION 12.11.    SUCCESSORS.............................................................104
     SECTION 12.12.    DUPLICATE ORIGINALS....................................................104
     SECTION 12.13.    SEVERABILITY...........................................................104
     SECTION 12.14.    TABLE OF CONTENTS, HEADINGS, ETC.......................................104
     SECTION 12.15.    QUALIFICATION OF INDENTURE.............................................105
     SECTION 12.16.    REGISTRATION RIGHTS....................................................105
     SIGNATURES...............................................................................106
     EXHIBIT A................................................................................A-1
     EXHIBIT B
     FORM OF CERTIFICATE OF TRANSFER..........................................................B-1
     EXHIBIT C
     FORM OF CERTIFICATE OF EXCHANGE..........................................................C-1
     EXHIBIT D
     FORM OF CERTIFICATE FROM ACQUIRING
     INSTITUTIONAL ACCREDITED INVESTOR........................................................D-1




                                       vi


                              CROSS REFERENCE TABLE

         Reconciliation and tie between the Trust Indenture Act of 1939 and this
Indenture, dated __________, 2002.




TIA SECTION                                                                                               INDENTURE
                                                                                                            SECTION
                                                                                               
Section 310          (a)(1)....................................................................................7.10
                     (a)(2)....................................................................................7.10
                     (a)(3)..........................................................................Not Applicable
                     (a)(4)..........................................................................Not Applicable
                     (a)(5)....................................................................................7.10
                     (b).......................................................................................7.10
                     (c).............................................................................Not Applicable
Section 311          (a).......................................................................................7.11
                     (b).......................................................................................7.11
Section 312          (a)........................................................................................2.5
                     (b).......................................................................................12.3
                     (c).......................................................................................12.3
Section 313          (a)........................................................................................7.6
                     (b)........................................................................................7.6
                     (c)........................................................................................7.6
                     (d)........................................................................................7.6
Section 314          (a)........................................................................................4.8
                     (a)(4).....................................................................................4.7
                     (b).............................................................................Not Applicable
                     (c)(1)....................................................................................12.4
                     (c)(2)....................................................................................12.4
                     (c)(3).....................................................................................8.4
                     (d).............................................................................Not Applicable
                     (e).......................................................................................12.5
Section 315          (a)........................................................................................7.1
                     (b)........................................................................................7.5
                     (c)........................................................................................7.1
                     (d)........................................................................................7.2
                     (e).......................................................................................6.13
Section 316          (a)........................................................................................2.9
                     (a)(1)(A).................................................................................6.11
                     (a)(1)(B).................................................................................6.12
                     (a)(2)..........................................................................Not Applicable
                     (b)........................................................................................6.8
                     (c)...................................................................................1.1, 9.4
Section 317          (a)(1).....................................................................................6.3
                     (a)(2).....................................................................................6.4
                     (b)........................................................................................2.4
Section 318          (a).......................................................................................12.1


Note: This reconciliation and tie shall not, for any purpose, be deemed to be
part of the Indenture.





                  INDENTURE, dated as of December 12, 2001, by and between
Radiologix, Inc., a Delaware corporation (the "Company"), the Guarantors (as
defined) named herein and U.S. Bank, N.A., as trustee (the "Trustee").

                  Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders of the
Company's 10.5% Series A Senior Notes due 2008 and the class of 10.5% Series B
Senior Notes due 2008 to be exchanged for the 10.5% Series A Senior Notes due
2008:

                                    ARTICLE I

                   DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.1. DEFINITIONS

         "144A Global Note" means one or more Global Notes bearing the Private
Placement Legend that will be issued in an aggregate amount of denominations
equal in total to the outstanding principal amount of the Notes sold in reliance
on Rule 144A.

         "501 Global Note" means one of more Global Notes bearing the Private
Placement Legend that will be issued in an aggregate amount of denominations
equal in total to the outstanding principal amount of the Notes sold to
institutional "accredited investors" within the meaning of Rule 501(a)(1), (2),
(3), or (7) of the Securities Act.

         "Acceleration Notice" shall have the meaning specified in Section 6.2.

         "Acquired Indebtedness" means Indebtedness (including Disqualified
Capital Stock) of any Person existing at the time such Person becomes a
Subsidiary of the Company, including by designation, or is merged or
consolidated into or with the Company or one of its Subsidiaries.

         "Acquisition" means the purchase or other acquisition of any Person or
all or substantially all the assets of any Person by any other Person, whether
by purchase, merger, consolidation, or other transfer, and whether or not for
consideration.

         "Additional Notes" means additional Notes having identical terms and
conditions to the Notes issued on the Issue Date that may be issued pursuant to
this Indenture after the Issue Date, other than pursuant to an Exchange Offer or
otherwise in exchange for or in replacement of outstanding Notes.

         "Affiliate" means any Person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a Person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise; provided, that with respect to ownership interest in the Company
and its Subsidiaries, a Beneficial Owner of 10% or more of the total voting
power normally entitled to





vote in the election of directors, managers or trustees, as applicable, shall
for such purposes be deemed to possess control. Notwithstanding the foregoing,
Affiliate shall not include Subsidiaries.

         "Affiliate Transaction" shall have the meaning specified in Section
4.10.

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

         "Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Note, the rules and procedures of
the Depositary, Euroclear and Clearstream that apply to such transfer or
exchange at the relevant time.

         "Asset Sale" shall have the meaning specified in Section 4.14.

         "Asset Sale Offer" shall have the meaning specified in Section 4.14.

         "Asset Sale Offer Amount" shall have the meaning specified in Section
4.14.

         "Asset Sale Offer Period" shall have the meaning specified in Section
4.14.

         "Asset Sale Offer Price" shall have the meaning specified in Section
4.14.

         "Attributable Indebtedness" in respect of a sale and leaseback
transaction means, at the time of determination, the present value of the
obligation of the lessee for net rental payments during the remaining term of
the lease included in such sale and leaseback transaction including any period
for which such lease has been extended or may, at the option of the lessor, be
extended. Such present value shall be calculated using a discount rate equal to
the rate of interest implicit in such transaction, determined in accordance with
GAAP.

         "Authentication Order" shall have the meaning specified in Section 2.2.

         "Average Life" means, as of the date of determination, with respect to
any security or instrument, the quotient obtained by dividing (1) the sum of the
products (a) of the number of years from the date of determination to the date
or dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (2) the sum of all such principal (or redemption)
payments.

         "Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal,
state or foreign law for the relief of debtors.

         "Beneficial Owner" or "beneficial owner" for purposes of the definition
of Change of Control and Affiliate has the meaning attributed to it in Rules
13d-3 and 13d-5 under the Exchange Act (as in effect on the Issue Date), whether
or not applicable.



                                       2


         "Board of Directors" means, with respect to any Person, the board of
directors (or if such Person is not a corporation, the equivalent board of
managers or members or body performing similar functions for such Person) of
such Person or any committee of the Board of Directors of such Person
authorized, with respect to any particular matter, to exercise the power of the
board of directors of such Person.

         "Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.

         "Broker-Dealer" means any broker-dealer that receives Exchange Notes
for its own account in the Exchange Offer in exchange for Notes that were
acquired by such broker-dealer as a result of market-making or other trading
activities.

         "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York, New York
are authorized or obligated by law or executive order to close.

         "Capitalized Lease Obligation" means, as to any Person, the obligations
of such Person under a lease that are required to be classified and accounted
for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.

         "Capital Stock" means, with respect to any corporation, any and all
shares, interests, rights to purchase (other than convertible or exchangeable
Indebtedness that is not itself otherwise capital stock), warrants, options,
participations or other equivalents of or interests (however designated) in
stock issued by that corporation.

         "Cash" or "cash" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public or private debts.

         "Cash Equivalent" means:

                  (1) securities issued or directly and fully guaranteed or
         insured by the United States of America or any agency or
         instrumentality thereof (provided, that the full faith and credit of
         the United States of America is pledged in support thereof); or

                  (2) demand and time deposits and certificates of deposit and
         commercial paper issued by the parent corporation of any domestic
         commercial bank of recognized standing having capital and surplus in
         excess of $500,000,000; or

                  (3) commercial paper issued by others rated at least A-2 or
         the equivalent thereof by Standard & Poor's Corporation or at least P-2
         or the equivalent thereof by Moody's Investors Service, Inc.; or



                                       3






                  (4) repurchase obligations with a term of not more than seven
         days for underlying securities of the types described in clause (1)
         above entered into with any commercial bank meeting the specifications
         of clause (2) above; or

                  (5) investments in money market or other mutual funds
         substantially all of whose assets comprise securities of the types
         described in clauses (1) through (4) above;

and in the case of each of (1), (2), and (3) maturing within one year after the
date of acquisition.

         "Change of Control" means:

                  (1) any sale, transfer, conveyance or other disposition (other
         than by way of merger or consolidation) of all or substantially all of
         the Company's assets, on a consolidated basis, in one transaction or a
         series of related transactions, to any "person" (including any group
         that is deemed to be a "person");

                  (2) the consummation of any transaction, including, without
         limitation, any merger or consolidation, whereby any "person"
         (including any group that is deemed to be a "person") is or becomes the
         "beneficial owner," directly or indirectly, of more than 35% of the
         aggregate Voting Equity Interests of the transferee(s) or surviving
         entity or entities;

                  (3) the Continuing Directors cease for any reason to
         constitute a majority of the Company's Board of Directors then in
         office; or

                  (4) the Company adopts a plan of liquidation.

         As used in this definition, "person" (including any group that is
deemed to be a "person") has the meaning given by Section 13(d) of the Exchange
Act, whether or not applicable.

         "Change of Control Offer" shall have the meaning specified in Section
10.1.

         "Change of Control Offer Period" shall have the meaning specified in
Section 10.1.

         "Change of Control Purchase Date" shall have the meaning specified in
Section 10.1.

         "Change of Control Purchase Price" shall have the meaning specified in
Section 10.1.

         "Clearstream" means Clearstream Banking S.A., or its successors, as
operators of the Clearstream system.

         "Code" means the Internal Revenue Code of 1986, as amended.




                                       4


         "Company" means the party named as such in this Indenture until a
successor replaces it pursuant to this Indenture, and thereafter means such
successor.

         "Consolidation" means, with respect to the Company, the consolidation
of the accounts of the Subsidiaries with those of the Company, all in accordance
with GAAP; provided, that "consolidation" will not include consolidation of the
accounts of any Unrestricted Subsidiary with the accounts of the Company. The
term "consolidated" has a correlative meaning to the foregoing.

         "Consolidated Coverage Ratio" of any Person on any date of
determination (the "Transaction Date") means the ratio, on a pro forma basis, of
(a) the aggregate amount of Consolidated EBITDA of such Person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such Person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such Person's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period; provided, that for purposes of
such calculation:

                  (1) Acquisitions which occurred during the Reference Period or
         subsequent to the Reference Period and on or prior to the Transaction
         Date shall be assumed to have occurred on the first day of the
         Reference Period;

                  (2) transactions giving rise to the need to calculate the
         Consolidated Coverage Ratio shall be assumed to have occurred on the
         first day of the Reference Period;

                  (3) other than Indebtedness incurred under any revolving
         credit facility, the incurrence of any Indebtedness (including the
         issuance of any Disqualified Capital Stock) during the Reference Period
         or subsequent to the Reference Period and on or prior to the
         Transaction Date (and the application of the proceeds therefrom to the
         extent used to refinance or retire other Indebtedness) shall be assumed
         to have occurred on the first day of the Reference Period; and

                  (4) the Consolidated Fixed Charges of such Person attributable
         to interest on any Indebtedness or dividends on any Disqualified
         Capital Stock bearing a floating interest (or dividend) rate shall be
         computed on a pro forma basis as if the average rate in effect from the
         beginning of the Reference Period to the Transaction Date had been the
         applicable rate for the entire period, unless such Person or any of its
         Subsidiaries is a party to an Interest Swap or Hedging Obligation
         (which shall remain in effect for the 12-month period immediately
         following the Transaction Date) that has the effect of fixing the
         interest rate on the date of computation, in which case such rate
         (whether higher or lower) shall be used.



                                       5






         "Consolidated EBITDA" means, with respect to any Person, for any
period, the Consolidated Net Income of such Person for such period adjusted to
add thereto (to the extent deducted from net revenues in determining
Consolidated Net Income), without duplication, the sum of:

                  (1) Consolidated income tax expense (except to the extent
         attributable to items of extraordinary or nonrecurring gain or loss as
         described in clause (a) of the definition of Consolidated Net Income);

                  (2) Consolidated depreciation and amortization expense;

                  (3) Consolidated Fixed Charges;

                  (4) all other non-cash charges required to be reflected as
         expenses on the books and records of such Person and its Consolidated
         Subsidiaries; and

                  (5) the amount of any earn-out payment or bonus paid by the
         Company or any Subsidiary of the Company for such period to the
         seller(s) of any Capital Stock or business acquired by the Company or
         any such Subsidiary, which payment is made pursuant to the terms of a
         purchase or similar agreement entered into at the time of the
         acquisition;

less the amount of all cash payments made by such Person or any of its
Subsidiaries during such period to the extent such payments relate to non-cash
charges that were added back in determining Consolidated EBITDA for such period
or any prior period; provided, that consolidated income tax expense and
depreciation and amortization of a Subsidiary that is a less than Wholly Owned
Subsidiary shall only be added to the extent of the equity interest of the
Company in such Subsidiary.

         "Consolidated Fixed Charges" of any Person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of:

                  (a) interest expensed or capitalized, paid, accrued, or
         scheduled to be paid or accrued (including, in accordance with the
         following sentence, interest attributable to Capitalized Lease
         Obligations and imputed interest on Attributable Indebtedness) of such
         Person and its Consolidated Subsidiaries during such period, including
         (1) original issue discount and non-cash interest payments or accruals
         on any Indebtedness, (2) amortization of Indebtedness discount or
         premium, (3) the interest portion of all deferred payment obligations,
         (4) all commissions, discounts and other fees and charges owed with
         respect to bankers' acceptances and letters of credit financings and
         currency and Interest Swap and Hedging Obligations, in each case to the
         extent attributable to such period, and (5) all interest payable with
         respect to discontinued operations;




                                       6



                  (b) the amount of dividends accrued or payable (or guaranteed)
         by such Person or any of its Consolidated Subsidiaries in respect of
         Preferred Stock (other than by Subsidiaries of such Person to such
         Person or such Person's Wholly Owned Subsidiaries) multiplied by a
         fraction, the numerator of which is one and the denominator of which is
         one minus the then current combined federal, state and local statutory
         tax rate of the Company and its Subsidiaries, expressed as a decimal.

For purposes of this definition, (x) interest on a Capitalized Lease Obligation
shall be deemed to accrue at an interest rate reasonably determined in good
faith by the Company to be the rate of interest implicit in such Capitalized
Lease Obligation in accordance with GAAP and (y) interest expense attributable
to any Indebtedness represented by the guarantee by such Person or a Subsidiary
of such Person of an obligation of another Person shall be deemed to be the
interest expense attributable to the Indebtedness guaranteed.

         "Consolidated Net Income" means, with respect to any Person for any
period, the net income (or loss) of such Person and its Consolidated
Subsidiaries (determined on a consolidated basis in accordance with GAAP) for
such period, adjusted to exclude (only to the extent included in computing such
net income (or loss) and without duplication):

                  (a) all gains and losses, together with any related provision
         for taxes on such gains or losses, that are either extraordinary (as
         determined in accordance with GAAP) or are nonrecurring (including any
         gain or loss from the sale or other disposition of assets outside the
         ordinary course of business or from the issuance or sale of any capital
         stock);

                  (b) the net income, if positive, of any Person, other than a
         Consolidated Subsidiary, in which such Person or any of its
         Consolidated Subsidiaries has an interest, except to the extent of the
         amount of any dividends or distributions actually paid in cash to such
         Person or a Consolidated Subsidiary of such Person during such period,
         but in any case not in excess of such Person's pro rata share of such
         Person's net income for such period;

                  (c) the net income or loss of any Person acquired in a pooling
         of interests transaction for any period prior to the date of such
         acquisition;

                  (d) the net income, if positive, of any of such Person's
         Consolidated Subsidiaries to the extent that the declaration or payment
         of dividends or similar distributions is not at the time permitted by
         operation of the terms of its charter or bylaws or any other agreement,
         instrument, judgment, decree, order, statute, rule or governmental
         regulation applicable to such Consolidated Subsidiary; and

                  (e) solely for the purpose of calculating Consolidated Net
         Income with respect to paragraph (3)(a) of Section 4.3, the amount of
         any goodwill impairment and valuation losses, as reflected in the
         Company's consolidated financial statements.



                                       7






         "Consolidated Net Worth" of any Person at any date means the aggregate
consolidated stockholders' equity of such Person (plus amounts of equity
attributable to preferred stock) and its Consolidated Subsidiaries, as would be
shown on the consolidated balance sheet of such Person prepared in accordance
with GAAP, adjusted to exclude (to the extent included in calculating such
equity), (a) the amount of any such stockholders' equity attributable to
Disqualified Capital Stock or treasury stock of such Person and its Consolidated
Subsidiaries, (b) all upward revaluations and other write-ups in the book value
of any asset of such Person or a Consolidated Subsidiary of such Person
subsequent to the Issue Date, and (c) all investments in subsidiaries that are
not Consolidated Subsidiaries and in Persons that are not Subsidiaries.

         "Consolidated Subsidiary" means, for any Person, each Subsidiary of
such Person (whether now existing or hereafter created or acquired) the
financial statements of which are consolidated for financial statement reporting
purposes with the financial statements of such Person in accordance with GAAP.

         "Consolidated Tangible Assets" means, as of the date of determination,
the total assets, less goodwill and other intangibles, shown on the balance
sheet of the Company and its Consolidated Subsidiaries as of the most recent
date for which such a balance sheet is available, determined on a consolidated
basis in accordance with GAAP.

         "Continuing Directors" means during any period of 12 consecutive months
after the Issue Date, individuals who at the beginning of any such 12-month
period constituted the Board of Directors of the Company (together with any new
directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company was approved by a vote of a majority
of the directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously so
approved, including new directors designated in or provided for in an agreement
regarding the merger, consolidation or sale, transfer or other conveyance, of
all or substantially all of the assets of the Company, if such agreement was
approved by a vote of such majority of directors).

         "Convertible Note" means that certain Convertible Junior Subordinated
Promissory Note due July 31, 2009, made by the Company in favor of BT Capital
Partners SBIC, L.P., dated August 1, 1999, as the same may be amended in a
manner not prohibited by this Indenture.

         "Corporate Trust Office" means the principal office of the Trustee at
which at any time its corporate trust business shall be administered, which
office at the date hereof is located at 180 East Fifth Street, St. Paul,
Minnesota 55101, Attention: Corporate Trust Department, or such other address as
the Trustee may designate from time to time by notice to the Holders and the
Company, or the principal corporate trust office of any successor Trustee (or
such other address as a successor Trustee may designate from time to time by
notice to the Holders and the Company), in either case which shall be located in
the Borough of Manhattan, The City of New York.




                                       8






         "Covenant Defeasance" shall have the meaning specified in Section 8.3.

         "Credit Agreement" means the credit agreement to be entered into by and
among the Company, certain of its Subsidiaries, certain financial institutions
and General Electric Capital Corporation, as agent, providing for an aggregate
$35,000,000 revolving credit facility, including any related notes, guarantees,
collateral documents, instruments and agreements executed in connection
therewith, as such credit agreement and/or related documents may be amended,
restated, supplemented, renewed, replaced or otherwise modified from time to
time whether or not with the same agent, trustee, representative lenders or
holders, and, subject to the proviso to the next succeeding sentence,
irrespective of any changes in the terms and conditions thereof. Without
limiting the generality of the foregoing, the term "Credit Agreement" shall
include any amendment, amendment and restatement, renewal, extension,
restructuring, supplement or modification to any Credit Agreement and all
refundings, refinancings and replacements of any Credit Agreement, including any
Credit Agreement:

                  (1) extending the maturity of any Indebtedness incurred
         thereunder or contemplated thereby;

                  (2) adding or deleting borrowers or guarantors thereunder, so
         long as borrowers and issuers include one or more of the Company and
         its Subsidiaries and their respective successors and assigns;

                  (3) increasing the amount of Indebtedness incurred thereunder
         or available to be borrowed thereunder; provided, that on the date such
         Indebtedness is incurred it would not be prohibited by Section 4.11; or

                  (4) otherwise altering the terms and conditions thereof in a
         manner not prohibited by the terms of this Indenture.

         "Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

         "Debt Incurrence Ratio" shall have the meaning specified in Section
4.11.

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

         "Defaulted Interest" shall have the meaning specified in Section 2.12.

         "Definitive Notes" means one or more certificated Notes registered in
the name of the Holder thereof and issued in accordance with Section 2.6 hereof,
in the form of Exhibit A hereto except that such Note shall not include the
information called for by footnotes 3, 4 and 8 thereof.




                                       9






         "Depositary" means, with respect to the Notes issuable or issued in
whole or in part in global form, the person specified in Section 2.3 as the
Depositary with respect to the Notes, until a successor shall have been
appointed and become such pursuant to the applicable provision of this
Indenture, and thereafter "Depositary" shall mean or include such successor.

         "Disqualified Capital Stock" means with respect to any Person, (a)
Equity Interests of such Person that, by its terms or by the terms of any
security into which it is convertible, exercisable or exchangeable, is, or upon
the happening of an event or the passage of time or both would be, required to
be redeemed or repurchased including at the option of the holder thereof by such
Person or any of its Subsidiaries, in whole or in part, on or prior to 91 days
following the Stated Maturity of the Notes and (b) any Equity Interests of any
Subsidiary of such Person other than any common equity with no preferences,
privileges, and no redemption or repayment provisions. Notwithstanding the
foregoing, any Equity Interests that would constitute Disqualified Capital Stock
solely because the holders thereof have the right to require the Company to
repurchase such Equity Interests upon the occurrence of a change of control or
an asset sale shall not constitute Disqualified Capital Stock if the terms of
such Equity Interests provide that the Company may not repurchase or redeem any
such Equity Interests pursuant to such provisions prior to the Company's
purchase of the Notes as are required to be purchased pursuant to Section 4.14
or Section 10.1.

         "Distribution Compliance Period" means the 40-day restricted period, as
defined in Rule 903(b)(3) under the Securities Act.

         "DTC" shall have the meaning specified in Section 2.3.

         "Equity Interests" means Capital Stock or partnership, participation or
membership interests and all warrants, options or other rights to acquire
Capital Stock or partnership, participation or membership interests (but
excluding any debt security that is convertible into, or exchangeable for,
Capital Stock or partnership, participation or membership interests).

         "Euroclear" means Euroclear Bank S.A./N.V., or its successors, as
operators of the Euroclear system.

         "Event of Default" shall have the meaning specified in Section 6.1.

         "Excess Proceeds" shall have the meaning specified in Section 4.14.

         "Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.

         "Exchange Notes" means 10.5% Senior Notes due 2008, Series B, of the
Company, including the guarantees endorsed thereon, identical in all respects to
the Notes and the Guarantees, except for references to series and restrictive
legends, issued pursuant to an Exchange Offer.



                                       10






         "Exchange Offer" means an offer that may be made by the Company
pursuant to the Registration Rights Agreement to exchange Exchange Notes for
Series A Notes.

         "Exchange Offer Registration Statement" shall have the meaning set
forth in the Registration Rights Agreement.

         "Exempted Affiliate Transaction" means (a) customary employee
compensation arrangements approved by a majority of independent (as to such
transactions) members of the Board of Directors of the Company, (b) dividends
permitted under the terms of Section 4.3 and payable, in form and amount, on a
pro rata basis to all holders of common stock of the Company, (c) transactions
solely between or among the Company and any of its Consolidated Subsidiaries or
solely among Consolidated Subsidiaries of the Company, and (d) transactions in
respect of the Convertible Note between the Company and the Holder of the
Convertible Note (other than an increase in the amount of principal or interest
payable thereon), including any amendments or modifications to the conversion
provisions thereof (and any related definitions).

         "Existing Indebtedness" means the Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Credit Agreement) in existence
on the Issue Date, reduced to the extent such amounts are repaid, refinanced or
retired.

         "Foreign Subsidiary" means any Subsidiary of the Company which (i) is
not organized under the laws of the United States, any state thereof or the
District of Columbia and (ii) conducts substantially all of its business
operations outside the United States of America.

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

         "Global Notes" means one or more Notes in the form of Exhibit A hereto
that includes the information referred to in footnotes 3, 4 and 8 to the form of
Note, attached hereto as Exhibit A, issued under this Indenture, that is
deposited with or on behalf of and registered in the name of the Depositary or
its nominee.

         "Global Note Legend" means the legend set forth in Section 2.6(g)(2),
which is required to be placed on all Global Notes issued under this Indenture.

         "Guarantee" shall have the meaning provided in Section 11.1.

         "Guarantor" means each of the Company's present and future Subsidiaries
that at the time are guarantors of the Notes in accordance with this Indenture.

         "Holder" or "Securityholder" means the Person in whose name a Note is
registered on the Registrar's books.


                                       11



         "Incur" or "incurrence" shall have the meaning specified in Section
4.11.

         "Incurrence Date" shall have the meaning specified in Section 4.11.

         "Indebtedness" of any Person means, without duplication,

                  (a) all liabilities and obligations, contingent or otherwise,
         of such Person, to the extent such liabilities and obligations would
         appear as a liability upon the consolidated balance sheet of such
         Person in accordance with GAAP, (1) in respect of borrowed money
         (whether or not the recourse of the lender is to the whole of the
         assets of such Person or only to a portion thereof), (2) evidenced by
         bonds, notes, debentures or similar instruments, (3) representing the
         balance deferred and unpaid of the purchase price of any property or
         services, except those incurred in the ordinary course of its business
         that would constitute ordinarily a trade payable to trade creditors;

                  (b) all liabilities and obligations, contingent or otherwise,
         of such Person (1) evidenced by bankers' acceptances or similar
         instruments issued or accepted by banks, (2) relating to any
         Capitalized Lease Obligation, or (3) evidenced by a letter of credit or
         a reimbursement obligation of such Person with respect to any letter of
         credit;

                  (c) all net obligations of such Person under Interest Swap and
         Hedging Obligations;

                  (d) all liabilities and obligations of others of the kind
         described in the preceding clause (a), (b) or (c) that such Person has
         guaranteed or provided credit support or that is otherwise its legal
         liability or which are secured by any assets or property of such
         Person;

                  (e) any and all deferrals, renewals, extensions, refinancing
         and refundings (whether direct or indirect) of, or amendments,
         modifications or supplements to, any liability of the kind described in
         any of the preceding clauses (a), (b), (c) or (d), or this clause (e),
         whether or not between or among the same parties;

                  (f) all Disqualified Capital Stock of such Person (measured at
         the greater of its voluntary or involuntary maximum fixed repurchase
         price plus accrued and unpaid dividends); and

                  (g) all Attributable Indebtedness.

For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any



                                       12






date on which Indebtedness shall be required to be determined pursuant to the
terms hereof, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value to be
determined in good faith by the Board of Directors of the issuer (or managing
general partner of the issuer) of such Disqualified Capital Stock.

         The amount of any Indebtedness outstanding as of any date shall be (1)
the accreted value thereof, in the case of any Indebtedness issued with original
issue discount, but the accretion of original issue discount in accordance with
the original terms of Indebtedness issued with an original issue discount will
not be deemed to be an incurrence and (2) the principal amount thereof, together
with any interest thereon that is more than 30 days past due, in the case of any
other Indebtedness.

         "Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.

         "Indirect Participant" means any entity that, with respect to DTC,
clears through or maintains a direct or indirect, custodial relationship with a
Participant.

         "Initial Notes" means the 10.5% Series A Senior Notes due 2008, as
supplemented from time to time in accordance with the terms hereof, issued under
this Indenture that contain the information referred to in footnotes 5 and 6 to
the form of Note attached hereto as Exhibit A.

         "Initial Purchasers" means Jefferies & Company, Inc. and Deutsche Banc
Alex. Brown Inc.

         "Institutional Accredited Investor" means an institution that is an
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act, who is not also a QIB.

         "Interest Payment Date" means the stated due date of an installment of
interest on the Notes.

         "Interest Swap and Hedging Obligation" means any obligation of any
Person pursuant to any interest rate swap agreement, interest rate cap
agreement, interest rate collar agreement, interest rate exchange agreement,
currency exchange agreement or any other agreement or arrangement designed to
protect against fluctuations in interest rates or currency values, including,
without limitation, any arrangement whereby, directly or indirectly, such Person
is entitled to receive from time to time periodic payments calculated by
applying either a fixed or floating rate of interest on a stated notional amount
in exchange for periodic payments made by such Person calculated by applying a
fixed or floating rate of interest on the same notional amount.



                                       13


         "Investment" by any Person in any other Person means (without
duplication):

                  (a) the acquisition (whether by purchase, merger,
         consolidation or otherwise) by such Person (whether for cash, property,
         services, securities or otherwise) of Equity Interests, capital stock,
         bonds, notes, debentures, partnership or other ownership interests or
         other securities, including any options or warrants, of such other
         Person or any agreement to make any such acquisition;

                  (b) the making by such Person of any deposit with, or advance,
         loan or other extension of credit to, such other Person (including the
         purchase of property from another Person subject to an understanding or
         agreement, contingent or otherwise, to resell such property to such
         other Person) or any commitment to make any such advance, loan or
         extension (but excluding accounts receivable, endorsements for
         collection or deposits arising in the ordinary course of business);

                  (c) other than guarantees of Indebtedness of the Company or
         any Guarantor to the extent permitted by Section 4.11, the entering
         into by such Person of any guarantee of, or other credit support or
         contingent obligation with respect to, Indebtedness or other liability
         of such other Person;

                  (d) the making of any capital contribution by such Person to
         such other Person; and

                  (e) the designation by the Board of Directors of the Company
         of any Person to be an Unrestricted Subsidiary.

The Company shall be deemed to make an Investment in an amount equal to the fair
market value of the net assets of any subsidiary (or, if neither the Company nor
any of its Subsidiaries has theretofore made an Investment in such subsidiary,
in an amount equal to the Investments being made), at the time that such
subsidiary is designated an Unrestricted Subsidiary, and any property
transferred to an Unrestricted Subsidiary from the Company or a Subsidiary of
the Company shall be deemed an Investment valued at its fair market value at the
time of such transfer. The Company or any of its Subsidiaries shall be deemed to
have made an Investment in a Person that is or was required to be a Guarantor
if, upon the issuance, sale or other disposition of any portion of the Company's
or the Subsidiary's ownership in the Capital Stock of such Person, such Person
ceases to be a Guarantor. The fair market value of each Investment shall be
measured at the time made or returned, as applicable.

         "Issue Date" means the date of first issuance of the Notes under this
Indenture.

         "Legal Defeasance" shall have the meaning specified in Section 8.2.

         "Legal Holiday" shall have the meaning specified in Section 12.7.

         "Lien" means any mortgage, charge, pledge, lien (statutory or
otherwise), privilege, security interest, hypothecation or other encumbrance
upon or with respect to any property of any kind, real or personal, movable or
immovable, now owned or hereafter acquired.



                                       14


         "Liquidated Damages" means all liquidated damages then owing pursuant
to the Registration Rights Agreement.

         "Maturity Date" means, when used with respect to any Note, the date
specified on such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any acceleration
thereof pursuant to the provisions of this Indenture regarding acceleration of
Indebtedness or any Change of Control Offer or Asset Sale Offer).

         "Moody's" means Moody's Investors Service, Inc. and its successors.

         "Net Cash Proceeds" means the aggregate amount of cash or Cash
Equivalents received by the Company in the case of a sale of Qualified Capital
Stock and by the Company and its Subsidiaries in respect of an Asset Sale plus,
in the case of an issuance of Qualified Capital Stock upon any exercise,
exchange or conversion of securities (including options, warrants, rights and
convertible or exchangeable debt) of the Company that were issued for cash on or
after the Issue Date, the amount of cash originally received by the Company upon
the issuance of such securities (including options, warrants, rights and
convertible or exchangeable debt) less, in each case, the sum of all payments,
fees, commissions and (in the case of Asset Sales, reasonable and customary),
expenses (including, without limitation, the fees and expenses of legal counsel
and investment banking fees and expenses) incurred in connection with such Asset
Sale or sale of Qualified Capital Stock, and, in the case of an Asset Sale only,
less (a) the amount (estimated reasonably and in good faith by the Company) of
income, franchise, sales and other applicable taxes required to be paid by the
Company or any of its respective Subsidiaries in connection with such Asset Sale
in the taxable year that such sale is consummated or in the immediately
succeeding taxable year, the computation of which shall take into account the
reduction in tax liability resulting from any available operating losses and net
operating loss carryovers, tax credits and tax credit carryforwards, and similar
tax attributes, and (b) appropriate amounts to be provided by the Company or any
of its Subsidiaries, as the case may be, as a reserve required in accordance
with GAAP against any liabilities associated with such Asset Sale and retained
by the Company or any such Subsidiary, as the case may be, after such Asset
Sale, including pensions and other post-employment benefit liabilities,
liabilities related to environmental matters and liabilities under any
indemnification obligations associated with such Asset Sale, all as reflected in
an Officers' Certificate delivered to the Trustee; provided, however, that any
amounts remaining after adjustments, revaluations or liquidations of such
reserves shall constitute Net Cash Proceeds.

         "Non-Recourse Indebtedness" means Indebtedness (a) as to which neither
the Company nor any of its Subsidiaries (1) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (2) is directly or indirectly liable (as a guarantor or
otherwise), or (3) constitutes the lender, and (b) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of the
Company or any of its Subsidiaries to declare a default on such other
Indebtedness or cause the payment thereof to be accelerated or payable prior to
its stated maturity.



                                       15


         "Notes" means, collectively (i) the Initial Notes, (ii) the Exchange
Notes, when and if issued as provided in the Registration Rights Agreement, and
(iii) the Additional Notes.

         "Offering" means the offering of the Notes by the Company.

         "Officer" means, with respect to the Company or any Guarantor, the
Chief Executive Officer, the President, any Vice President, the Chief Financial
Officer, the Treasurer, the Controller, or the Secretary of the Company or such
Guarantor.

         "Officers' Certificate" means, with respect to the Company or any
Guarantor, a certificate signed by two Officers or by an Officer and an
Assistant Secretary of the Company or such Guarantor and otherwise complying
with the requirements of Sections 12.4 and 12.5.

         "Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
12.4 and 12.5.

         "Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to The Depository Trust Company,
shall include Euroclear and Clearstream).

         "Paying Agent" shall have the meaning specified in Section 2.3.

         "Permitted Indebtedness" means that:

                  (a) the Company and the Guarantors may incur Indebtedness
         evidenced by the Notes and the Guarantees issued pursuant to this
         Indenture up to the amounts being issued on the original Issue Date
         less any amounts repaid or retired;

                  (b) the Company and the Guarantors, as applicable, may incur
         Refinancing Indebtedness with respect to any Existing Indebtedness or
         any Indebtedness (including Disqualified Capital Stock), described in
         clause (a) of this definition or clause (a) of the third paragraph of,
         or incurred pursuant to the Debt Incurrence Ratio test of, Section
         4.11, or which was refinanced pursuant to this clause (b);

                  (c) the Company and its Subsidiaries may incur Indebtedness
         solely in respect of bankers acceptances, letters of credit and
         performance bonds (to the extent that such incurrence does not result
         in the incurrence of any obligation to repay any obligation relating to
         borrowed money or other Indebtedness), all in the ordinary course of
         business in accordance with customary industry practices, in amounts
         and for the purposes customary in the Company's industry;



                                       16


                  (d) the Company may incur Indebtedness owed to (borrowed from)
         any Subsidiary, and any Subsidiary may incur Indebtedness owed to
         (borrowed from) any other Subsidiary or the Company; provided, that in
         the case of Indebtedness of the Company, such obligations shall be
         unsecured and contractually subordinated in all respects to the
         Company's obligations pursuant to the Notes and any event that causes
         such Subsidiary no longer to be a Subsidiary respectively (including by
         designation to be an Unrestricted Subsidiary) shall be deemed to be a
         new incurrence by such issuer of such Indebtedness and any guarantor
         thereof subject to the provisions of Section 4.11;

                  (e) any Guarantor may guarantee any Indebtedness of the
         Company or another Guarantor that was permitted to be incurred pursuant
         to this Indenture, substantially concurrently with such incurrence or
         at the time such Person becomes a Subsidiary;

                  (f) the Company and the Guarantors may incur Interest Swap and
         Hedging Obligations that are incurred for the purpose of fixing or
         hedging interest rate or currency risk with respect to any fixed or
         floating rate Indebtedness that is permitted by this Indenture to be
         outstanding or any receivable or liability the payment of which is
         determined by reference to a foreign currency; provided, that the
         notional amount of any such Interest Swap and Hedging Obligation does
         not exceed the principal amount of Indebtedness to which such Interest
         Swap and Hedging Obligation relates;

                  (g) Indebtedness arising from the honoring by a bank or other
         financial institution of a check, draft or similar instrument
         inadvertently (except in the case of daylight overdrafts) drawn against
         insufficient funds in the ordinary course of business; provided,
         however, that such Indebtedness if extinguished within five business
         days of incurrence;

                  (h) Indebtedness arising in connection with endorsement of
         instruments for deposit in the ordinary course of business; and

                  (i) Indebtedness arising from the payment of interest on the
         Convertible Note in the form of additional like securities with a
         principal amount equal to the amount of accrued but unpaid interest due
         thereon in accordance with the terms of Section 1 (Interest) of the
         Convertible Note.

         "Permitted Investment" means:

                  (a) any Investment in any of the Notes;

                  (b) any Investment in Cash Equivalents;

                  (c) intercompany notes to the extent permitted under clause
         (d) of the definition of "Permitted Indebtedness";




                                       17






                  (d) any Investment by the Company or any Guarantor in a Person
         in a Related Business if as a result of such Investment such Person
         immediately becomes a Guarantor or such Person is immediately merged
         with or into the Company or a Guarantor;

                  (e) any Investment by the Company or any Subsidiary of the
         Company in the Company or in any Guarantor;

                  (f) any Investment by the Company or any Subsidiary of the
         Company in Permitted Joint Ventures made after the Reference Date
         having an aggregate fair market value, when taken together with all
         other Investments made pursuant to this clause (f) that are at the time
         outstanding, not exceeding the greater of (i) $25,000,000 and (ii) 10%
         of the Consolidated Tangible Assets of the Company as of the last day
         of the most recent full fiscal quarter ended immediately prior to the
         date of such Investment (with the fair market value of each Investment
         being measured at the time made and without giving effect to subsequent
         changes in value);

                  (g) any asset exchange permitted by clause (8) of Section
         4.14;

                  (h) loans and advances to directors, employees and officers of
         the Company and its Subsidiaries for bona fide business purposes not in
         excess of $2,000,000 at any one time outstanding;

                  (i) receivables owing to the Company or any Subsidiary of the
         Company if created or acquired in the ordinary course of business and
         payable or dischargeable in accordance with customary trade terms;
         provided, however, that such trade terms may include such concessionary
         trade terms as the Company or any such Subsidiary deems reasonable
         under the circumstances;

                  (j) lease, utility and other similar deposits in the ordinary
         course of business;

                  (k) Investments in securities of trade creditors or customers
         received pursuant to any plan of reorganization or similar arrangement
         upon the bankruptcy or insolvency of such trade creditors or customers;

                  (l) Interest Swap and Hedging Obligations to the extent
         permitted under clause (f) of the definition of "Permitted
         Indebtedness";

                  (m) advances to radiology practice groups made pursuant to
         service agreements in effect on the Issue Date or pursuant to service
         agreements similar to service agreements in effect on the Issue Date in
         the ordinary course of business consistent with past practice;




                                       18



                  (n) stock, obligations or securities received in settlement of
         debts created in the ordinary course of business and owing to the
         Company or any of its Subsidiaries or in satisfaction of judgments;

                  (o) any Investment made as a result of the receipt of non-cash
         consideration from an Asset Sale that was made pursuant to and in
         compliance with Section 4.14; and

                  (p) any Investment acquired solely in exchange for Qualified
         Capital Stock.

         "Permitted Joint Venture" means any joint venture, partnership or other
Person designated by the Board of Directors of the Company as a Permitted Joint
Venture and (i) at least 20% of whose Voting Equity Interests is at the time
owned (beneficially or directly) by the Company and/or by one or more
Subsidiaries of the Company and if such Permitted Joint Venture is a Subsidiary
of the Company, such Permitted Joint Venture has been designated as an
Unrestricted Subsidiary of the Company in accordance with Section 4.20, and (ii)
is engaged in a Related Business; provided that each of Advanced PET Imaging of
Maryland, L.P., Montgomery Community Magnetic Imaging Center Limited
Partnership, Tower OpenScan MRI, MRI of Kansas, Carroll County, LLC, Franklin
Imaging Joint Venture, Greater Baltimore Diagnostic Imaging Partnership, MRI at
St. Joseph Medical Center, LLC, Health Systems Imaging, LLC, Magnetic Imaging of
Baltimore, Southeast Baptist Imaging Center, Baptist Imaging Center, Northeast
Baptist MRI Center, Lexington MR, Ltd. and North Central Baptist Imaging Center
shall be deemed to be a Permitted Joint Venture as of the Issue Date. Any such
designation (other than with respect to the Persons identified in the preceding
sentence) shall be evidenced to the Trustee by promptly filing with the Trustee
a copy of the resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions.

         "Permitted Lien" means:

                  (a) Liens existing on the Issue Date;

                  (b) Liens imposed by governmental authorities for taxes,
         assessments or other charges not yet subject to penalty or which are
         being contested in good faith and by appropriate proceedings, if
         adequate reserves with respect thereto are maintained on the books of
         the Company in accordance with GAAP;

                  (c) statutory liens of carriers, warehousemen, mechanics,
         material men, landlords, repairmen or other like Liens arising by
         operation of law in the ordinary course of business provided that (1)
         the underlying obligations are not overdue for a period of more than 60
         days, or (2) such Liens are being contested in good faith and by
         appropriate proceedings and adequate reserves with respect thereto are
         maintained on the books of the Company in accordance with GAAP;




                                       19


                  (d) Liens securing the performance of bids, trade contracts
         (other than borrowed money), leases, statutory obligations, surety and
         appeal bonds, performance bonds and other obligations of a like nature
         incurred in the ordinary course of business;

                  (e) easements, rights-of-way, zoning, similar restrictions and
         other similar encumbrances or title defects which, singly or in the
         aggregate, do not in any case materially detract from the value of the
         property, subject thereto (as such property is used by the Company or
         any of its Subsidiaries) or interfere with the ordinary conduct of the
         business of the Company or any of its Subsidiaries;

                  (f) Liens arising by operation of law in connection with
         judgments, only to the extent, for an amount and for a period not
         resulting in an Event of Default with respect thereto;

                  (g) pledges or deposits made in the ordinary course of
         business in connection with workers' compensation, unemployment
         insurance and other types of social security legislation;

                  (h) Liens securing the Notes;

                  (i) Liens securing Indebtedness of a Person existing at the
         time such Person becomes a Subsidiary or is merged with or into the
         Company or a Subsidiary or Liens securing Indebtedness incurred in
         connection with an Acquisition, provided, that such Liens were in
         existence prior to the date of such acquisition, merger or
         consolidation, were not incurred in anticipation thereof, and do not
         extend to any other assets;

                  (j) Liens arising from Purchase Money Indebtedness permitted
         to be incurred pursuant to clause (a) of Section 4.11 provided such
         Liens relate solely to the property which is subject to such Purchase
         Money Indebtedness;

                  (k) leases or subleases granted to other Persons in the
         ordinary course of business not materially interfering with the conduct
         of the business of the Company or any of its Subsidiaries or materially
         detracting from the value of the related assets of the Company or any
         Subsidiary;

                  (l) Liens arising from precautionary Uniform Commercial Code
         financing statement filings regarding operating leases entered into by
         the Company or any of its Subsidiaries in the ordinary course of
         business;

                  (m) Liens securing Refinancing Indebtedness incurred to
         refinance any Indebtedness that was previously so secured, provided
         that the Indebtedness secured is not increased and the Lien is not
         extended to any additional assets or property that would not have been
         security for the Indebtedness refinanced;




                                       20






                  (n) Liens securing Indebtedness incurred under the Credit
         Agreement in accordance with Section 4.11;

                  (o) Liens in favor of the Company or any Guarantor;

                  (p) Liens upon specific items of inventory or other goods and
         proceeds of any Person securing such Person's obligations in respect of
         bankers' acceptances issued or created for the account of such Person
         to facilitate the purchase, shipment or storage of such inventory or
         other goods;

                  (q) Liens to secure Attributable Indebtedness and that are
         permitted to be incurred pursuant to Section 4.18; provided that any
         such Lien shall not extend to or cover any assets of the Company or any
         Subsidiary other than the assets that are the subject of the sale and
         leaseback transaction in which the Attributable Indebtedness is
         incurred; and

                  (r) Liens incurred in the ordinary course of business of the
         Company or any Subsidiary with respect to obligations (other than
         Indebtedness) that do not in the aggregate exceed $7,000,000 at any one
         time outstanding.

         "Person" or "person" means any corporation, individual, limited
liability company, joint stock company, joint venture, partnership,
unincorporated association, governmental regulatory entity, country, state or
political subdivision thereof, trust, municipality or other entity.

         "Preferred Stock" means any Equity Interest of any class or classes of
a Person (however designated) which is preferred as to payments of dividends, or
as to distributions upon any liquidation or dissolution, over Equity Interests
of any other class of such Person.

         "Private Placement Legend" means the legend set forth in Section
2.6(g)(1) to be placed on all Notes issued under this Indenture except where
specifically stated otherwise by the provisions of this Indenture.

         "principal" of any Indebtedness means the principal of such
Indebtedness.

         "property" means any right or interest in or to property or assets of
any kind whatsoever, whether real, personal or mixed and whether tangible,
intangible, contingent, direct or indirect.

         "Pro Forma" or "pro forma" shall have the meaning set forth in
Regulation S-X of the Securities Act, unless otherwise specifically stated
herein.

         "Public Equity Offering" means an underwritten public offering pursuant
to a registration statement filed with the SEC in accordance with the Securities
Act of 1933, as amended, of Qualified Capital Stock of the Company.




                                       21


         "Purchase Money Indebtedness" of any Person means any Indebtedness of
such Person to any seller or other Person incurred solely to finance the
acquisition (including in the case of a Capitalized Lease Obligation, the
lease), construction, installation or improvement of any after acquired real or
personal tangible property which is directly related to a Related Business of
the Company and which is incurred within 180 days of such acquisition,
construction, installation or improvement and is secured only by the assets so
financed.

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

         "Qualified Capital Stock" means any Capital Stock of the Company that
is not Disqualified Capital Stock.

         "Qualified Exchange" means:

                  (1) any legal defeasance, redemption, retirement, repurchase
         or other acquisition of Capital Stock or Indebtedness of the Company
         with the Net Cash Proceeds received by the Company from the
         substantially concurrent sale of its Qualified Capital Stock (other
         than to a Subsidiary); or

                  (2) any issuance of Qualified Capital Stock of the Company
         solely in exchange for any Capital Stock or Indebtedness of the
         Company.

         "Record Date" means a record date specified in the Notes whether or not
such record date is a Business Day, or, if applicable, as specified in Section
2.12.

         "Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to Article III of this
Indenture and Section 5 in the form of Note attached hereto as Exhibit A.

         "Redemption Price," when used with respect to any Note to be redeemed,
means the redemption price for such redemption pursuant to Section 5 in the form
of Note attached hereto as Exhibit A, which shall include, without duplication,
in each case, accrued and unpaid interest and Liquidated Damages, if any, to the
Redemption Date.

         "Reference Period" with regard to any Person means the four full fiscal
quarters ended immediately preceding any date upon which any determination is to
be made pursuant to the terms of the Notes or this Indenture.

         "Refinancing Indebtedness" means Indebtedness (including Disqualified
Capital Stock) (a) issued in exchange for, or the proceeds from the issuance and
sale of which are used substantially concurrently to repay, redeem, defease,
refund, refinance, discharge or otherwise retire for value, in whole or in part,
or (b) constituting an amendment, modification or supplement to, or a deferral
or renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness (including Disqualified Capital Stock) in a principal amount or, in
the case of



                                       22






Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing plus the amount of any premium paid in connection with such
Refinancing in accordance with the terms of the documents governing the
Indebtedness refinanced without giving effect to any modification thereof made
in connection with or in contemplation of such refinancing) the lesser of (1)
the principal amount or, in the case of Disqualified Capital Stock, liquidation
preference, of the Indebtedness (including Disqualified Capital Stock) so
Refinanced and (2) if such Indebtedness being Refinanced was issued with an
original issue discount, the accreted value thereof (as determined in accordance
with GAAP) at the time of such Refinancing; provided, that (A) such Refinancing
Indebtedness shall only be used to refinance outstanding Indebtedness (including
Disqualified Capital Stock) of such Person issuing such Refinancing
Indebtedness, (B) such Refinancing Indebtedness shall (x) not have an Average
Life shorter than the Indebtedness (including Disqualified Capital Stock) to be
so refinanced at the time of such Refinancing and (y) in all respects, be no
less contractually subordinated or junior, if applicable, to the rights of
Holders of the Notes than was the Indebtedness (including Disqualified Capital
Stock) to be refinanced, (C) such Refinancing Indebtedness shall have a final
stated maturity or redemption date, as applicable, no earlier than the final
stated maturity or redemption date, as applicable, of the Indebtedness
(including Disqualified Capital Stock) to be so refinanced or, if sooner, 91
days after the Stated Maturity of the Notes, and (D) such Refinancing
Indebtedness shall be secured (if secured) in a manner no more adverse to the
Holders of the Notes than the terms of the Liens (if any) securing such
refinanced Indebtedness.

         "Reg S Permanent Global Note" means one or more permanent Global Notes
bearing the Private Placement Legend, that will be issued in an aggregate amount
of denominations equal in total to the outstanding principal amount of the Reg S
Temporary Global Note upon expiration of the Distribution Compliance Period.

         "Reg S Temporary Global Note" means one or more temporary Global Notes
bearing the Private Placement Legend and the Reg S Temporary Global Note Legend,
issued in an aggregate amount of denominations equal in total to the outstanding
principal amount of the Notes initially sold in reliance on Rule 903 of
Regulation S.

         "Reg S Temporary Global Note Legend" means the legend set forth in
Section 2.6(g)(3), which is required to be placed on all Reg S Temporary Global
Notes issued under this Indenture.

         "Registrar" shall have the meaning specified in Section 2.3.

         "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Issue Date, by and among the Company and the other
parties named on the signature pages thereof, as such agreement may be amended,
modified or supplemented from time to time.

         "Regulation S" means Regulation S promulgated under the Securities Act,
as it may be amended from time to time, and any successor provision thereto.




                                       23






         "Regulation S Global Note" means a Reg S Temporary Global Note or a Reg
S Permanent Global Note, as the case may be.

         "Related Business" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.

         "Restricted Definitive Note" means one or more Definitive Notes bearing
the Private Placement Legend, issued under this Indenture.

         "Restricted Global Note" means one or more Global Notes bearing the
Private Placement Legend, issued under this Indenture; provided, that in no case
shall an Exchange Note issued in accordance with this Indenture and the terms of
the Registration Rights Agreement be a Restricted Global Note.

         "Restricted Investment" means, in one or a series of related
transactions, any Investment, other than Permitted Investments.

         "Restricted Note" means a Note, unless or until it has been (i)
effectively registered under the Securities Act and disposed of in accordance
with the registration statement covering it or (ii) distributed to the public
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act; provided, that in no case shall an Exchange Note issued in
accordance with this Indenture and the terms and provisions of the Registration
Rights Agreement be a Restricted Note.

         "Restricted Payment" means, with respect to any Person:

                  (a) the declaration or payment of any dividend or other
         distribution in respect of Equity Interests of such Person;

                  (b) any payment (except to the extent with Qualified Capital
         Stock) on account of the purchase, redemption or other acquisition or
         retirement for value of Equity Interests of such Person;

                  (c) other than with the proceeds from the substantially
         concurrent sale of, or in exchange for, Refinancing Indebtedness, any
         purchase, redemption, or other acquisition or retirement for value of,
         any payment in respect of any amendment of the terms of or any
         defeasance of, any Subordinated Indebtedness, directly or indirectly,
         by such Person or a Subsidiary of such Person prior to the scheduled
         maturity, any scheduled repayment of principal, or scheduled sinking
         fund payment, as the case may be, of such Subordinated Indebtedness;
         and

                  (d) any Restricted Investment by such Person;


                                       24




provided, however, that the term "Restricted Payment" does not include (1) any
dividend, distribution or other payment on or with respect to Equity Interests
of an issuer to the extent payable solely in shares of Qualified Capital Stock
of such issuer, or (2) any dividend, distribution or other payment to the
Company, or to any Guarantor, by any Subsidiary of the Company.

         "Rule 144A" means Rule 144A promulgated under the Securities Act, as it
may be amended from time to time, and any successor provision thereto.

         "S&P" means Standard & Poor's, a division of The McGraw-Hill Companies,
and its successors.

         "SEC" means the Securities and Exchange Commission.

         "Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.

         "Securities Custodian" means the Trustee, as custodian with respect to
the Notes in global form, or any successor entity thereto.

         "Securityholder" or "Holder" means the Person in whose name a Note is
registered on the Registrar's books.

         "Shelf Registration Statement" shall have the meaning set forth in the
Registration Rights Agreement.

         "Significant Subsidiary" shall have the meaning provided under
Regulation S-X of the Securities Act, as in effect on the Issue Date.

         "Special Record Date" for payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Section 2.12.

         "Stated Maturity," when used with respect to any Note, means December
15, 2008.

         "Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor that is subordinated in right of payment by its terms or the terms of
any document or instrument relating thereto ("contractually") to the Notes or
such Guarantee, as applicable, in any respect.

         "Subsidiary," with respect to any Person, means (1) a corporation a
majority of whose Equity Interests with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by such Person and one or more Subsidiaries of such Person or by
one or more Subsidiaries of such Person, (2) any other Person (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly,
at the date of determination



                                       25

thereof has a majority ownership interest, and (3) any partnership in which such
Person or a Subsidiary of such Person is, at the time, a general partner.
Notwithstanding the foregoing, an Unrestricted Subsidiary shall not be a
Subsidiary of the Company or of any Subsidiary of the Company. Unless the
context requires otherwise, Subsidiary means each direct and indirect Subsidiary
of the Company.

         "TIA" means the Trust Indenture Act of 1939, as amended, (15 U.S. Code
Sections 77aaa-77bbbb) as in effect on the date of the execution of this
Indenture, except as provided in Section 9.3.

         "Transfer Restricted Notes" means Global Notes and Definitive Notes
that bear or are required to bear the Private Placement Legend, issued under
this Indenture.

         "Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor.

         "Trust Officer" means, when used with respect to the Trustee, any
officer within the corporate trust department of the Trustee, including any vice
president, assistant vice president, assistant secretary, assistant treasurer,
trust officer or any other officer of the Trustee who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject and who shall have direct responsibility for the administration of this
Indenture.

         "Unrestricted Definitive Note" means one or more Definitive Notes that
do not bear and are not required to bear the Private Placement Legend, issued
under this Indenture.

         "Unrestricted Global Note" means one or more permanent Global Notes
representing a series of Notes that does not bear and is not required to bear
the Private Placement Legend, issued under this Indenture.

         "Unrestricted Subsidiary" means (1) Advanced PET Imaging of Maryland,
L.P., Montgomery Community Magnetic Imaging Center Limited Partnership, Tower
OpenScan MRI, MRI of Kansas, Carroll County, LLC, Franklin Imaging Joint
Venture, Greater Baltimore Diagnostic Imaging Partnership, MRI at St. Joseph
Medical Center, LLC, Health Systems Imaging, LLC, Magnetic Imaging of Baltimore,
Southeast Baptist Imaging Center, Baptist Imaging Center, Northeast Baptist MRI
Center, Lexington MR, Ltd., and North Central Baptist Imaging Center, and (2)
any Subsidiary of the Company that is designated as such in accordance with
Section 4.20.

         "U.S. Government Obligations" means direct non-callable obligations of,
or noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.




                                       26



         "Voting Equity Interests" means Equity Interests which at the time are
entitled to vote in the election of, as applicable, directors, members or
partners generally.

         "Wholly Owned Subsidiary" means a Subsidiary all the Equity Interests
of which (other than directors' qualifying Shares) are owned by the Company or
one or more Wholly Owned Subsidiaries of the Company or a combination thereof.

SECTION 1.2. INCORPORATION BY REFERENCE OF TIA

                  Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:

                  "Commission" means the SEC.

                  "indenture securities" means the Notes.

                  "indenture securityholder" means a Holder or a Securityholder.

                  "indenture to be qualified" means this Indenture.

                  "indenture trustee" or "institutional trustee" means the
Trustee.

                  "obligor" on the indenture securities means the Company, each
Guarantor and any other obligor on the Notes.

                  All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the TIA meanings assigned to them thereby.

SECTION 1.3. RULES OF CONSTRUCTION

                  Unless the context otherwise requires:

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

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

                  (3) "or" is not exclusive;

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




                                       27






                  (5) provisions apply to successive events and transactions;

                  (6) "herein," "hereof" and other words of similar import refer
         to this Indenture as a whole and not to any particular Article, Section
         or other subdivision; and

                  (7) references to Sections or Articles means reference to such
         Section or Article in this Indenture, unless stated otherwise.


                                   ARTICLE II

                                 THE SECURITIES

SECTION 2.1. FORM AND DATING

                  (a) General. The Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The Notes
may have notations, legends or endorsements required by law, stock exchange rule
or usage. Each Note shall be dated the date of its authentication. The Notes
shall be in denominations of $1,000 and integral multiples thereof.

                  The terms and provisions contained in the Notes shall
constitute, and are hereby expressly made, a part of this Indenture, and the
Company, the Guarantors and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
However, to the extent any provision of any Note conflicts with the express
provisions of this Indenture, the provisions of this Indenture shall govern and
be controlling.

                  (b) Global Notes. Notes issued in global form shall be
substantially in the form of Exhibit A attached hereto (including the Global
Note Legend thereon and the "Schedule of Exchanges of Interests in the Global
Note" attached thereto). Notes issued in definitive form shall be substantially
in the form of Exhibit A attached hereto (but without the Global Note Legend
thereon and without the "Schedule of Exchanges of Interests in the Global Note"
attached thereto). Each Global Note shall represent such of the outstanding
Notes as shall be specified therein and each shall provide that it shall
represent the aggregate principal amount of outstanding Notes from time to time
endorsed thereon and that the aggregate principal amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the aggregate
principal amount of outstanding Notes represented thereby shall be made by the
Trustee or the Securities Custodian, at the direction of the Trustee, in
accordance with instructions given by the Holder thereof as required by Section
2.6 hereof.




                                       28



                  (c) Euroclear and Clearstream Procedures Applicable. The
provisions of the "Operating Procedures of the Euroclear System" and "Terms and
Conditions Governing Use of Euroclear" and the "General Terms and Conditions of
Clearstream Banking" and "Customer Handbook" of Clearstream in effect at the
relevant time shall be applicable to transfers of beneficial interests in the
Regulation S Global Notes that are held by Participants through Euroclear or
Clearstream.

SECTION 2.2. EXECUTION AND AUTHENTICATION

                  Two Officers shall sign the Notes for the Company by manual or
facsimile signature. In the case of Definitive Notes, such signatures may be
imprinted or otherwise reproduced on such Notes. If an Officer whose signature
is on a Note no longer holds that office at the time a Note is authenticated,
the Note shall nevertheless be valid. A Note shall not be valid until
authenticated by the manual signature of the Trustee. The signature shall be
conclusive evidence that the Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by an Officer (an
"Authentication Order"), authenticate Notes for issuance up to the aggregate
principal amount stated in such Authentication Order; provided, that Notes
authenticated for issuance on the Issue Date shall not exceed $160,000,000 in
aggregate principal amount. The Trustee may appoint an authenticating agent
acceptable to the Company to authenticate Notes. An authenticating agent may
authenticate Notes whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by such
agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company.

SECTION 2.3. REGISTRAR, PAYING AGENT AND DEPOSITARY

                  The Company shall maintain an office or agency in the Borough
of Manhattan, The City of New York, where Notes may be presented for
registration of transfer or for exchange ("Registrar") and an office or agency
where Notes may be presented for payment ("Paying Agent"). The Registrar shall
keep a register of the Notes and of their transfer and exchange. The Company may
appoint one or more co-registrars and one or more additional paying agents. The
term "Registrar" includes any co-registrar and the term "Paying Agent" includes
any additional paying agent. The Company may change any Paying Agent or
Registrar without notice to any Holder. The Company shall notify the Trustee in
writing of the name and address of any Agent not a party to this Indenture. If
the Company fails to appoint or maintain an entity other than the Trustee as
either Registrar or Paying Agent, the Trustee shall act as such. The Company or
any of its Subsidiaries may act as Paying Agent or Registrar. The Company
initially appoints The Depository Trust Company ("DTC") to act as Depositary
with respect to the Global Notes. The Company initially appoints the Trustee to
act as Registrar and Paying Agent and to act as Notes Custodian with respect to
the Global Notes.



                                       29


SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST

                  The Company shall require each Paying Agent other than the
Trustee to agree in writing that the Paying Agent will hold in trust for the
benefit of Holders or the Trustee all money held by the Paying Agent for the
payment of principal, premium or Liquidated Damages, if any, or interest on the
Notes and will notify the Trustee of any default by the Company in making any
such payment. While any such default continues, the Trustee may require a Paying
Agent to pay all money held by it to the Trustee. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee. Upon payment
over to the Trustee, the Paying Agent (if other than the Company or a
Subsidiary) shall have no further liability for the money. If the Company or a
Subsidiary acts as Paying Agent, it shall segregate and hold in a separate trust
fund for the benefit of the Holders all money held by it as Paying Agent. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Notes.

SECTION 2.5. HOLDER LISTS

                  The Trustee shall preserve, in as current a form as is
reasonably practicable, the most recent list available to it of the names and
addresses of all Holders and shall otherwise comply with TIA Section 312(a). If
the Trustee is not the Registrar, the Company shall furnish, or shall cause the
Registrar (if other than the Company) to furnish, to the Trustee at least seven
Business Days before each Interest Payment Date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes, and the Company shall otherwise comply with TIA Section 312(a).

SECTION 2.6. TRANSFER AND EXCHANGE

                  (a) Transfer and Exchange of Global Notes. A Global Note may
not be transferred except as a whole by the Depositary to a nominee of the
Depositary, by a nominee of the Depositary to the Depositary or to another
nominee of the Depositary, or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary. All Global Notes
will be exchanged by the Company for Definitive Notes if (i) the Company
delivers to the Trustee notice from the Depositary that (x) the Depositary is
unwilling or unable to continue to act as Depositary for the Global Notes and
the Company thereupon fails to appoint a successor Depositary within 90 days or
(y) the Depositary is no longer a clearing agency registered under the Exchange
Act, (ii) the Company, in its sole discretion, determines that the Global Notes
(in whole but not in part) should be exchanged for Definitive Notes and delivers
a written notice to such effect to the Trustee or (iii) upon request of the
Trustee or Holders of a majority of the aggregate principal amount of
outstanding Notes if there shall have occurred and be continuing a Default or
Event of Default with respect to the Notes; provided, that in no event shall the
Reg S Temporary Global Note be exchanged by the Company for Definitive Notes
prior to (x) the expiration of the Distribution Compliance Period and (y) the
receipt by the Registrar of any certificate identified by the Company and its
counsel to be required pursuant to Rule 903 or Rule 904 under the Securities
Act. Upon the occurrence of any of the preceding events in (i), (ii) or (iii)
above, Definitive Notes shall be issued in such names



                                       30






as the Depositary shall instruct the Trustee. Global Notes also may be exchanged
or replaced, in whole or in part, as provided in Sections 2.7 and 2.10 hereof.
Every Note authenticated and delivered in exchange for, or in lieu of, a Global
Note or any portion thereof, pursuant to this Section 2.6 or Section 2.7 or 2.10
hereof, shall be authenticated and delivered in the form of, and shall be, a
Global Note. A Global Note may not be exchanged for another Note other than as
provided in this Section 2.6(a), however, beneficial interests in a Global Note
may be transferred and exchanged as provided in Section 2.6(b), (c) or (f)
hereof.

                  (b) Transfer and Exchange of Beneficial Interests in the
Global Notes. The transfer and exchange of beneficial interests in the Global
Notes shall be effected through the Depositary, in accordance with the
provisions of this Indenture and the Applicable Procedures. Beneficial interests
in the Restricted Global Notes shall be subject to restrictions on transfer
comparable to those set forth herein to the extent required by the Securities
Act. Transfers of beneficial interests in the Global Notes also shall require
compliance with either subparagraph (1) or (2) below, as applicable, as well as
one or more of the other following subparagraphs, as applicable:

                  (1) Transfer of Beneficial Interests in the Same Global Note.
         Beneficial interests in any Restricted Global Note may be transferred
         to Persons who take delivery thereof in the form of a beneficial
         interest in the same Restricted Global Note in accordance with the
         transfer restrictions set forth in the Private Placement Legend;
         provided, however, that prior to the expiration of the Distribution
         Compliance Period, transfers of beneficial interests in the Reg S
         Temporary Global Note may not be made to a U.S. person (as such term is
         defined in Regulation S) or for the account or benefit of a U.S. person
         (other than an Initial Purchaser). Beneficial interests in any
         Unrestricted Global Note may be transferred to Persons who take
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note. No written orders or instructions shall be
         required to be delivered to the Registrar to effect the transfers
         described in this Section 2.6(b)(1), but the Company or the Trustee may
         request an opinion of counsel.

                  (2) All Other Transfers and Exchanges of Beneficial Interests
         in Global Notes (including for Definitive Notes). In connection with
         all transfers and exchanges of beneficial interests that are not
         subject to Section 2.6(b)(1) above, the transferor of such beneficial
         interest must deliver to the Registrar either (A) (1) an order from a
         Participant or an Indirect Participant given to the Depositary in
         accordance with the Applicable Procedures directing the Depositary to
         credit or cause to be credited a beneficial interest in another Global
         Note in an amount equal to the beneficial interest to be transferred or
         exchanged and (2) instructions given in accordance with the Applicable
         Procedures containing information regarding the Participant account to
         be credited with such increase or (B) (1) an order from a Participant
         or an Indirect Participant given to the Depositary in accordance with
         the Applicable Procedures directing the Depositary to cause to be
         issued a Definitive Note in an amount equal to the beneficial interest
         to be transferred or exchanged and (2) instructions given by the



                                       31






         Depositary to the Registrar containing information regarding the Person
         in whose name such Definitive Note shall be registered to effect the
         transfer or exchange referred to in (B)(1) above; provided, that in no
         event shall Definitive Notes be issued upon the transfer or exchange of
         beneficial interests in the Reg S Temporary Global Note prior to (x)
         the expiration of the Distribution Compliance Period and (y) the
         receipt by the Registrar of any certificates identified by the Company
         or its counsel to be required pursuant to Rule 903 and Rule 904 under
         the Securities Act. Upon consummation of an Exchange Offer by the
         Company in accordance with Section 2.6(f) hereof, the requirements of
         this Section 2.6(b)(2) shall be deemed to have been satisfied upon
         receipt by the Registrar of the instructions contained in the Letter of
         Transmittal delivered by the Holder of such beneficial interests in the
         Restricted Global Notes. Upon satisfaction of all of the requirements
         for transfer or exchange of beneficial interests in Global Notes
         contained in this Indenture and the Notes or otherwise applicable under
         the Securities Act, the Trustee shall adjust the principal amount of
         the relevant Global Note(s) pursuant to Section 2.6(h) hereof.

                  (3) Transfer of Beneficial Interests to Another Restricted
         Global Note. A beneficial interest in any Restricted Global Note may be
         transferred to a Person who takes delivery thereof in the form of a
         beneficial interest in another Restricted Global Note if the transfer
         complies with the requirements of Section 2.6(b)(2) above and the
         Registrar receives the following:

                                    (A) if the transferee will take delivery in
                  the form of a beneficial interest in the 144A Global Note,
                  then the transferor must deliver a certificate in the form of
                  Exhibit B hereto, including the certifications in item (1)
                  thereof;

                                    (B) if the transferee will take delivery in
                  the form of a beneficial interest in the 501 Global Note, then
                  the transferor must deliver a certificate in the form of
                  Exhibit B hereto, including the certifications in item (3)(d)
                  thereof; or

                                    (C) if the transferee will take delivery in
                  the form of a beneficial interest in the Reg S Temporary
                  Global Note or the Reg S Permanent Global Note, then the
                  transferor must deliver a certificate in the form of Exhibit B
                  hereto, including the certifications in item (2) thereof.

                  (4) Transfer and Exchange of Beneficial Interests in a
         Restricted Global Note for Beneficial Interests in an Unrestricted
         Global Note. A beneficial interest in any Restricted Global Note may be
         exchanged by any holder thereof for a beneficial interest in an
         Unrestricted Global Note or transferred to a Person who takes delivery
         thereof in the form of a beneficial interest in an Unrestricted Global
         Note if the exchange or transfer complies with the requirements of
         Section 2.6(b)(2) above and:



                                       32

                                    (A) such exchange or transfer is effected
                  pursuant to the Exchange Offer in accordance with the
                  Registration Rights Agreement and Section 2.6(f) hereof, and
                  the holder of the beneficial interest to be transferred, in
                  the case of an exchange, or the transferee, in the case of a
                  transfer, certifies in the applicable Letter of Transmittal
                  that it is not (1) a Broker-Dealer, (2) a Person participating
                  in the distribution of the Exchange Notes or (3) a Person who
                  is an affiliate (as defined in Rule 144) of the Company;

                                    (B) such transfer is effected pursuant to
                  the Shelf Registration Statement in accordance with the
                  Registration Rights Agreement and a certificate to the effect
                  set forth in Exhibit B hereto, including the certifications in
                  item (3)(c) thereof, is delivered by the transferor;

                                    (C) such transfer is effected by a
                  Broker-Dealer pursuant to the Exchange Offer Registration
                  Statement in accordance with the Registration Rights Agreement
                  and a certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(c) thereof, is
                  delivered by the transferor; or

                                    (D) the Registrar receives the following:
                  (1) if the holder of such beneficial interest in a Restricted
                  Global Note proposes to exchange such beneficial interest for
                  a beneficial interest in an Unrestricted Global Note, a
                  certificate from such holder in the form of Exhibit C hereto,
                  including the certifications in item (1)(a) thereof; or (2) if
                  the holder of such beneficial interest in a Restricted Global
                  Note proposes to transfer such beneficial interest to a Person
                  who shall take delivery thereof in the form of a beneficial
                  interest in an Unrestricted Global Note, a certificate from
                  such holder in the form of Exhibit B hereto, including the
                  certifications in item (4) thereof; and, in each such case set
                  forth in this subparagraph (D), an Opinion of Counsel in form,
                  and from legal counsel, reasonably acceptable to the Registrar
                  and the Company to the effect that such exchange or transfer
                  is in compliance with the Securities Act and that the
                  restrictions on transfer contained herein and in the Private
                  Placement Legend are no longer required in order to maintain
                  compliance with the Securities Act.

                  If any such transfer is effected pursuant to subparagraph (B)
or (D) above at a time when an Unrestricted Global Note has not yet been issued,
the Company shall issue and,



                                       33






upon receipt of an Authentication Order in accordance with Section 2.2 hereof,
the Trustee shall authenticate one or more Unrestricted Global Notes in an
aggregate principal amount equal to the aggregate principal amount of beneficial
interests transferred pursuant to subparagraph (B) or (D) above. Beneficial
interests in an Unrestricted Global Note cannot be exchanged for, or transferred
to Persons who take delivery thereof in the form of, a beneficial interest in a
Restricted Global Note.

                  (c) Transfer and Exchange of Beneficial Interests for
Definitive Notes. Transfer and exchange of beneficial interests in the Global
Notes for Definitive Notes shall be made subject to compliance with this Section
2.6(c), and the requesting Holder shall provide any certifications, documents
and information, as applicable, required pursuant to the following provisions of
this Section 2.6(c). Upon receipt of such applicable documentation, the Trustee
shall cause the aggregate principal amount of the applicable Restricted Global
Note or Unrestricted Global Note, as applicable, to be reduced accordingly
pursuant to Section 2.6 (h) hereof, and the Company shall execute and, upon
receipt of an Authentication Order pursuant to Section 2.2, the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Restricted Definitive Note or an Unrestricted Definitive Note, as applicable, in
the appropriate principal amount. Any Definitive Note issued in exchange for a
beneficial interest in a Global Note pursuant to this Section 2.6(c) shall be
registered in such name or names and in such authorized denomination or
denominations as the Holder of such beneficial interest shall instruct the
Registrar through instructions from the Depositary and the Participant or
Indirect Participant. The Trustee shall deliver such Definitive Notes to the
Persons in whose names such Definitive Notes are so registered.

                  (1) Beneficial Interests in Restricted Global Notes to
         Restricted Definitive Notes. If any holder of a beneficial interest in
         a Restricted Global Note proposes to exchange such beneficial interest
         for a Restricted Definitive Note or to transfer such beneficial
         interest to a Person who takes delivery thereof in the form of a
         Restricted Definitive Note, then, upon receipt by the Registrar of the
         following documentation:

                                    (A) if the holder of such beneficial
                  interest in a Restricted Global Note proposes to exchange such
                  beneficial interest for a Restricted Definitive Note, a
                  certificate from such holder in the form of Exhibit C hereto,
                  including the certifications in item (2)(a) thereof;

                                    (B) if such beneficial interest is being
                  transferred to a QIB in accordance with Rule 144A under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (1)
                  thereof;

                                    (C) if such beneficial interest is being
                  transferred to a Non-U.S. Person (as such term is defined in
                  Regulation S) in an offshore transaction in accordance with
                  Rule 903 or Rule



                                       34






                  904 under the Securities Act, a certificate to the effect set
                  forth in Exhibit B hereto, including the certifications in
                  item (2) thereof;

                                    (D) if such beneficial interest is being
                  transferred to an Institutional Accredited Investor in
                  reliance on an exemption from the registration requirements of
                  the Securities Act other than those listed in subparagraphs
                  (B) and (C) above, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications, certificates
                  and Opinion of Counsel required by item (3)(d) thereof, if
                  applicable; or

                                    (E) if such beneficial interest is being
                  transferred to the Company or any of its Subsidiaries, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(b) thereof.

Any Restricted Definitive Note issued in exchange for a beneficial interest in a
Restricted Global Note pursuant to this Section 2.6(c)(1) shall bear the Private
Placement Legend and shall be subject to all restrictions on transfer contained
therein.

                  (2) Beneficial Interests in Restricted Global Notes to
         Unrestricted Definitive Notes. A holder of a beneficial interest in a
         Restricted Global Note may exchange such beneficial interest for an
         Unrestricted Definitive Note or may transfer such beneficial interest
         to a Person who takes delivery thereof in the form of an Unrestricted
         Definitive Note only if:

                                    (A) such exchange or transfer is effected
                  pursuant to the Exchange Offer in accordance with the
                  Registration Rights Agreement and Section 2.6(f) hereof, and
                  the holder of such beneficial interest, in the case of an
                  exchange, or the transferee, in the case of a transfer,
                  certifies in the applicable Letter of Transmittal that it is
                  not (1) a Broker-Dealer, (2) a Person participating in the
                  distribution of the Exchange Notes or (3) a Person who is an
                  affiliate (as defined in Rule 144) of the Company;

                                    (B) such transfer is effected pursuant to
                  the Shelf Registration Statement in accordance with the
                  Registration Rights Agreement and a certificate to the effect
                  set forth in Exhibit B hereto, including the certifications in
                  item (3)(c) thereof, is delivered by the transferor;




                                       35






                                    (C) such transfer is effected by a
                  Broker-Dealer pursuant to the Exchange Offer Registration
                  Statement in accordance with the Registration Rights Agreement
                  and a certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(c) thereof, is
                  delivered by the transferor; or

                                    (D) the Registrar receives the following:
                  (1) if the holder of such beneficial interest in a Restricted
                  Global Note proposes to exchange such beneficial interest for
                  an Unrestricted Definitive Note, a certificate from such
                  holder in the form of Exhibit C hereto, including the
                  certifications in item (1)(b) thereof; or (2) if the holder of
                  such beneficial interest in a Restricted Global Note proposes
                  to transfer such beneficial interest to a Person who shall
                  take delivery thereof in the form of an Unrestricted
                  Definitive Note, a certificate from such holder in the form of
                  Exhibit B hereto, including the certifications in item (4)
                  thereof; and, in each such case set forth in this subparagraph
                  (D), an Opinion of Counsel in form, and from legal counsel,
                  reasonably acceptable to the Registrar and the Company to the
                  effect that such exchange or transfer is in compliance with
                  the Securities Act and that the restrictions on transfer
                  contained herein and in the Private Placement Legend are no
                  longer required in order to maintain compliance with the
                  Securities Act.

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or
transferred to Persons who take delivery thereof in the form of, a Restricted
Definitive Note.

                  (3) Beneficial Interests in Unrestricted Global Notes to
         Unrestricted Definitive Notes. If any holder of a beneficial interest
         in an Unrestricted Global Note proposes to exchange such beneficial
         interest for an Unrestricted Definitive Note or to transfer such
         beneficial interest to a Person who takes delivery thereof in the form
         of an Unrestricted Definitive Note, then such holder shall satisfy the
         applicable conditions set forth in Section 2.6(b)(2) hereof. Any
         Unrestricted Definitive Note issued in exchange for a beneficial
         interest pursuant to this Section 2.6(c)(3) shall not bear the Private
         Placement Legend.

                  (4) Transfer or Exchange of Reg S Temporary Global Notes.
         Notwithstanding the other provisions of this Section 2.6, a beneficial
         interest in the Reg S Temporary Global Note may not be (A) exchanged
         for a Definitive Note prior to (x) the expiration of the Distribution
         Compliance Period (unless such exchange is approved by the Company,
         does not require an investment decision on the part of the Holder
         thereof and does not violate the provisions of Regulation S) and (y)
         the receipt by the Registrar of any certificates identified by the
         Company or its counsel to be required



                                       36






         pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act or (B)
         transferred to a Person who takes delivery thereof in the form of a
         Definitive Note prior to the events set forth in clause (A) above or
         unless the transfer is pursuant to an exemption from the registration
         requirements of the Securities Act other than Rule 903 or Rule 904.

                  (d) Transfer and Exchange of Definitive Notes for Beneficial
Interests. Transfer and exchange of Definitive Notes for beneficial interests in
the Global Notes shall be made subject to compliance with this Section 2.6(d),
and the requesting Holder shall provide any certifications, documents and
information, as applicable, required pursuant to the following provisions of
this Section 2.6(d). Upon receipt from such Holder of such applicable
documentation and the surrender to the Registrar of the Definitive Notes duly
endorsed or accompanied by a written instruction of transfer in form
satisfactory to the Registrar, duly executed by such Holder or by its attorney,
duly authorized in writing, the Registrar shall register the transfer or
exchange of the Definitive Notes. The Trustee shall cancel such Definitive Notes
so surrendered and cause the aggregate principal amount of the applicable
Restricted Global Note or Unrestricted Global Note, as applicable, to be
increased accordingly pursuant to Section 2.6(h) hereof.

                  (1) Restricted Definitive Notes to Beneficial Interests in
         Restricted Global Notes. If any Holder of a Restricted Definitive Note
         proposes to exchange such Note for a beneficial interest in a
         Restricted Global Note or to transfer such Restricted Definitive Notes
         to a Person who takes delivery thereof in the form of a beneficial
         interest in a Restricted Global Note, then, upon receipt by the
         Registrar of the following documentation:

                                    (A) if the Holder of such Restricted
                  Definitive Note proposes to exchange such Note for a
                  beneficial interest in a Restricted Global Note, a certificate
                  from such Holder in the form of Exhibit C hereto, including
                  the certifications in item (2)(b) thereof;

                                    (B) if such Restricted Definitive Note is
                  being transferred to a QIB in accordance with Rule 144A under
                  the Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (1)
                  thereof;

                                    (C) if such Restricted Definitive Note is
                  being transferred to a Non-U.S. Person in an offshore
                  transaction in accordance with Rule 903 or Rule 904 under the
                  Securities Act, a certificate to the effect set forth in
                  Exhibit B hereto, including the certifications in item (2)
                  thereof; or

                                    (D) if such Restricted Definitive Note is
                  being transferred to an Institutional Accredited Investor in
                  accordance



                                       37






                  with Regulation D under the Securities Act, a certificate to
                  the effect set forth in Exhibit B hereto, including the
                  certifications in item (3)(d) thereof;

the Trustee shall cancel the Restricted Definitive Note and increase or cause to
be increased the aggregate principal amount of, in the case of clause (A) above,
the appropriate Restricted Global Note, in the case of clause (B) above, the
144A Global Note, in the case of clause (C) above, the Regulation S Global Note
and in the case of clause (D) above, the 501 Global Note.

                  (2) Restricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of a Restricted Definitive Note may
         exchange such Note for a beneficial interest in an Unrestricted Global
         Note or transfer such Restricted Definitive Note to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note only if:

                                    (A) such exchange or transfer is effected
                  pursuant to the Exchange Offer in accordance with the
                  Registration Rights Agreement and Section 2.6(f) hereof, and
                  the Holder, in the case of an exchange, or the transferee, in
                  the case of a transfer, certifies in the applicable Letter of
                  Transmittal that it is not (1) a Broker-Dealer, (2) a Person
                  participating in the distribution of the Exchange Notes or (3)
                  a Person who is an affiliate (as defined in Rule 144) of the
                  Company;

                                    (B) such transfer is effected pursuant to
                  the Shelf Registration Statement in accordance with the
                  Registration Rights Agreement and a certificate to the effect
                  set forth in Exhibit B hereto, including the certifications in
                  item (3)(c) thereof, is delivered by the transferor;

                                    (C) such transfer is effected by a
                  Broker-Dealer pursuant to the Exchange Offer Registration
                  Statement in accordance with the Registration Rights Agreement
                  and a certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(c) thereof, is
                  delivered by the transferor; or

                                    (D) the Registrar receives the following:
                  (1) if the Holder of such Restricted Definitive Notes proposes
                  to exchange such Notes for a beneficial interest in the
                  Unrestricted Global Note, a certificate from such Holder in
                  the form of Exhibit C hereto, including the certifications in
                  item (1)(c) thereof; or (2) if the Holder of such Restricted
                  Definitive Notes proposes to transfer such Notes to a Person
                  who shall take delivery thereof



                                       38


                  in the form of a beneficial interest in the Unrestricted
                  Global Note, a certificate from such Holder in the form of
                  Exhibit B hereto, including the certifications in item (4)
                  thereof; and, in each such case set forth in this subparagraph
                  (D), an Opinion of Counsel in form, and from legal counsel,
                  reasonably acceptable to the Registrar and the Company to the
                  effect that such exchange or transfer is in compliance with
                  the Securities Act and that the restrictions on transfer
                  contained herein and in the Private Placement Legend are no
                  longer required in order to maintain compliance with the
                  Securities Act.

                  (3) Unrestricted Definitive Notes to Beneficial Interests in
         Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note
         may exchange such Note for a beneficial interest in an Unrestricted
         Global Note or transfer such Definitive Notes to a Person who takes
         delivery thereof in the form of a beneficial interest in an
         Unrestricted Global Note at any time.

If any such exchange or transfer from a Definitive Note to a beneficial interest
is effected pursuant to subparagraphs (2)(B), (2)(D) or (3) of this Section
2.6(d) at a time when an Unrestricted Global Note has not yet been issued, the
Company shall issue and, upon receipt of an Authentication Order in accordance
with Section 2.2 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
Definitive Notes so transferred.

                  (e) Transfer and Exchange of Definitive Notes for Definitive
Notes. Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.6(e), the Registrar shall register the
transfer or exchange of Definitive Notes. Prior to such registration of transfer
or exchange, the requesting Holder shall present or surrender to the Registrar
the Definitive Notes duly endorsed or accompanied by a written instruction of
transfer in form satisfactory to the Registrar duly executed by such Holder or
by its attorney, duly authorized in writing. The Trustee shall cancel any such
Definitive Notes so surrendered, and the Company shall execute and, upon receipt
of an Authentication Order pursuant to Section 2.2, the Trustee shall
authenticate and deliver to the Person designated in the instructions a
Restricted Definitive Note or an Unrestricted Definitive Note, as applicable, in
the appropriate principal amount. Any Definitive Note issued pursuant to this
Section 2.6(c) shall be registered in such name or names and in such authorized
denomination or denominations as the Holder of such beneficial interest shall
instruct the Registrar through instructions from the Depositary and the
Participant or Indirect Participant. The Trustee shall deliver such Definitive
Notes to the Persons in whose names such Definitive Notes are so registered. In
addition, the requesting Holder shall provide any additional certifications,
documents and information, as applicable, required pursuant to the following
provisions of this Section 2.6(e).




                                       39






                  (1) Restricted Definitive Notes to Restricted Definitive
         Notes. Any Restricted Definitive Note may be transferred to and
         registered in the name of Persons who take delivery thereof in the form
         of a Restricted Definitive Note if the Registrar receives the
         following:

                                    (A) if the transfer will be made to a QIB
                  pursuant to Rule 144A under the Securities Act, then the
                  transferor must deliver a certificate in the form of Exhibit B
                  hereto, including the certifications in item (1) thereof;

                                    (B) if the transfer will be made pursuant to
                  Rule 903 or Rule 904, then the transferor must deliver a
                  certificate in the form of Exhibit B hereto, including the
                  certifications in item (2) thereof;

                                    (C) if such beneficial interest is being
                  transferred to an Institutional Accredited Investor in
                  reliance on an exemption from the registration requirements of
                  the Securities Act other than those listed in subparagraphs
                  (A) and (B) above, then the transferor must deliver a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications, certificates and Opinion of
                  Counsel required by item (3)(d) thereof, if applicable; or

                                    (D) if such beneficial interest is being
                  transferred to the Company or any of its Subsidiaries, a
                  certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(b) thereof, must be
                  delivered by the transferor.

                  (2) Restricted Definitive Notes to Unrestricted Definitive
         Notes. Any Restricted Definitive Note may be exchanged by the Holder
         thereof for an Unrestricted Definitive Note or transferred to a Person
         or Persons who take delivery thereof in the form of an Unrestricted
         Definitive Note if:

                                    (A) such exchange or transfer is effected
                  pursuant to the Exchange Offer in accordance with the
                  Registration Rights Agreement and Section 2.6(f) hereof, and
                  the Holder, in the case of an exchange, or the transferee, in
                  the case of a transfer, certifies in the applicable Letter of
                  Transmittal that it is not (1) a Broker-Dealer, (2) a Person
                  participating in the distribution of the Exchange Notes or (3)
                  a Person who is an affiliate (as defined in Rule 144) of the
                  Company;




                                       40






                                    (B) any such transfer is effected pursuant
                  to the Shelf Registration Statement in accordance with the
                  Registration Rights Agreement and a certificate to the effect
                  set forth in Exhibit B hereto, including the certifications in
                  item (3)(c) thereof, is delivered by the transferor;

                                    (C) any such transfer is effected by a
                  Broker-Dealer pursuant to the Exchange Offer Registration
                  Statement in accordance with the Registration Rights Agreement
                  and a certificate to the effect set forth in Exhibit B hereto,
                  including the certifications in item (3)(c) thereof, is
                  delivered by the transferor; or

                                    (D) the Registrar receives the following:
                  (1) if the Holder of such Restricted Definitive Notes proposes
                  to exchange such Notes for an Unrestricted Definitive Note, a
                  certificate from such Holder in the form of Exhibit C hereto,
                  including the certifications in item (1)(d) thereof; or (2) if
                  the Holder of such Restricted Definitive Notes proposes to
                  transfer such Notes to a Person who shall take delivery
                  thereof in the form of an Unrestricted Definitive Note, a
                  certificate from such Holder in the form of Exhibit B hereto,
                  including the certifications in item (4) thereof; and, in each
                  such case set forth in this subparagraph (D), an Opinion of
                  Counsel in form, and from legal counsel, reasonably acceptable
                  to the Registrar and the Company to the effect that such
                  exchange or transfer is in compliance with the Securities Act
                  and that the restrictions on transfer contained herein and in
                  the Private Placement Legend are no longer required in order
                  to maintain compliance with the Securities Act.

                  (3) Unrestricted Definitive Notes to Unrestricted Definitive
         Notes. A Holder of Unrestricted Definitive Notes may transfer such
         Notes to a Person who takes delivery thereof in the form of an
         Unrestricted Definitive Note. Upon receipt of a request to register
         such a transfer, the Registrar shall register the Unrestricted
         Definitive Notes pursuant to the instructions from the Holder thereof.

                  (f) Exchange Offer. Upon the occurrence of the Exchange Offer
in accordance with the Registration Rights Agreement, the Company shall issue
and, upon receipt of an Authentication Order in accordance with Section 2.2 and
an Opinion of Counsel for the Company as to certain matters discussed in this
Section 2.6(f), the Trustee shall authenticate (i) one or more Unrestricted
Global Notes in an aggregate principal amount equal to the sum of (A) the
principal amount of the beneficial interests in the Restricted Global Notes
exchanged or transferred for beneficial interests in Unrestricted Global Notes
in connection with the Exchange Offer pursuant to Section 2.6(b)(4) and (B) the
principal amount of Restricted Definitive Notes



                                       41






exchanged or transferred for beneficial interests in Unrestricted Global Notes
in connection with the Exchange Offer pursuant to Section 2.6(d)(2), in each
case tendered for acceptance by Persons that certify in the applicable Letters
of Transmittal that (x) they are not Broker-Dealers, (y) they are not
participating in a distribution of the Exchange Notes and (z) they are not
affiliates (as defined in Rule 144) of the Company, and accepted for exchange in
the Exchange Offer, and (ii) Unrestricted Definitive Notes in an aggregate
principal amount equal to the sum of (A) the principal amount of the Restricted
Definitive Notes exchanged or transferred for Unrestricted Definitive Notes in
connection with the Exchange Offer pursuant to Section 2.6(e)(2) and (B)
Restricted Global Notes exchanged or transferred for Unrestricted Definitive
Notes in connection with the Exchange Offer pursuant to Section 2.6(c)(2), in
each case tendered for acceptance by Persons that certify in the applicable
Letters of Transmittal that (x) they are not Broker-Dealers, (y) they are not
participating in a distribution of the Exchange Notes and (z) they are not
affiliates (as defined in Rule 144) of the Company, and accepted for exchange in
the Exchange Offer. Concurrently with the issuance of such Notes, the Trustee
shall cancel any Definitive Notes so surrendered and shall cause the aggregate
principal amount of the applicable Restricted Global Notes to be reduced
accordingly, and the Company shall execute and, upon receipt of an
Authentication Order pursuant to Section 2.2, the Trustee shall authenticate and
deliver to the Persons designated by the Holders of Definitive Notes so accepted
Definitive Notes in the appropriate principal amount.

                  The Opinion of Counsel for the Company referenced above shall
state that:

                                    (A) the issuance and sale of the Exchange
                  Notes by the Company have been duly authorized and, when
                  executed by the Company and authenticated by the Trustee in
                  accordance with the provisions of this Indenture and delivered
                  in exchange for Series A Notes in accordance with this
                  Indenture and the Exchange Offer, the Exchange Notes will be
                  entitled to the benefits of this Indenture and will be valid
                  and binding obligations of the Company, enforceable against
                  the Company in accordance with their terms, except as the
                  enforceability thereof may be limited by (x) bankruptcy,
                  fraudulent transfer, insolvency, reorganization, moratorium or
                  similar laws now or hereafter in effect relating to or
                  affecting creditors' rights generally and (y) principles of
                  equity (regardless of whether enforceability is considered in
                  equity or at law); and

                                    (B) when the Exchange Notes are issued and
                  executed by the Company and authenticated by the Trustee in
                  accordance with the provisions of this Indenture and delivered
                  in exchange for Series A Notes in accordance with this
                  Indenture and the Exchange Offer, the Guarantees by the
                  Guarantors endorsed thereon will be entitled to the benefits
                  of this Indenture and will be the valid and binding
                  obligations of the Guarantors,



                                       42






                  enforceable against the Guarantors in accordance with their
                  terms, except as the enforceability thereof may be limited by
                  (x) bankruptcy, fraudulent transfer, insolvency,
                  reorganization, moratorium or similar laws now or hereafter in
                  effect relating to or affecting creditors' rights generally
                  and (y) principles of equity (regardless of whether
                  enforceability is considered in equity or at law).

                  (g) Legends. The following legends shall appear on the face of
all Global Notes and Definitive Notes issued under this Indenture unless
specifically stated otherwise in the applicable provisions of this Indenture.

                  (1) Private Placement Legend.

                                    (A) Except as permitted by subparagraph (B)
                  below, each Global Note and each Definitive Note (and all
                  Notes issued in exchange therefor or substitution thereof)
                  shall bear the legend in substantially the following form:

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
         NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
         REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
         OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
         SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE
         HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
         OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE DATE WHICH IS TWO
         YEARS (OR SUCH OTHER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE
         144(k) UNDER THE SECURITIES ACT AS PERMITTING RESALES OF RESTRICTED
         SECURITIES BY NON-AFFILIATES WITHOUT RESTRICTION) AFTER THE LATER OF
         THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR
         ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY
         PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION
         DATE") ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT
         WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO
         LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A
         UNDER THE SECURITIES ACT, IN THE UNITED STATES TO A PERSON IT
         REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
         RULE 144A UNDER THE SECURITIES ACT) THAT PURCHASES FOR ITS OWN ACCOUNT
         OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
         GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE



                                       43



         144A UNDER THE SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN
         OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES
         ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING
         OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF RULE 501 UNDER THE
         SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR
         FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
         INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
         CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR
         (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
         REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE
         TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE
         THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
         INFORMATION SATISFACTORY TO EACH OF THEM AND IN EACH OF THE FOREGOING
         CASES A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY
         IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND IN EACH
         CASE IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF ANY U.S. STATE OR
         ANY OTHER APPLICABLE JURISDICTION. THE HOLDER OF THIS SECURITY AGREES
         THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS
         TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS
         LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
         RESTRICTION TERMINATION DATE.

                                    (B) Notwithstanding the foregoing, any
                  Global Note or Definitive Note issued pursuant to
                  subparagraphs (b)(4), (c)(2), (c)(3), (d)(2), (d)(3), (e)(2),
                  (e)(3) or (f) to this Section 2.6 (and all Notes issued in
                  exchange therefor or substitution thereof) shall not bear the
                  Private Placement Legend.

                           (2) Global Note Legend. To the extent required by the
         Depositary, each Global Note shall bear legends in substantially the
         following forms:

         "THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
         INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
         BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
         PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
         SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.6 OF THE
         INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN
         PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS GLOBAL
         NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
         SECTION 2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE



                                       44






         TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN
         CONSENT OF THE COMPANY."

         "UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
         DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY
         THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE
         DEPOSITARY TO THE DEPOSITARY OR TO ANOTHER NOMINEE OF THE DEPOSITARY OR
         BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A
         NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS
         PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
         COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY
         OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
         CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH
         OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC
         (AND ANY PAYMENT IS MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE
         REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
         OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
         WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
         INTEREST HEREIN."

                           (3) Reg S Temporary Global Note Legend. To the extent
         required by the Depositary, each Reg S Temporary Global Note shall bear
         a legend in substantially the following form:

         "THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
         THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE
         NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER
         THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY
         GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE CASH PAYMENTS OF INTEREST
         DURING THE PERIOD WHICH SUCH HOLDER HOLDS THIS NOTE. NOTHING IN THIS
         LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM ACCRUING ON THIS NOTE."

                  (h) Cancellation and/or Adjustment of Global Notes. At such
time as all beneficial interests in a particular Global Note have been exchanged
for Definitive Notes or a particular Global Note has been redeemed, repurchased
or cancelled in whole and not in part, each such Global Note shall be returned
to or retained and cancelled by the Trustee in accordance with Section 2.11
hereof. At any time prior to such cancellation, if any beneficial interest in a
Global Note is exchanged for or transferred to a Person who will take delivery
thereof in the form of a beneficial interest in another Global Note or for
Definitive Notes, the principal amount of Notes represented by such Global Note
shall be reduced accordingly and



                                       45






an endorsement may be made on such Global Note by the Trustee or by the
Depositary at the direction of the Trustee to reflect such reduction; and if the
beneficial interest is being exchanged for or transferred to a Person who will
take delivery thereof in the form of a beneficial interest in another Global
Note, such other Global Note shall be increased accordingly and an endorsement
may be made on such Global Note by the Trustee or by the Depositary at the
direction of the Trustee to reflect such increase.

                  (i) General Provisions Relating to Transfers and Exchanges.

                  (1) To permit registrations of transfers and exchanges, the
         Company shall execute and the Trustee shall authenticate Global Notes
         and Definitive Notes upon receipt of an Authentication Order.

                  (2) No service charge shall be made to a holder of a
         beneficial interest in a Global Note or to a Holder of a Definitive
         Note for any registration of transfer or exchange, but the Company may
         require payment of a sum sufficient to cover any transfer tax or
         similar governmental charge payable in connection therewith (other than
         any such transfer taxes or similar governmental charge payable upon
         exchange or transfer pursuant to Sections 2.10, 3.7, 4.14 and 10.1
         hereof).

                  (3) The Registrar shall not be required to register the
         transfer of or exchange any Note selected for redemption in whole or in
         part, except the unredeemed portion of any Note being redeemed in part.

                  (4) All Global Notes and Definitive Notes issued upon any
         registration of transfer or exchange of Global Notes or Definitive
         Notes shall be the valid obligations of the Company, evidencing the
         same Indebtedness, and entitled to the same benefits under this
         Indenture, as the Global Notes or Definitive Notes surrendered upon
         such registration of transfer or exchange.

                  (5) The Company shall not be required (A) to issue, to
         register the transfer of or to exchange any Notes during a period
         beginning at the opening of business 15 days before the day of any
         selection of Notes for redemption under Section 3.3 hereof and ending
         at the close of business on the day of selection, (B) to register the
         transfer of or to exchange any Note so selected for redemption in whole
         or in part, except the unredeemed portion of any Note being redeemed in
         part or (C) to register the transfer of or to exchange a Note between a
         Record Date and the next succeeding Interest Payment Date.

                  (6) Prior to due presentment for the registration of a
         transfer of any Note, the Trustee, any Agent and the Company may deem
         and treat the Person in whose name any Note is registered as the
         absolute owner of such Note for the purpose of receiving payment of
         principal of and interest on such Notes and for all other purposes, and
         none of the Trustee, any Agent or the Company shall be affected by
         notice to the contrary.



                                       46






                  (7) The Trustee shall authenticate Global Notes and Definitive
         Notes in accordance with the provisions of Section 2.2 hereof.

                  (8) All certifications, certificates and Opinions of Counsel
         required to be submitted to the Registrar pursuant to this Section 2.6
         to effect a registration of transfer or exchange may be submitted by
         facsimile.

                  Notwithstanding anything herein to the contrary, as to any
certifications and certificates delivered to the Registrar pursuant to this
Section 2.6, the Registrar's duties shall be limited to confirming that any such
certifications and certificates delivered to it are in the form of Exhibits B, C
and D attached hereto. The Registrar shall not be responsible for confirming the
truth or accuracy of representations made in any such certifications or
certificates.

SECTION 2.7. REPLACEMENT NOTES

                  If any mutilated Note is surrendered to the Trustee or the
Company and the Trustee and the Company receive evidence (which evidence may be
from the Trustee) to their satisfaction of the destruction, loss or theft of any
Note, the Company shall issue and the Trustee, upon receipt of an Authentication
Order, shall authenticate a replacement Note if the Trustee's reasonable
requirements are met. If required by the Trustee or the Company, an indemnity
bond must be supplied by the Holder that is sufficient in the judgment of the
Trustee and the Company to protect the Company, the Trustee, any Agent and any
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company may charge for its expenses in replacing a Note. Every
replacement Note is an additional obligation of the Company and shall be
entitled to all of the benefits of this Indenture equally and proportionately
with all other Notes duly issued hereunder.

SECTION 2.8. OUTSTANDING NOTES

                  The Notes outstanding at any time are all the Notes
authenticated by the Trustee (including any Note represented by a Global Note)
except for those cancelled by it or at its direction, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.9 hereof, a Note
does not cease to be outstanding because the Company or an Affiliate of the
Company holds the Note. If a Note is replaced pursuant to Section 2.7 hereof,
such Note, together with the Guarantee of that particular Note endorsed thereon,
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser. If the principal amount
of any Note is considered paid under Section 4.1 hereof, it ceases to be
outstanding and interest on it ceases to accrue. If the Paying Agent (other than
the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption
date or the maturity date, money sufficient to pay Notes payable on that date,
then on and after that date such Notes shall be deemed to be no longer
outstanding and shall cease to accrue interest.



                                       47







SECTION 2.9. TREASURY NOTES

                  In determining whether the Holders of the required principal
amount of Notes have concurred in any direction, waiver or consent, Notes owned
by the Company, or by any Affiliate of the Company, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Trust Officer of the Trustee actually knows are so owned shall
be so disregarded.

SECTION 2.10. TEMPORARY NOTES

                  Until certificates representing Notes are ready for delivery,
the Company may prepare, and the Trustee, upon receipt of an Authentication
Order, shall authenticate, temporary Notes. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, the Company shall
prepare, and the Trustee shall authenticate, Definitive Notes in exchange for
temporary Notes. Holders of temporary Notes shall be entitled to all of the
benefits of this Indenture.

SECTION 2.11. CANCELLATION

                  The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment. The
Trustee, or, at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else, shall
cancel all Notes surrendered for registration of transfer, exchange, payment,
replacement or cancellation and shall dispose of cancelled Notes in accordance
with its procedures for the disposition of cancelled securities in effect as of
the date of such disposition (subject to the record retention requirement of the
Exchange Act). Certification of the disposition of all cancelled Notes shall be
delivered to the Company, unless the Company directs the Trustee to deliver
cancelled Notes to the Company. The Company may not issue new Notes to replace
Notes that it has paid or that have been delivered to the Trustee for
cancellation.

SECTION 2.12. DEFAULTED INTEREST

                  Any interest on any Note which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date, plus, to the
extent lawful, any interest payable on the defaulted interest at the rate and in
the manner provided in Section 4.1 hereof and in the Note (herein called
"Defaulted Interest"), shall forthwith cease to be payable to the registered
Holder on the relevant Record Date, and such Defaulted Interest may be paid by
the Company, at its election in each case, as provided in clause (1) or (2)
below:




                                       48






                  (1) The Company may elect to make payment of any Defaulted
         Interest to the Persons in whose names the Notes are registered at the
         close of business on a Special Record Date for the payment of such
         Defaulted Interest, which shall be fixed in the following manner. The
         Company shall notify the Trustee and the Paying Agent in writing of the
         amount of Defaulted Interest proposed to be paid on each Note and the
         date of the proposed payment, and at the same time the Company shall
         deposit with the Paying Agent an amount of cash equal to the aggregate
         amount proposed to be paid in respect of such Defaulted Interest or
         shall make arrangements reasonably satisfactory to the Paying Agent for
         such deposit prior to the date of the proposed payment, such cash when
         deposited to be held in trust for the benefit of the Persons entitled
         to such Defaulted Interest as provided in this clause (1). Thereupon
         the Paying Agent shall fix a "Special Record Date" for the payment of
         such Defaulted Interest which shall be not more than 15 days and not
         less than 10 days prior to the date of the proposed payment and not
         less than 10 days after the receipt by the Paying Agent of the notice
         of the proposed payment. The Paying Agent shall promptly notify the
         Company and the Trustee of such Special Record Date and, in the name
         and at the expense of the Company, shall cause notice of the proposed
         payment of such Defaulted Interest and the Special Record Date therefor
         to be mailed, first-class postage prepaid, to each Holder at its
         address as it appears in the Note register maintained by the Registrar
         not less than 10 days prior to such Special Record Date. Notice of the
         proposed payment of such Defaulted Interest and the Special Record Date
         therefor having been mailed as aforesaid, such Defaulted Interest shall
         be paid to the persons in whose names the Notes (or their respective
         predecessor Notes) are registered on such Special Record Date and shall
         no longer be payable pursuant to the following clause (2).

                  (2) The Company may make payment of any Defaulted Interest in
         any other lawful manner not inconsistent with the requirements of any
         securities exchange on which the Notes may be listed, and upon such
         notice as may be required by such exchange, if, after notice given by
         the Company to the Trustee and the Paying Agent of the proposed payment
         pursuant to this clause, such manner shall be deemed practicable by the
         Trustee and the Paying Agent.

                  Subject to the foregoing provisions of this Section, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note shall carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.

SECTION 2.13. CUSIP NUMBERS

                  The Company in issuing the Notes may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided, that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on the Notes or as contained in any notice of a
redemption and that reliance may be placed only on the other identification
numbers printed



                                       49


on the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.

SECTION 2.14. ISSUANCE OF ADDITIONAL NOTES

                  The company may, subject to Section 4.11 hereof and applicable
law, issue Additional Notes under this Indenture. The Notes issued on the Issue
Date and any additional Notes subsequently issued shall be treated as a single
class for all purposes under this Indenture.

                                   ARTICLE III

                                   REDEMPTION

SECTION 3.1. OPTIONAL REDEMPTION

                  (a) Except as set forth in clause (b) of this Section 3.1, the
Company shall not have the option to redeem the Notes pursuant to this Section
3.1 prior to December 15, 2005. The Notes will be redeemable for cash at the
option of the Company, in whole or in part, at any time on or after December 15,
2005, upon not less than 30 days nor more than 60 days prior notice mailed by
first class mail to each Holder at its last registered address, at the following
redemption prices (expressed as percentages of the principal amount) if redeemed
during the 12-month period commencing December 15 of the years indicated below,
in each case (subject to the right of Holders of record on a Record Date to
receive the corresponding interest due (and the corresponding Liquidated
Damages, if any) on the corresponding Interest Payment Date that is on or prior
to such Redemption Date), together with accrued and unpaid interest and
Liquidated Damages, if any, thereon to the Redemption Date:





           YEAR                                                           PERCENTAGE
           ----                                                           ----------
                                                                       

           2005.............................................................105.250%
           2006.............................................................102.625%
           2007 and thereafter..............................................100.000%


                  (b) Notwithstanding the provisions of clause (a) of this
Section 3.1, at any time or from time to time on or prior to December 15, 2004,
upon any Public Equity Offering, up to 35% of the aggregate principal amount of
the Notes issued pursuant to this Indenture may be redeemed at the option of the
Company within 90 days of such Public Equity Offering, on not less than 30 days,
but not more than 60 days, notice to each Holder of the Notes to be redeemed,
with cash from the Net Cash Proceeds of such Public Equity Offering, at a
redemption price equal to 110.500% of the principal amount thereof (subject to
the right of Holders of record on a Record Date to receive the corresponding
interest (and the corresponding Liquidated Damages, if any) due on the Interest
Payment Date that is on or prior to such Redemption Date), together with accrued
and unpaid interest and Liquidated Damages, if any,



                                       50



thereon to the Redemption Date; provided, however, that immediately following
such redemption not less than 65% of the aggregate principal amount of the Notes
originally issued pursuant to this Indenture on the Issue Date remain
outstanding.

                  (c) Any redemption pursuant to this Section 3.1 shall be made
pursuant to the provisions of Sections 3.2 through 3.7 hereof.

SECTION 3.2. NOTICES TO TRUSTEE

                  If the Company elects to redeem Notes pursuant to Section 5 of
the Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of Notes to be redeemed and whether it
wants the Paying Agent to give notice of redemption to the Holders.

                  If the Company elects to reduce the principal amount of Notes
to be redeemed pursuant to Section 5 of the Notes by crediting against any such
redemption Notes it has not previously delivered to the Trustee and the Paying
Agent for cancellation, it shall so notify the Trustee, in the form of an
Officers' Certificate, and the Paying Agent of the amount of the reduction and
deliver such Notes with such notice.

                  The Company shall give each notice to the Trustee and the
Paying Agent provided for in this Section 3.2 at least 15 days before the date
on which the notice of redemption is to be given (unless a shorter notice shall
be satisfactory to the Trustee and the Paying Agent). Any such notice may be
cancelled at any time prior to notice of such redemption being mailed to any
Holder and shall thereby be void and of no effect.

SECTION 3.3. SELECTION OF NOTES TO BE REDEEMED

                  If less than all of the Notes are to be redeemed at any time,
the Trustee shall select the Notes or portions thereof to be redeemed among the
Holders of the Notes in compliance with the requirements of the principal
national securities exchange, if any, on which the Notes are listed or, if the
Notes are not so listed, on a pro rata basis, by lot or in accordance with any
other method the Trustee considers fair and appropriate.

                  The Trustee shall make the selection from the Notes
outstanding and not previously called for redemption and shall promptly notify
the Company and the Paying Agent in writing of the Notes selected for redemption
and, in the case of any Note selected for partial redemption, the principal
amount thereof to be redeemed. Notes in denominations of $1,000 may be redeemed
only in whole. The Trustee may select for redemption portions (equal to $1,000
or any integral multiple thereof) of the principal of Notes that have
denominations larger than $1,000. Provisions of this Indenture that apply to
Notes called for redemption also apply to portions of Notes called for
redemption.



                                       51


SECTION 3.4. NOTICE OF REDEMPTION

                  At least 30 days, but not more than 60 days, prior to the
Redemption Date, the Company shall mail a notice of redemption by first class
mail, postage prepaid, to the Trustee, the Paying Agent and each Holder whose
Notes are to be redeemed. At the Company's request delivered at least 15 days
prior to the date on which such notice is to be given (unless a shorter period
shall be acceptable to the Paying Agent), the Paying Agent shall give the notice
of redemption in the Company's name and at the Company's expense. Each notice
for redemption shall identify the Notes to be redeemed and shall state:

                  (1) the Redemption Date;

                  (2) the Redemption Price, including accrued and unpaid
         interest and Liquidated Damages, if any, to be paid upon such
         redemption;

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

                  (4) that Notes called for redemption must be surrendered to
         the Paying Agent at the address specified in such notice to collect the
         Redemption Price;

                  (5) that, unless (a) the Company defaults in its obligation to
         deposit with the Paying Agent cash which through the scheduled payment
         of principal and interest (and Liquidated Damages, if any) in respect
         thereof in accordance with their terms shall provide the amount to fund
         the Redemption Price in accordance with Section 3.6 hereof or (b) such
         redemption payment is prohibited, interest (and Liquidated Damages, if
         any) on Notes called for redemption ceases to accrue on and after the
         Redemption Date and the only remaining right of the Holders of such
         Notes is to receive payment of the Redemption Price, including accrued
         and unpaid interest (and Liquidated Damages, if any) to the Redemption
         Date, upon surrender to the Paying Agent of the Notes called for
         redemption and to be redeemed;

                  (6) if any Note is being redeemed in part, the portion of the
         principal amount, equal to $1,000 or any integral multiple thereof, of
         such Note to be redeemed and that, on and after the Redemption Date,
         and upon surrender of such Note, a new Note or Notes in aggregate
         principal amount equal to the unredeemed portion thereof shall be
         issued;

                  (7) if less than all the Notes are to be redeemed, the
         identification of the particular Notes (or portion thereof) to be
         redeemed, as well as the aggregate principal amount of such Notes to be
         redeemed and the aggregate principal amount of Notes to be outstanding
         after such partial redemption;

                  (8) the CUSIP number of the Notes to be redeemed; and

                  (9) that the notice is being sent pursuant to this Section 3.4
         and pursuant to the optional redemption provisions of Section 5 of the
         Notes.



                                       52


SECTION 3.5. EFFECT OF NOTICE OF REDEMPTION

                  Once notice of redemption is mailed in accordance with Section
3.4 hereof, Notes called for redemption become due and payable on the Redemption
Date and at the Redemption Price, including accrued and unpaid interest (and
Liquidated Damages, if any) to the Redemption Date. Upon surrender to the
Trustee or Paying Agent, such Notes called for redemption shall be paid at the
Redemption Price, including interest and Liquidated Damages, if any, accrued and
unpaid to the Redemption Date; provided, that if the Redemption Date is on or
after an interest Record Date on which the Holders of record have a right to
receive the corresponding interest due, and Liquidated Damages, if any, and is
on or before the associated Interest Payment Date, any accrued and unpaid
interest and Liquidated Damages, if any, due on such Interest Payment Date shall
be paid to the Person in whose name a Note is registered at the close of
business on such Record Date on the corresponding Interest Payment Date; and
provided, further, that if a Redemption Date is a Legal Holiday, payment shall
be made on the next succeeding Business Day and no interest shall accrue for the
period from such Redemption Date to such succeeding Business Day.

SECTION 3.6. DEPOSIT OF REDEMPTION PRICE

                  On or prior to the Redemption Date, the Company shall deposit
with the Paying Agent (other than the Company or an Affiliate of the Company)
cash sufficient to pay the Redemption Price of all Notes to be redeemed on such
Redemption Date (other than Notes or portions thereof called for redemption on
that date that have been delivered by the Company to the Trustee for
cancellation). The Paying Agent shall promptly return to the Company any cash so
deposited which is not required for that purpose upon the written request of the
Company.

                  If the Company complies with the preceding paragraph and
payment of the Notes called for redemption is not prohibited for any reason,
interest (and Liquidated Damages, if any) on the Notes to be redeemed shall
cease to accrue on the applicable Redemption Date, whether or not such Notes are
presented for payment. Notwithstanding anything herein to the contrary, if any
Note surrendered for redemption in the manner provided in the Notes shall not be
so paid upon surrender for redemption because of the failure of the Company to
comply with the preceding paragraph, interest shall (and Liquidated Damages, if
any) continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and in the manner
provided in Section 4.1 hereof and the Note.

SECTION 3.7. NOTES REDEEMED IN PART

                  Upon surrender of a Note that is to be redeemed in part, the
Company shall execute, and the Trustee shall authenticate and deliver to the
Holder, without service charge to the Holder, a new Note or Notes equal in
principal amount to the unredeemed portion of the Note surrendered.




                                       53


SECTION 3.8. NO MANDATORY REDEMPTION

                  The Company shall not be required to make mandatory redemption
payments with respect to the Notes. The Notes shall not have the benefit of any
sinking fund.


                                   ARTICLE IV

                                    COVENANTS

SECTION 4.1. PAYMENT OF NOTES

                  The Company shall pay the principal of and interest (and
Liquidated Damages, if any) on the Notes on the dates and in the manner provided
herein and in the Notes. An installment of principal of or interest (or
Liquidated Damages, if any) on the Notes shall be considered paid on the date it
is due if the Trustee or Paying Agent (other than the Company or an Affiliate of
the Company) holds for the benefit of the Holders (on or before 11:00 a.m. New
York City time to the extent necessary to provide the funds to the Depositary in
accordance with the Depositary's procedures) on that date cash deposited and
designated for and sufficient to pay the installment.

                  The Company shall pay interest on overdue principal and on
overdue installments of interest (and Liquidated Damages, if any) at the rate
specified in the Notes compounded semi- annually, to the extent lawful.

SECTION 4.2. MAINTENANCE OF OFFICE OR AGENCY

                  The Company and the Guarantors shall maintain in the Borough
of Manhattan, The City of New York, an office or agency where Notes may be
presented or surrendered for payment, where Notes may be surrendered for
registration of transfer or exchange and where notices and demands to or upon
the Company and the Guarantors in respect of the Notes and this Indenture may be
served. The Company and the Guarantors shall give prompt written notice to the
Trustee and the Paying Agent of the location, and any change in the location, of
such office or agency. If at any time the Company and the Guarantors shall fail
to maintain any such required office or agency or shall fail to furnish the
Trustee and the Paying Agent with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 12.2 hereof.

                  The Company and the Guarantors may also from time to time
designate one or more other offices or agencies where the Notes may be presented
or surrendered for any or all such purposes and may from time to time rescind
such designations; provided, however, that no such designation or rescission
shall in any manner relieve the Company and the Guarantors of their obligation
to maintain an office or agency in the Borough of Manhattan, The City of New
York, for such purposes. The Company and the Guarantors shall give prompt
written notice to



                                       54






the Trustee and the Paying Agent of any such designation or rescission and of
any change in the location of any such other office or agency. The Company
hereby initially designates the Corporate Trust Office of the Trustee as such
office.

SECTION 4.3. LIMITATION ON RESTRICTED PAYMENTS

         The Company and the Guarantors shall not, and neither the Company nor
the Guarantors shall permit any of their respective Subsidiaries to, directly or
indirectly, make any Restricted Payment if, after giving effect to such
Restricted Payment on a pro forma basis:

                  (1) a Default or an Event of Default shall have occurred and
         be continuing;

                  (2) the Company is not permitted to incur at least $1.00 of
         additional Indebtedness pursuant to the Debt Incurrence Ratio; or

                  (3) the aggregate amount of all Restricted Payments made by
         the Company and its Subsidiaries, including after giving effect to such
         proposed Restricted Payment, on and after the Issue Date, would exceed,
         without duplication, the sum of:

                           (a) 50% of the Company's aggregate Consolidated Net
                  Income for the period (taken as one accounting period),
                  commencing on the first day of the first full fiscal quarter
                  commencing after the Issue Date, to and including the last day
                  of the fiscal quarter ended immediately prior to the date of
                  each such calculation for which the Company's consolidated
                  financial statements are required to be delivered to the
                  Trustee or, if sooner, filed with the SEC (or, in the event
                  Consolidated Net Income for such period is a deficit, then
                  minus 100% of such deficit); plus

                           (b) the aggregate Net Cash Proceeds received by the
                  Company from the issuance or sale of its Qualified Capital
                  Stock (other than (i) to one of the Company's Subsidiaries and
                  (ii) to the extent applied in connection with a Qualified
                  Exchange or, to avoid duplication, otherwise given credit for
                  in any provision of paragraph (c) below), after the Issue
                  Date; plus

                           (c) except in each case, in order to avoid
                  duplication, to the extent any such payment or proceeds have
                  been included in the calculation of Consolidated Net Income,
                  an amount equal to the net reduction in Investments (other
                  than returns of or from Permitted Investments) in any Person
                  resulting from cash distributions on or cash repayments of any
                  Investments, including payments of interest on Indebtedness,
                  dividends, repayments of loans or advances, or other
                  distributions or other transfers of assets, in each case to
                  the Company or any Subsidiary or from the Net Cash Proceeds
                  from the sale of any such Investment or from redesignations of
                  Unrestricted Subsidiaries as Subsidiaries (valued in each case
                  as provided in the definition of "Investments"),



                                       55






                  not to exceed, in each case, the amount of Investments
                  previously made by the Company or any Subsidiary in such
                  Person, including, if applicable, such Unrestricted
                  Subsidiary, less the cost of disposition.

         The foregoing clauses (2) and (3) of the immediately preceding
paragraph, however, shall not prohibit:

                  (u) repurchases of Capital Stock from the Company's employees
         or directors (or their heirs or estates) or employees or directors (or
         their heirs or estates) of its Subsidiaries upon the death, disability
         or termination of employment in an aggregate amount to all employees or
         directors (or their heirs or estates) not to exceed in the aggregate
         $1,000,000 per calendar year;

                  (v) Restricted Payments in an aggregate amount not to exceed
         $5,000,000,

and the provisions of the immediately preceding paragraph shall not prohibit:

                  (w) any dividend, distribution or other payments by any of the
         Company's Subsidiaries on its Equity Interests that is paid pro rata to
         all holders of such Equity Interests;

                  (x) a Qualified Exchange;

                  (y) the payment of any dividend on Qualified Capital Stock
         within 60 days after the date of its declaration if such dividend could
         have been made on the date of such declaration in compliance with the
         foregoing provisions; or

                  (z) in the event of a Change of Control that also constitutes
         a "Change of Control" as defined in the Convertible Note, the
         prepayment or redemption of the Convertible Note in accordance with
         Section 4 thereof (Mandatory Prepayment/Redemption) as in effect on the
         Issue Date; provided, that no such prepayment or redemption may be made
         under this clause (z) until the Company has made a Change of Control
         Offer in accordance with Section 10.1 and any Notes tendered pursuant
         thereto have been purchased in accordance therewith on or prior to the
         Change of Control Purchase Date; and provided further, that the Company
         shall include in the Change of Control Offer notice delivered to
         Holders a statement that the Company will prepay or redeem the
         Convertible Note upon the completion of the Change of Control Offer in
         accordance with this clause (z).

         The full amount of any Restricted Payment made pursuant to the
foregoing clauses (u), (w) (to avoid duplication, exclusive of amounts that
reduced Consolidated Net Income), (y) and (z) (but not pursuant to clause (v) or
(x)) of the immediately preceding sentence, however, will be counted as
Restricted Payments made for purposes of the calculation of the aggregate amount



                                       56


of Restricted Payments available to be made referred to in clause (3) of the
first paragraph of this Section 4.3.

         For purposes of this Section 4.3, the amount of any Restricted Payment
made or returned, if other than in cash, shall be the fair market value thereof,
as determined in the good faith reasonable judgment of the Company's Board of
Directors, unless stated otherwise, at the time made or returned, as applicable.
Additionally, on the date of each Restricted Payment, the Company shall deliver
an Officers' Certificate to the Trustee describing in reasonable detail the
nature of such Restricted Payment in excess of $10,000,000 that is not a
Restricted Investment, stating the amount of such Restricted Payment, stating in
reasonable detail the provisions of this Indenture pursuant to which such
Restricted Payment was made and certifying that such Restricted Payment was made
in compliance with the terms of this Indenture.

SECTION 4.4. CORPORATE AND PARTNERSHIP EXISTENCE

                  Except as otherwise permitted by Article V, Section 4.14 or
Section 11.4, the Company and the Guarantors shall do or cause to be done all
things necessary to preserve and keep in full force and effect their respective
corporate, partnership or other organizational existence, as the case may be,
and the corporate, partnership or other organizational existence, as the case
may be, of each of their Subsidiaries in accordance with the respective
organizational documents of each of them and the material rights (charter and
statutory) and material corporate franchises of the Company, the Guarantors and
each of their respective Subsidiaries; provided, however, that neither the
Company nor any Guarantor shall be required to preserve, with respect to
themselves, any right or franchise, and with respect to any of their respective
Subsidiaries, any such existence, right or franchise, if (a) the Company shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and (b) the loss thereof is not adverse in any
material respect to the Holders.

SECTION 4.5. PAYMENT OF TAXES AND OTHER CLAIMS

                  The Company and the Guarantors shall, and each of the Company
and the Guarantors shall cause each of their Subsidiaries to, pay or discharge
or cause to be paid or discharged, before the same shall become delinquent, (a)
all material taxes, assessments and governmental charges (including withholding
taxes and any penalties, interest and additions to taxes) levied or imposed upon
the Company, any Guarantor or any of their Subsidiaries or any of their
respective properties and assets and (b) all material lawful claims, whether for
labor, materials, supplies or services, which have become due and payable and
which by law have or may become a Lien upon the property and assets of the
Company, any Guarantor or any of their Subsidiaries; provided, however, that
neither the Company nor any Guarantor shall be required to pay or discharge or
cause to be paid or discharged any such tax, assessment, charge or claim whose
amount, applicability or validity is being contested in good faith by
appropriate proceedings and for which disputed amounts adequate reserves have
been established in accordance with GAAP.




                                       57



SECTION 4.6. MAINTENANCE OF PROPERTIES AND INSURANCE

                  The Company and the Guarantors shall cause all material
properties used or useful in the conduct of their business and the business of
each of their Subsidiaries to be maintained and kept in good condition, repair
and working order (reasonable wear and tear excepted) and supplied with all
necessary equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in their reasonable
judgment may be necessary, so that the business carried on in connection
therewith may be properly conducted at all times; provided, however, that
nothing in this Section 4.6 shall prevent the Company or any Guarantor from
discontinuing any operation or maintenance of any of such properties, or
disposing of any of them, if such discontinuance or disposal is (a)(i) in the
judgment of the Board of Directors of the Company, desirable in the conduct of
the business of the Company and (ii) not adverse in any material respect to the
Holders or (b) otherwise permitted under Section 4.14.

                  The Company and the Guarantors shall provide, or cause to be
provided, for themselves and each of their Subsidiaries, insurance (including
appropriate self-insurance) against loss or damage of the kinds that, in the
reasonable, good faith opinion of the Board of Directors of the Company, is
adequate and appropriate for the conduct of the business of the Company, the
Guarantors and such Subsidiaries in a prudent manner, with (except for self-
insurance) reputable insurers or with the government of the United States of
America or an agency or instrumentality thereof, in such amounts, with such
deductibles, and by such methods as shall be customary, in the reasonable, good
faith opinion of the Company and adequate and appropriate for the conduct of the
business of the Company, the Guarantors and such Subsidiaries in a prudent
manner for entities similarly situated in the industry.

SECTION 4.7. COMPLIANCE CERTIFICATE; NOTICE OF DEFAULT

                  (a) The Company shall deliver to the Trustee within 120 days
after the end of its fiscal year an Officers' Certificate, one of the signers of
which shall be the principal executive, principal financial or principal
accounting officer of the Company, complying with TIA 314(a)(4) and stating that
a review of its activities and the activities of its Subsidiaries, if any,
during the preceding fiscal year has been made under the supervision of the
signing Officers with a view to determining whether the Company has kept,
observed, performed and fulfilled its obligations under this Indenture (without
regard to notice requirements or grace periods) and further stating, as to each
such Officer signing such certificate, whether or not the signer knows of any
failure by the Company, any Guarantor or any Subsidiary of the Company to comply
with any conditions or covenants in this Indenture and, if such signer does know
of such a failure to comply, the certificate shall describe such failure with
particularity. The Officers' Certificate shall also notify the Trustee should
the relevant fiscal year end on any date other than the current fiscal year end
date.

                  (b) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, promptly upon becoming aware of any Default
or Event of Default, an Officers'



                                       58






Certificate specifying such Default or Event of Default and what action the
Company is taking or proposes to take with respect thereto. The Trustee shall
not be deemed to have knowledge of any Default, any Event of Default or any such
fact unless one of its Trust Officers receives written notice thereof from the
Company or any of the Holders.

SECTION 4.8. REPORTS

                  Whether or not the Company is subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall
furnish to the Trustee and deliver or cause to be delivered, to each Holder and
to prospective purchasers of Notes identified to the Company by an Initial
Purchaser, within 5 days after the Company is or would have been (if it were
subject to such reporting obligations) required to file such with the SEC,
annual and quarterly financial statements substantially equivalent to financial
statements that would have been included in reports filed with the SEC, if the
Company were subject to the requirements of Section 13 or 15(d) of the Exchange
Act, including, with respect to annual information only, a report thereon by the
Company's certified independent public accountants as such would be required in
such reports to the SEC, and, in each case, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required and, unless the SEC will not accept such reports, file with
the SEC the annual, quarterly and other reports which the Company is or would
have been required to file with the SEC.

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

                  For so long as any Transfer Restricted Notes remain
outstanding, the Company shall make available (which shall include filings by
EDGAR) to all Holders and to securities analysts and prospective investors, upon
their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.

SECTION 4.9. LIMITATION ON STATUS AS INVESTMENT COMPANY

                  Neither the Company nor any of its Subsidiaries shall become
required to register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or from otherwise becoming subject
to regulation under the Investment Company Act.

SECTION 4.10. LIMITATION ON TRANSACTIONS WITH AFFILIATES

                  Neither the Company nor any of its Subsidiaries shall on or
after the Issue Date enter into or suffer to exist any contract, agreement,
arrangement or transaction with any Affiliate (an "Affiliate Transaction"), or
any series of related Affiliate Transactions (other than



                                       59






Exempted Affiliate Transactions), (1) unless it is determined that the terms of
such Affiliate Transaction are fair and reasonable to the Company, and no less
favorable to the Company than could have been obtained in an arm's length
transaction with a non-Affiliate, and (2) if involving consideration to either
party in excess of $2,000,000, unless such Affiliate Transaction(s) has been
approved by a majority of the members of the Company's Board of Directors that
are disinterested in such transaction, if there are any directors who are so
disinterested, and (3) if involving consideration to either party in excess of
$10,000,000, or $2,000,000 if there are no disinterested directors for such
transaction, unless, in addition the Company, prior to the consummation thereof,
obtains a written favorable opinion as to the fairness of such transaction to
the Company from a financial point of view from an independent investment
banking firm of national reputation in the United States or, if pertaining to a
matter for which such investment banking firms do not customarily render such
opinions, an accounting, appraisal or valuation firm of national reputation in
the United States. Within 5 days of any Affiliate Transaction(s) involving
consideration to either party of $2,000,000 or more, the Company shall deliver
to the Trustee an Officers' Certificate addressed to the Trustee certifying that
such Affiliate Transaction (or Transactions) complied with clause (1), (2), and
(3), of this Section 4.10, as applicable.

SECTION 4.11. LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS

                  Except as set forth in this Section 4.11, the Company and the
Guarantors shall not, and neither the Company nor the Guarantors shall permit
any of their respective Subsidiaries to, directly or indirectly, issue, assume,
guarantee, incur, become directly or indirectly liable with respect to
(including as a result of an Acquisition), or otherwise become responsible for,
contingently or otherwise (individually and collectively, to "incur" or, as
appropriate, an "incurrence"), any Indebtedness (including Disqualified Capital
Stock and Acquired Indebtedness), other than Permitted Indebtedness.

                  Notwithstanding the foregoing if:

                  (1) no Default or Event of Default shall have occurred and be
         continuing at the time of, or would occur after giving effect on a pro
         forma basis to, such incurrence of Indebtedness and

                  (2) on the date of such incurrence (the "Incurrence Date"),
         the Company's Consolidated Coverage Ratio for the Reference Period
         immediately preceding the Incurrence Date, after giving effect on a pro
         forma basis to such incurrence of such Indebtedness and, to the extent
         set forth in the definition of Consolidated Coverage Ratio, the use of
         proceeds thereof, would be at least (x) 2.5 to 1.0, if such incurrence
         occurs prior to January 1, 2004, and (y) 2.75 to 1.0, if the incurrence
         occurs on or after January 1, 2004 (the "Debt Incurrence Ratio"),




                                       60






then the Company and the Guarantors may incur such Indebtedness (including
Disqualified Capital Stock).

                  In addition, the foregoing limitations of the first paragraph
of this Section 4.11 will not prohibit:

                  (a) the Company's incurrence or the incurrence by any
Guarantor of Purchase Money Indebtedness; provided, that

                           (1) the aggregate amount of such Indebtedness
                  incurred and outstanding at any time pursuant to this
                  paragraph (a) (plus any Refinancing Indebtedness issued to
                  retire, defease, refinance, replace or refund such
                  Indebtedness) shall not exceed $10,000,000; and

                           (2) in each case, such Indebtedness shall not
                  constitute more than 100% of the Company's cost or the cost to
                  such Guarantor (determined in accordance with GAAP), as
                  applicable, of the property so purchased, constructed,
                  improved or leased;

                  (b) if no Event of Default shall have occurred and be
continuing, the Company's incurrence or the incurrence by any Guarantor of
Indebtedness in an aggregate amount incurred and outstanding at any time
pursuant to this paragraph (b) (plus any Refinancing Indebtedness incurred to
retire, defease, refinance, replace or refund such Indebtedness) of up to
$17,500,000; and

                  (c) the Company's incurrence or the incurrence by any
Guarantor of Indebtedness pursuant to the Credit Agreement in an aggregate
amount incurred and outstanding at any time pursuant to this paragraph (c) (plus
any Refinancing Indebtedness incurred to retire, defease, refinance, replace or
refund such Indebtedness) of up to $35,000,000, minus the amount of any such
Indebtedness (1) retired with the Net Cash Proceeds from any Asset Sale applied
to permanently reduce the outstanding amounts or the commitments with respect to
such Indebtedness pursuant to clause (b) of the second paragraph of Section 4.14
or (2) assumed by a transferee in an Asset Sale so long as neither the Company
nor such Guarantor continues to be an obligor under such Indebtedness.

         Indebtedness (including Disqualified Capital Stock) of any Person which
is outstanding at the time such Person becomes one of the Company's Subsidiaries
(including upon designation of any subsidiary or other Person as a Subsidiary)
or is merged with or into or consolidated with the Company or one of the
Company's Subsidiaries shall be deemed to have been incurred at the time such
Person becomes or is designated one of the Company's Subsidiaries or is merged
with or into or consolidated with the Company or one of the Company's
Subsidiaries as applicable.




                                       61






         Notwithstanding any other provision of this Section 4.11, but only to
avoid duplication, a guarantee of the Company's Indebtedness or of the
Indebtedness of another Guarantor incurred in accordance with the terms of this
Indenture issued at the time such Indebtedness was incurred or if later at the
time the guarantor thereof became one of the Company's Subsidiaries will not
constitute a separate incurrence, or amount outstanding, of Indebtedness. Upon
each incurrence the Company may designate pursuant to which provision of this
Section 4.11 such Indebtedness is being incurred and the Company may subdivide
an amount of Indebtedness and designate more than one provision pursuant to
which such amount of Indebtedness is being incurred and such Indebtedness shall
not be deemed to have been incurred or outstanding under any other provision of
this Section 4.11, except as stated otherwise in the foregoing provisions.

SECTION 4.12. LIMITATIONS ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
              SUBSIDIARIES

                  The Company and the Guarantors shall not, and neither the
Company nor the Guarantors shall permit any of their respective Subsidiaries to,
directly or indirectly, create, assume or suffer to exist any consensual
restriction on the ability of any Subsidiary of the Company to pay dividends or
make other distributions to or on behalf of, or to pay any obligation to or on
behalf of, or otherwise to transfer assets or property to or on behalf of, or to
make or pay loans or advances to or on behalf of, the Company or any of its
Subsidiaries, except:

                  (1) restrictions imposed by the Notes or this Indenture or by
         the Company's other Indebtedness (which may also be guaranteed by the
         Guarantors); provided, that such restrictions are not materially more
         restrictive than those imposed by this Indenture and the Notes;

                  (2) restrictions imposed by applicable law;

                  (3) existing restrictions under Existing Indebtedness;

                  (4) restrictions under any Acquired Indebtedness not incurred
         in violation of this Indenture or any agreement (including any Equity
         Interest) relating to any property, asset, or business acquired by the
         Company or any of its Subsidiaries, which restrictions in each case
         existed at the time of acquisition, were not put in place in connection
         with or in anticipation of such acquisition and are not applicable to
         any Person, other than the Person acquired, or to any property, asset
         or business, other than the property, assets and business so acquired;

                  (5) any restriction imposed by Indebtedness incurred under the
         Credit Agreement pursuant to clause (c) of Section 4.11; provided, that
         such restriction or requirement is no more restrictive than that
         imposed by the Credit Agreement as of the Issue Date;




                                       62






                  (6) restrictions with respect solely to any of the Company's
         Subsidiaries imposed pursuant to a binding agreement which has been
         entered into for the sale or disposition of all of the Equity Interests
         or assets of such Subsidiary; provided, that such restrictions apply
         solely to the Equity Interests or assets of such Subsidiary which are
         being sold;

                  (7) restrictions on transfer contained in Purchase Money
         Indebtedness incurred pursuant to clause (a) of Section 4.11; provided,
         that such restrictions relate only to the transfer of the property
         acquired with the proceeds of such Purchase Money Indebtedness;

                  (8) in connection with and pursuant to permitted Refinancings,
         replacements of restrictions imposed pursuant to clauses (1), (3), (4)
         or (7) or this clause (8) of this paragraph that are not materially
         more restrictive than those being replaced and do not apply to any
         other Person or assets than those that would have been covered by the
         restrictions in the Indebtedness so refinanced; and

                  (9) customary provisions in partnership agreements, limited
         liability company organizational governance documents, joint venture
         agreements and other similar agreements entered into in the ordinary
         course of business that restrict the transfer of ownership interests in
         such partnership, limited liability company, joint venture or similar
         Person.

         Notwithstanding the foregoing, (a) customary provisions restricting
subletting or assignment of any lease entered into in the ordinary course of
business, consistent with industry practice and (b) any asset subject to a Lien
which is not prohibited to exist with respect to such asset pursuant to the
terms of this Indenture may be subject to customary restrictions on the transfer
or disposition thereof pursuant to such Lien.

SECTION 4.13. LIMITATIONS ON LAYERING INDEBTEDNESS

                  The Company and the Guarantors shall not, and neither the
Company nor the Guarantors shall permit any of their respective Subsidiaries to,
directly or indirectly, incur any Indebtedness that is contractually subordinate
to any of the Company's other Indebtedness or the other Indebtedness of any
Guarantor unless, by its terms, such Indebtedness is made at least as
contractually subordinate to the Notes or the Guarantees, as applicable.

SECTION 4.14. LIMITATION ON SALES OF ASSETS AND SUBSIDIARY STOCK

                  The Company and the Guarantors shall not, and neither the
Company nor the Guarantors shall permit any of their respective Subsidiaries to,
in one or a series of related transactions, convey, sell, transfer, assign or
otherwise dispose of, directly or indirectly, any of their property, business or
assets, including by merger or consolidation (in the case of a Guarantor or one
of the Company's Subsidiaries), and including any sale or other transfer or



                                       63






issuance of any Equity Interests of any of the Company's Subsidiaries, whether
by the Company or one of its Subsidiaries or through the issuance, sale or
transfer of Equity Interests by one of the Company's Subsidiaries and including
any sale and leaseback transaction (any of the foregoing, an "Asset Sale"),
unless:

                  (1) at least 75% of the total consideration for such Asset
         Sale or series of related Asset Sales consists of cash or Cash
         Equivalents; and

                  (2) the Company receives or such Subsidiary receives, as
         applicable, fair market value for such Asset Sale, such determination
         to be made in good faith by the Company's Board of Directors for Asset
         Sales exceeding $2,000,000.

Solely for purposes of (1) above, (a) any Indebtedness (other than Subordinated
Indebtedness) of the Company or such Subsidiary that is expressly assumed by the
transferee in such Asset Sale and with respect to which the Company is and its
Subsidiaries are fully and unconditionally released from any and all obligations
in connection therewith, (b) property that within 30 days of such Asset Sale is
converted into cash or Cash Equivalents; provided, that such cash and Cash
Equivalents shall be treated as Net Cash Proceeds attributable to the original
Asset Sale for which such property was received, and (c) the fair market value,
as determined in good faith by the Board of Directors, of any asset (other than
securities) received by the Company or any Subsidiary that, in the good faith
reasonable judgment of the Company's Board of Directors, will immediately
constitute or be a part of a Related Business shall be deemed to be cash or Cash
Equivalents.

         Within 360 days following such Asset Sale, the Net Cash Proceeds
therefrom are:

                  (a) invested in fixed assets and property (other than notes,
bonds, obligations and other securities, except in connection with the
acquisition of a Guarantor in a Related Business) that in the good faith
reasonable judgment of the Company's Board of Directors will immediately
constitute or be a part of a Related Business of the Company or such Subsidiary
(if it continues to be a Subsidiary) immediately following such transaction; or

                  (b) used to retire Purchase Money Indebtedness secured by the
asset that was the subject of the Asset Sale or to permanently reduce the amount
of Indebtedness outstanding under the Credit Agreement; or

                  (c) applied to the optional redemption of the Notes in
accordance with the terms of this Indenture and the Company's other Indebtedness
ranking on a parity with the Notes and with similar provisions requiring the
Company to redeem such Indebtedness with the proceeds from such Asset Sale, pro
rata in proportion to the respective principal amounts (or accreted values in
the case of Indebtedness issued with an original issue discount) of the Notes
and such other Indebtedness then outstanding.




                                       64






Pending the final application of any Net Cash Proceeds, the Company may
temporarily reduce revolving credit borrowings or otherwise invest the Net Cash
Proceeds in any manner that is not prohibited by this Indenture.

                  The accumulated Net Cash Proceeds from Asset Sales not applied
as set forth in (a), (b) or (c) of the preceding paragraph shall constitute
"Excess Proceeds". Within 30 days after the date that the amount of Excess
Proceeds exceeds $10,000,000, the Company shall apply the Excess Proceeds (the
"Asset Sale Offer Amount") to the repurchase of the Notes and such other
Indebtedness ranking on a parity with the Notes and with similar provisions
requiring the Company to make an offer to purchase such Indebtedness with the
proceeds from such Asset Sale pursuant to a cash offer (subject only to
conditions required by applicable law, if any) (pro rata in proportion to the
respective principal amounts (or accreted values in the case of Indebtedness
issued with an original issue discount) of the Notes and such other Indebtedness
then outstanding) (the "Asset Sale Offer") at a purchase price of 100% of the
principal amount (or accreted value in the case of Indebtedness issued with an
original issue discount) (the "Asset Sale Offer Price") together with accrued
and unpaid interest and Liquidated Damages, if any, to the date of payment. Each
Asset Sale Offer shall remain open for 20 Business Days following its
commencement (the "Asset Sale Offer Period").

                  Upon expiration of the Asset Sale Offer Period, the Company
shall apply the Asset Sale Offer Amount plus an amount equal to accrued and
unpaid interest and Liquidated Damages, if any, to the purchase of all
Indebtedness properly tendered in accordance with the provisions hereof (on a
pro rata basis if the Asset Sale Offer Amount is insufficient to purchase all
Indebtedness so tendered) at the Asset Sale Offer Price (together with accrued
interest and Liquidated Damages, if any). To the extent that the aggregate
amount of Notes and such other pari passu Indebtedness tendered pursuant to an
Asset Sale Offer is less than the Asset Sale Offer Amount, the Company may use
any remaining Net Cash Proceeds as otherwise permitted by this Indenture (other
than for making Restricted Payments that are not Investments) and following the
consummation of each Asset Sale Offer the Excess Proceeds amount shall be reset
to zero.

         Notwithstanding, and without complying with, the provisions of this
Section 4.14:

                  (1) the Company may and its Subsidiaries may, in the ordinary
         course of business, (a) convey, sell, transfer, assign or otherwise
         dispose of inventory and other assets acquired and held for resale in
         the ordinary course of business and (b) liquidate Cash Equivalents;

                  (2) the Company may and its Subsidiaries may convey, sell,
         transfer, assign or otherwise dispose of assets pursuant to and in
         accordance with Article V;

                  (3) the Company may and its Subsidiaries may sell or dispose
         of damaged, worn out or other obsolete personal property in the
         ordinary course of business so long



                                       65






         as such property is no longer necessary for the proper conduct of the
         Company's business or the business of such Subsidiary, as applicable;

                  (4) the Guarantors may convey, sell, transfer, assign or
         otherwise dispose of assets to the Company or any Guarantor;

                  (5) the Company may and its Subsidiaries may convey, sell,
         transfer, assign, or otherwise dispose of assets (or related assets or
         in related transactions) with a fair market value of less than
         $250,000;

                  (6) the Company may and each of its Subsidiaries may surrender
         or waive contract rights or settle, release or surrender contract, tort
         or other litigation claims in the ordinary course of business or grant
         (or permit realization of) Liens not prohibited by this Indenture;

                  (7) the Company may and the Company's Subsidiaries may make
         Permitted Investments (excluding clause (o) in the definition thereof)
         and Restricted Investments under Section 4.3; and

                  (8) the Company may and the Company's Subsidiaries may
         exchange assets held by the Company or such Subsidiaries for assets
         held by any Person or entity; provided, that (a) the assets received by
         the Company or such Subsidiaries in any such exchange in the good faith
         reasonable judgment of the Company's Board of Directors will
         immediately constitute, be a part of, or be used in, a Related Business
         of the Company or such Subsidiaries, (b) the Company's Board of
         Directors has determined that the terms of any exchange are fair and
         reasonable, (c) any such exchange shall be deemed to be an Asset Sale
         to the extent that the Company or any of the Company's Subsidiaries
         receives cash or Cash Equivalents in such exchange, and (d) that, in
         the case of a transaction exceeding $10,000,000 of consideration to any
         party thereto, the Company shall have obtained a favorable written
         opinion by an independent financial advisor of national reputation in
         the United States as to the fairness from a financial point of view to
         the Company or such Subsidiary of the proposed transaction.

                  In addition to the foregoing and notwithstanding anything
herein to the contrary, (A) the Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly make any Asset Sale of any of the
Equity Interests of any of the Company's Subsidiaries (other than to the Company
or to a Guarantor) except (i) pursuant to an Asset Sale of all the Equity
Interests of such Subsidiary, (ii) for an Asset Sale of Equity Interests with no
preferences or special rights or privileges and with no redemption or prepayment
provisions, provided, that after such sale the Company or the Company's
Subsidiaries own a majority of the voting and economic Equity Interests of such
Subsidiary, (iii) to the extent such shares represent directors' qualifying
shares or shares required by applicable law to be held by a Person other than
the Company or a Wholly Owned Subsidiary of the Company, and (B) in the event of
the transfer of substantially all (but not all) of the assets of the Company and
its Subsidiaries as an entirety



                                       66






to a Person in a transaction covered by and effected in accordance with Article
V, the successor corporation shall be deemed to have sold for cash at fair
market value the assets of the Company and its Subsidiaries not so transferred
for purposes of this Section 4.14, and shall comply with the provisions of this
section with respect to such deemed sale as if it were an Asset Sale (with such
fair market value being deemed to be Net Cash Proceeds for such purpose).

                  Any Asset Sale Offer shall be made in compliance with all
applicable laws, rules, and regulations, including, if applicable, Regulation
14E of the Exchange Act and the rules and regulations thereunder and all other
applicable Federal and state securities laws. To the extent that the provisions
of any securities laws or regulations conflict with the provisions of this
Section 4.14, the Company's compliance or the compliance of any of the Company's
Subsidiaries with such laws and regulations shall not in and of itself cause a
breach of the Company's obligations under this Section 4.14.

                  If the payment date in connection with an Asset Sale Offer
hereunder is on or after an interest payment Record Date and on or before the
associated Interest Payment Date, any accrued and unpaid interest (and
Liquidated Damages, if any, due on such Interest Payment Date) will be paid to
the Person in whose name a Note is registered at the close of business on such
Record Date.

                  Notice of an Asset Sale Offer shall be sent, on or prior to
the commencement of the Asset Sale Offer, by first-class mail, by the Company to
each Holder at its registered address, with a copy to the Trustee. The notice to
the Holders shall contain all information, instructions and materials required
by applicable law or otherwise material to such Holders' decision to tender
Notes pursuant to the Asset Sale Offer. The notice, which (to the extent
consistent with this Indenture) shall govern the terms of an Asset Sale Offer,
shall state:

                  (1) that the Asset Sale Offer is being made pursuant to such
         notice and this Section 4.14;

                  (2) the Asset Sale Offer Amount, the Asset Sale Offer Price
         (including the amount of accrued but unpaid interest (and Liquidated
         Damages, if any)), and the date of purchase;

                  (3) that any Note or portion thereof not tendered or accepted
         for payment will continue to accrue interest (and Liquidated Damages,
         if any) if interest (and Liquidated Damages, if any) is then accruing;

                  (4) that, unless the Company defaults in depositing cash with
         the Paying Agent (which may not for purposes of this Section 4.14,
         notwithstanding anything in this Indenture to the contrary, be the
         Company or any Affiliate of the Company) in accordance with the last
         paragraph of this Section 4.14, any Note, or portion thereof, accepted
         for payment pursuant to the Asset Sale Offer shall cease to accrue
         interest (and Liquidated Damages, if any) after the payment date in
         connection with an Asset Sale;



                                       67






                  (5) that Holders electing to have a Note, or portion thereof,
         purchased pursuant to an Asset Sale Offer will be required to surrender
         their Note, with the form entitled "Option of Holder to Elect Purchase"
         on the reverse of the Note completed, to the Paying Agent (which may
         not for purposes of this Section 4.14, notwithstanding any other
         provision of this Indenture, be the Company or any Affiliate of the
         Company) at the address specified in the notice;

                  (6) that Holders will be entitled to withdraw their elections,
         in whole or in part, if the Paying Agent receives, prior to the
         expiration of the Asset Sale Offer, a facsimile transmission or letter
         setting forth the name of the Holder, the principal amount of the Notes
         the Holder is withdrawing and a statement containing a facsimile
         signature and stating that such Holder is withdrawing his election to
         have such principal amount of the Notes purchased;

                  (7) that if Indebtedness in an aggregate principal amount in
         excess of the aggregate principal amount of Notes to be acquired
         pursuant to the Asset Sale Offer is tendered and not withdrawn, the
         Company shall purchase such Indebtedness on a pro rata basis in
         proportion to the respective principal amounts (or accreted values in
         the case of Indebtedness issued with an original issue discount)
         thereof (with such adjustments as may be deemed appropriate by the
         Company so that only Notes in denominations of $1,000 or integral
         multiples of $1,000 shall be acquired);

                  (8) that Holders whose Notes were purchased only in part will
         be issued new Notes equal in principal amount to the unpurchased
         portion of the Notes surrendered; and

                  (9) the circumstances and relevant facts regarding such Asset
         Sale.

                  On or before the date of purchase, the Company shall (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Asset Sale Offer (on a pro rata basis if required pursuant to paragraph (7)
above), (ii) deposit with the Paying Agent cash sufficient to pay the Asset Sale
Offer Price for all Notes or portions thereof so accepted and (iii) deliver to
the Trustee Notes so accepted together with an Officers' Certificate setting
forth the Notes or portions thereof being purchased by the Company. The Paying
Agent shall promptly mail or deliver to Holders of Notes so accepted payment in
an amount equal to the Asset Sale Offer Price for such Notes, and the Trustee
shall promptly authenticate and mail or deliver to such Holders a new Note equal
in principal amount to any unpurchased portion of the Note surrendered. Any
Notes not so accepted shall be promptly mailed or delivered by the Company to
the Holder thereof.

SECTION 4.15. WAIVER OF STAY, EXTENSION OR USURY LAWS

                  Each of the Company and the Guarantors covenants (to the
extent that it may lawfully do so) that it shall not at any time insist upon,
plead, or in any manner whatsoever



                                       68






claim or take the benefit or advantage of, any stay or extension law or any
usury law or other law which would prohibit or forgive the Company or any
Guarantor from paying all or any portion of the principal of, premium of, or
interest (or Liquidated Damages, if any) on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that it may
lawfully do so) each of the Company and the Guarantors hereby expressly waives
all benefit or advantage of any such law and covenants that it shall not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
had been enacted.

SECTION 4.16. LIMITATION ON LIENS SECURING INDEBTEDNESS

                  The Company and the Guarantors shall not, and neither the
Company nor the Guarantors shall permit any of their respective Subsidiaries to,
create, incur, assume or suffer to exist any Lien of any kind, other than
Permitted Liens, upon any of their respective assets now owned or acquired on or
after the date of this Indenture or upon any income or profits therefrom, unless
the Company provides, and causes its Subsidiaries to provide, concurrently
therewith, that the Notes and the applicable Guarantees are equally and ratably
so secured; provided, that if such Indebtedness is Subordinated Indebtedness,
the Lien securing such Subordinated Indebtedness shall be contractually
subordinate and junior to the Lien securing the Notes (and any related
applicable Guarantees) with the same relative priority as such Subordinated
Indebtedness shall have with respect to the Notes (and any related applicable
Guarantees).

SECTION 4.17. LIMITATIONS ON LINES OF BUSINESS

                  Neither the Company nor any of its Subsidiaries shall directly
or indirectly engage to any substantial extent in any line or lines of business
activity other than that which, in the reasonable good faith judgment of the
Company's Board of Directors, is a Related Business.

SECTION 4.18. SALE AND LEASEBACK TRANSACTIONS

                  The Company will not, and will not permit any of its
Subsidiaries to, enter into any sale and leaseback transaction; provided that
the Company and its Subsidiaries may enter into a sale and leaseback transaction
if:

                  (1) the Company or such Subsidiary could have (a) incurred
         Indebtedness in an amount equal to the Attributable Indebtedness
         relating to such sale and leaseback transaction under the Debt
         Incurrence Ratio in the second paragraph of Section 4.11 and (b)
         incurred a Lien to secure such Indebtedness pursuant to the covenant
         described in Section 4.16;




                                       69






                  (2) the gross cash proceeds of such sale and leaseback
         transaction are at least equal to the fair market value, as determined
         in good faith by the Board of Directors and set forth in an Officers'
         Certificate delivered to the Trustee, of the property that is the
         subject of such sale and leaseback transaction; and

                  (3) the transfer of assets in such sale and leaseback
         transaction is permitted by, and the Company applies the proceeds of
         such transaction in compliance with, Section 4.14.

SECTION 4.19. LIMITATION ON CASH INTEREST PAYMENTS ON CONVERTIBLE NOTE

                  Scheduled interest payments in respect of the Convertible Note
shall be paid in kind pursuant to the terms thereof, unless the Company's
Consolidated Coverage Ratio for the Reference Period immediately preceding the
date of such interest payment is at least equal to the Debt Incurrence Ratio, in
which case, such scheduled interest payments shall be payable, at the Company's
option, in cash pursuant to the terms thereof.


SECTION 4.20. DESIGNATION OF UNRESTRICTED SUBSIDIARIES

                  (a) The Board of Directors of the Company may designate any
Subsidiary (including any newly acquired or newly formed Subsidiary) that does
not directly, indirectly or beneficially own any Capital Stock of, or
Subordinated Indebtedness of, or own or hold any Lien on any property of, the
Company or any other Subsidiary of the Company, to be an Unrestricted Subsidiary
so long as (a) such Subsidiary at the time of such designation: (i) has no
Indebtedness other than Non-Recourse Indebtedness; provided, that the Company or
a Subsidiary of the Company may guarantee Indebtedness of an Unrestricted
Subsidiary so long as any such guarantee constitutes an Investment made pursuant
to clause (f) of the definition of Permitted Investment; (ii) is not party to
any agreement, contract, arrangement or understanding with the Company or any
Subsidiary of the Company unless the terms of any such agreement, contract,
arrangement or understanding are no less favorable to the Company or such
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Company; (iii) is a Person with respect to which neither
the Company nor any of its Subsidiaries has any direct or indirect obligation
(x) to subscribe for additional Equity Interests, except to the extent that any
such Investment made for such purpose constitutes an Investment made pursuant to
clause (f) of the definition of Permitted Investment, or (y) to maintain or
preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results; and (iv) has not guaranteed or
otherwise directly or indirectly provided credit support for any Indebtedness of
the Company or any of its Subsidiaries; and (b) each Subsidiary of such
Subsidiary shall also be designated an Unrestricted Subsidiary and shall comply
with clause (a) above.




                                       70






                  (b) The Board of Directors of the Company may designate any
Unrestricted Subsidiary to be a Subsidiary, provided, that (a) no Default or
Event of Default is existing or will occur as a consequence thereof and (b)
immediately after giving effect to such designation, on a pro forma basis, the
Company could incur at least $1.00 of Indebtedness pursuant to the Debt
Incurrence Ratio.

                  (c) Each such designation shall be evidenced by filing with
the Trustee a certified copy of the resolution giving effect to such designation
and an Officers' Certificate certifying that such designation complied with the
foregoing conditions.


                                    ARTICLE V

                              SUCCESSOR CORPORATION

SECTION 5.1. LIMITATION ON MERGER, SALE OR CONSOLIDATION

                  The Company shall not consolidate with or merge with or into
another Person or, directly or indirectly, sell, lease, convey or transfer all
or substantially all of its assets (such amounts to be computed on a
consolidated basis), whether in a single transaction or a series of related
transactions, to another Person or group of affiliated Persons, unless:

                  (1) either (a) the Company is the continuing entity or (b) the
         resulting, surviving or transferee entity or, in the case of a plan of
         liquidation, the entity which receives the greatest value from such
         plan of liquidation is a corporation organized under the laws of the
         United States, any state thereof or the District of Columbia and
         expressly assumes by supplemental indenture all of the Company's
         obligations in connection with the Notes and this Indenture;

                  (2) no Default or Event of Default shall exist or shall occur
         immediately after giving effect on a pro forma basis to such
         transaction;

                  (3) immediately after giving effect to such transaction on a
         pro forma basis, the Consolidated Net Worth of the consolidated
         surviving or transferee entity or, in the case of a plan of
         liquidation, the entity which receives the greatest value from such
         plan of liquidation is at least equal to the Company's Consolidated Net
         Worth immediately prior to such transaction;

                  (4) unless such transaction is solely the merger of the
         Company and one of the Company's previously existing Guarantors for the
         purpose of reincorporation into another jurisdiction and which
         transaction is not for the purpose of evading this provision and not in
         connection with any other transaction, immediately after giving effect
         to such transaction on a pro forma basis, the consolidated resulting,
         surviving or transferee entity or, in the case of a plan of
         liquidation, the entity which receives the



                                       71






         greatest value from such plan of liquidation would immediately
         thereafter be permitted to incur at least $1.00 of additional
         Indebtedness pursuant to the Debt Incurrence Ratio; and

                  (5) each Guarantor, shall have by amendment to its Guarantee
         and this Indenture confirmed in writing that its Guarantee shall apply
         to the obligations of the Company or the surviving entity in accordance
         with the Notes and this Indenture.

                  For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise) of all or substantially all of the properties and
assets of one or more Subsidiaries, the Company's interest in which constitutes
all or substantially all of the Company's properties and assets, shall be deemed
to be the transfer of all or substantially all of the Company's properties and
assets.

SECTION 5.2. SUCCESSOR CORPORATION SUBSTITUTED

                  Upon any consolidation or merger or any transfer of all or
substantially all of the assets of the Company in accordance with Section 5.1,
the successor entity formed by such consolidation or into which the Company is
merged or to which such transfer is made shall succeed to and (except in the
case of a lease or any transfer of all or substantially all of the Company's
assets) be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such successor entity
had been named therein as the Company, and (except in the case of a lease or any
transfer or all or substantially all of the Company's assets) the Company shall
be released from the obligations under the Notes and this Indenture except with
respect to any obligations that arise from, or are related to, such transaction.


                                   ARTICLE VI

                         EVENTS OF DEFAULT AND REMEDIES

SECTION 6.1. EVENTS OF DEFAULT

                  "Event of Default," wherever used herein, means any one of the
following events (whatever reason for such Event of Default and whether it shall
be caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body)

                  (1) the Company's failure to pay any installment of interest
         (or Liquidated Damages, if any) on the Notes as and when the same
         becomes due and payable and the continuance of any such failure for 30
         days;




                                       72






                  (2) the Company's failure to pay all or any part of the
         principal, or premium, if any, on the Notes when and as the same
         becomes due and payable at maturity, redemption, by acceleration or
         otherwise, including, without limitation, payment of the Change of
         Control Purchase Price or the Asset Sale Offer Price, on Notes validly
         tendered and not properly withdrawn pursuant to a Change of Control
         Offer or Asset Sale Offer, as applicable;

                  (3) the Company's failure or the failure by any of its
         Subsidiaries to observe or perform any other covenant or agreement
         contained in the Notes or this Indenture and, except for the provisions
         under Sections 4.3 and 4.14, and Articles V and X, the continuance of
         such failure for a period of 60 days after written notice is given to
         the Company by the Trustee or to the Company and the Trustee by the
         Holders of at least 25% in aggregate principal amount of the Notes
         outstanding;

                  (4) a decree, judgment, or order by a court of competent
         jurisdiction shall have been entered adjudicating the Company or any of
         its Significant Subsidiaries as bankrupt or insolvent, or approving as
         properly filed a petition seeking reorganization of the Company or any
         of its Significant Subsidiaries under any bankruptcy or similar law,
         and such decree or order shall have continued undischarged and unstayed
         for a period of 60 days; or a decree, judgment or order of a court of
         competent jurisdiction appointing a receiver, liquidator, trustee, or
         assignee in bankruptcy or insolvency for the Company, any of its
         Significant Subsidiaries, or any substantial part of the property of
         any such Person, or for the winding up or liquidation of the affairs of
         any such Person, shall have been entered, and such decree, judgment, or
         order shall have remained in force undischarged and unstayed for a
         period of 60 days;

                  (5) the Company or any of its Significant Subsidiaries shall
         institute proceedings to be adjudicated a voluntary bankrupt, or shall
         consent to the filing of a bankruptcy proceeding against it, or shall
         file a petition or answer or consent seeking reorganization under any
         bankruptcy or similar law or similar statute, or shall consent to the
         filing of any such petition, or shall consent to the appointment of a
         custodian, receiver, liquidator, trustee, or assignee in bankruptcy or
         insolvency of it or any substantial part of its assets or property, or
         shall make a general assignment for the benefit of creditors, or shall
         admit in writing its inability to pay its debts generally as they
         become due, or take any corporate action in furtherance of any of the
         foregoing;

                  (6) a default in the Company's Indebtedness or the
         Indebtedness any of its Subsidiaries with an aggregate amount
         outstanding in excess of $10,000,00 (a) resulting from the failure to
         pay principal at maturity or (b) as a result of which the maturity of
         such Indebtedness has been accelerated prior to its stated maturity;

                  (7) final unsatisfied judgments not covered by insurance
         aggregating in excess of $5,000,000, at any one time rendered against
         the Company or any of its Subsidiaries and not stayed, bonded or
         discharged within 60 days; and



                                       73






                  (8) any Guarantee of a Guarantor that is a Significant
         Subsidiary ceases to be in full force and effect or becomes
         unenforceable or invalid or is declared null and void (other than in
         accordance with the terms of the Guarantee and this Indenture) or any
         Guarantor denies or disaffirms its obligations under its Guarantee.

SECTION 6.2. ACCELERATION OF MATURITY DATE; RESCISSION AND ANNULMENT

                  If an Event of Default occurs and is continuing (other than an
Event of Default specified in Section 6.1(4) or Section 6.1(5) relating to the
Company or any of its Significant Subsidiaries,) then in every such case, unless
the principal of all of the Notes shall have already become due and payable,
either the Trustee or the Holders of at least 25% in aggregate principal amount
of the Notes then outstanding, by notice in writing to the Company (and to the
Trustee if given by Holders) (an "Acceleration Notice"), may declare all
principal, determined as set forth below, and accrued interest (and Liquidated
Damages, if any) thereon to be due and payable immediately.

                   If an Event of Default specified in Section 6.1(4) or Section
6.1(5), relating to the Company or any of its Significant Subsidiaries occurs,
all principal and accrued interest (and Liquidated Damages, if any) thereon will
be immediately due and payable on all outstanding Notes without any declaration
or other act on the part of the Trustee or the Holders. The Holders of a
majority in aggregate principal amount of the then outstanding Notes, by written
notice to the Trustee, may rescind any acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default, other than the non-payment of the principal of, premium, if
any, and interest, if any, on the Notes that have become due solely because of
the acceleration, and except a Default with respect to any provision requiring a
supermajority approval to amend, which Default may only be waived by such a
supermajority, have been cured or waived as provided in Section 6.12.

SECTION 6.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE

                  The Company covenants that if an Event of Default in payment
of principal, premium or interest specified in clause (1) or (2) of Section 6.1
hereof occurs and is continuing, the Company shall, upon demand of the Trustee,
pay to it, for the benefit of the Holders of such Notes, the whole amount then
due and payable on such Notes for principal, premium (if any), and interest (and
Liquidated Damages, if any), and, to the extent that payment of such interest
shall be legally enforceable, interest on any overdue principal (and premium, if
any), and on any overdue interest (and Liquidated Damages, if any), at the rate
borne by the Notes, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including compensation
to, and expenses, disbursements and advances of the Trustee and its agents and
counsel and all other amounts due the Trustee under Section 7.7.




                                       74






                  If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust in favor
of the Holders, may institute a judicial proceeding for the collection of the
sums so due and unpaid, may prosecute such proceeding to judgment or final
decree and may enforce the same against the Company or any other obligor upon
the Notes and collect the moneys adjudged or decreed to be payable in the manner
provided by law out of the property of the Company or any other obligor upon the
Notes, wherever situated.

                  If an Event of Default occurs and is continuing, the Trustee
may in its discretion proceed to protect and enforce its rights and the rights
of the Holders by such appropriate judicial proceedings as the Trustee shall
deem most effective to protect and enforce any such rights, whether for the
specific enforcement of any covenant or agreement in this Indenture or in aid of
the exercise of any power granted herein, or to enforce any other proper remedy.

SECTION 6.4. TRUSTEE MAY FILE PROOFS OF CLAIM

                  In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Notes or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Notes shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal, premium, if any, or interest (and
Liquidated Damages, if any)) shall be entitled and empowered, by intervention in
such proceeding or otherwise to take any and all actions under the TIA,
including

                  (1) to file and prove a claim for the whole amount of
         principal (and premium, if any) and interest (and Liquidated Damages,
         if any) owing and unpaid in respect of the Notes and to file such other
         papers or documents as may be necessary or advisable in order to have
         the claims of the Trustee (including any claim for the reasonable
         compensation, expenses, disbursements and advances of the Trustee and
         its agent and counsel and all other amounts due the Trustee under
         Section 7.7) and of the Holders allowed in such judicial proceeding,
         and

                  (2) to collect and receive any moneys or other property
         payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and any
other amounts due the Trustee under Section 7.7 hereof.




                                       75






                  Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.

SECTION 6.5. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF NOTES

                  All rights of action and claims under this Indenture or the
Notes may be prosecuted and enforced by the Trustee without the possession of
any of the Notes or the production thereof in any proceeding relating thereto,
and any such proceeding instituted by the Trustee shall be brought in its own
name as trustee of an express trust in favor of the Holders, and any recovery of
judgment shall, after provision for the payment of compensation to, and
expenses, disbursements and advances of the Trustee and its agents and counsel
and all other amounts due the Trustee under Section 7.7, be for the ratable
benefit of the Holders of the Notes in respect of which such judgment has been
recovered.

SECTION 6.6. PRIORITIES

                  Any money collected by the Trustee pursuant to this Article VI
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such money on account of principal,
premium (if any), or interest (or Liquidated Damages, if any), upon presentation
of the Notes and the notation thereon of the payment if only partially paid and
upon surrender thereof if fully paid:

                  FIRST: To the Trustee in payment of all amounts due pursuant
to Section 7.7 hereof;

                  SECOND: To the Holders in payment of the amounts then due and
unpaid for principal of, premium (if any), and interest (and Liquidated Damages,
if any) on, the Notes in respect of which or for the benefit of which such money
has been collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Notes for principal, premium
(if any), and interest (and Liquidated Damages, if any), respectively; and

                  THIRD: To the Company, the Guarantors or such other Person as
may be lawfully entitled thereto, the remainder, if any, each as their
respective interests may appear.

                  The Trustee may, but shall not be obligated to, fix a record
date and payment date for any payment to the Holders under this Section 6.6.



                                       76


SECTION 6.7. LIMITATION ON SUITS

                  No Holder of any Note shall have any right to order or direct
the Trustee to institute any proceeding, judicial or otherwise, with respect to
this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless

                                    (A) such Holder has previously given written
                  notice to the Trustee of a continuing Event of Default;

                                    (B) the Holders of not less than 25% in
                  aggregate principal amount of then outstanding Notes shall
                  have made written request to the Trustee to institute
                  proceedings in respect of such Event of Default in its own
                  name as Trustee hereunder;

                                    (C) such Holder or Holders have offered to
                  the Trustee security or indemnity reasonably satisfactory to
                  it against the costs, expenses and liabilities to be incurred
                  or reasonably probable to be incurred in compliance with such
                  request;

                                    (D) the Trustee for 60 days after its
                  receipt of such notice, request and offer of indemnity has
                  failed to institute any such proceeding; and

                                    (E) no direction inconsistent with such
                  written request has been given to the Trustee during such
                  60-day period by the Holders of a majority in aggregate
                  principal amount of the outstanding Notes;

it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.

SECTION 6.8. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
             INTEREST

                  Notwithstanding any other provision of this Indenture, the
Holder of any Note shall have the right, which is absolute and unconditional, to
receive payment of the principal of, and premium (if any), and interest (and
Liquidated Damages, if any) on, such Note on the Maturity Dates of such payments
as expressed in such Note (in the case of redemption, the Redemption Price on
the applicable Redemption Date, in the case of a Change of Control, the Change
of Control Purchase Price on the Change of Control Purchase Date, and in the
case of an Asset Sale, the Asset Sale Offer Price on the relevant purchase date)
and to institute suit for the enforcement of any such payment after such
respective dates, and such rights shall not be impaired without the consent of
such Holder.



                                       77






SECTION 6.9. RIGHTS AND REMEDIES CUMULATIVE

                  Except as otherwise provided with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Notes in Section 2.7 hereof,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

SECTION 6.10. DELAY OR OMISSION NOT WAIVER

                  No delay or omission by the Trustee or by any Holder of any
Note to exercise any right or remedy arising upon any Event of Default shall
impair the exercise of any such right or remedy or constitute a waiver of any
such Event of Default. Every right and remedy given by this Article VI or by law
to the Trustee or to the Holders may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee or by the Holders, as the case
may be.

SECTION 6.11. CONTROL BY HOLDERS

                  The Holder or Holders of a majority in aggregate principal
amount of then outstanding Notes shall have the right to direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or exercising any trust or power conferred upon the Trustee, provided, that:

                  (1) such direction shall not be in conflict with any
         applicable rule of law or with this Indenture;

                  (2) the Trustee shall not determine that the action so
         directed would be unjustly prejudicial to the Holders not taking part
         in such direction; and

                  (3) the Trustee may take any other action deemed proper by the
         Trustee which is not inconsistent with such direction.

SECTION 6.12. WAIVER OF EXISTING OR PAST DEFAULT

                  Subject to Section 6.8, the Holder or Holders of not less than
a majority in aggregate principal amount of the outstanding Notes may, on behalf
of all Holders, waive any existing or past Default and its consequences under
this Indenture, except a continuing Default

                                    (A) with respect to any provision requiring
                  a supermajority approval to amend, which Default may only be
                  waived by such supermajority; or



                                       78






                                    (B) in the payment of the principal of, or
                  interest on, any Note as specified in clauses (1) and (2) of
                  Section 6.1 hereof and not yet cured; or

                                    (C) with respect to any covenant or
                  provision hereof which, under Article IX, cannot be modified
                  or amended without the consent of the Holder of each
                  outstanding Note affected.

                  Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture, but no such waiver shall extend to any
subsequent or other Default or impair the exercise of any right arising from
such Default or Event of Default.

SECTION 6.13. UNDERTAKING FOR COSTS

                  All parties to this Indenture agree, and each Holder of any
Note by his acceptance thereof shall be deemed to have agreed, that in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Trustee for any action taken, suffered or omitted to be taken by it
as Trustee, any court may in its discretion require the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 6.13 shall not apply to any
suit instituted by the Company, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in aggregate principal amount of the outstanding Notes, or to any
suit instituted by any Holder for enforcement of the payment of principal of, or
premium (if any), or interest (or Liquidated Damages, if any) on, any Note on or
after the respective Maturity Date expressed in such Note (including, in the
case of redemption, on or after the Redemption Date).

SECTION 6.14. RESTORATION OF RIGHTS AND REMEDIES

                  If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Guarantors, the Trustee and
the Holders shall be restored severally and respectively to their former
positions hereunder and thereafter all rights and remedies of the Trustee and
the Holders shall continue as though no such proceeding had been instituted.




                                       79


                                   ARTICLE VII

                                     TRUSTEE

                  The Trustee hereby accepts the trust imposed upon it by this
Indenture and covenants and agrees to perform the same, as herein expressed,
subject to the terms hereof.

SECTION 7.1. DUTIES OF TRUSTEE

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

                  (b) Except during the continuance of a Default or an Event of
Default:

                  (1) the Trustee need perform only those duties as are
         specifically set forth in this Indenture and no others, and no
         covenants or obligations shall be implied in or read into this
         Indenture which are adverse to the Trustee, and

                  (2) in the absence of bad faith on its part, the Trustee may
         conclusively rely, as to the truth of the statements and the
         correctness of the opinions expressed therein, upon certificates or
         opinions furnished to the Trustee and conforming to the requirements of
         this Indenture. However, in the case of any such certificates or
         opinions which by any provision hereof are specifically required to be
         furnished to the Trustee, the Trustee shall examine the certificates
         and opinions to determine whether or not they conform to the
         requirements of this Indenture (but need not confirm or investigate the
         accuracy of mathematical calculations or other facts stated therein).

                  (c) The Trustee shall not be relieved from liability for its
own negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

                  (1) this paragraph does not limit the effect of paragraph (b)
         of this Section 7.1;

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

                  (3) the Trustee shall not be liable with respect to any action
         it takes or omits to take in good faith in accordance with a direction
         received by it pursuant to Section 6.11 hereof.

                  (d) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or at the request, order or



                                       80






direction of the Holders or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it.

                  (e) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this
Section 7.1.

                  (f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company
(including without limitation to the extent the Trustee receives funds prior to
the interest payment date in order to comply with the provisions of Section
4.1). Assets held in trust by the Trustee need not be segregated from other
assets except to the extent required by law.

SECTION 7.2. RIGHTS OF TRUSTEE

                  Subject to Section 7.1 hereof:

                  (a) In the absence of bad faith, the Trustee may conclusively
rely on any document reasonably believed by it to be genuine and to have been
signed or presented by the proper Person. The Trustee need not investigate any
fact or matter stated in such document.

                  (b) Before the Trustee acts or refrains from acting, it may
consult with counsel and may require an Officers' Certificate or an Opinion of
Counsel, which shall conform to Sections 12.4 and 12.5 hereof. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on such certificate or advice of counsel.

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

                  (d) The Trustee shall not be liable for any action it or its
agent takes or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers conferred upon it by this Indenture;
provided, however, that the Trustee's conduct does not constitute willful
misconduct or gross negligence.

                  (e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, notice, request, direction, consent, order, bond, debenture
or other paper or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as it may see fit.

                  (f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the



                                       81






Trustee reasonable security or indemnity reasonably satisfactory to it against
the costs, expenses and liabilities which may be incurred therein or thereby.

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

                  (h) The Trustee shall have no duty to inquire as to the
performance of the Company's or any Guarantor's covenants in Article IV hereof
or as to the performance by any Agent of its duties hereunder. In addition, the
Trustee shall not be deemed to have knowledge of any Default or Event of Default
except (i) any Event of Default occurring pursuant to Sections 6.1(1), 6.1(2)
and 4.1 hereof, or (ii) any Default or Event of Default of which the Trustee
shall have received written notification or obtained actual knowledge.

                  (i) Whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, rely upon an Officers' Certificate, an Opinion of Counsel, or both.

                  (j) The Trustee may request that the Issuer or the Company
deliver an Officers' Certificate setting forth the names of individuals and/or
titles of officers authorized at such time to take specified actions pursuant to
this Indenture, which Officers' Certificate may be signed by any person
authorized to sign an Officers' Certificate, including any person specified as
so authorized in any such certificate previously delivered and not superseded.

SECTION 7.3. INDIVIDUAL RIGHTS OF TRUSTEE

                  The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may otherwise deal with the Company, any
Guarantor, any of their Subsidiaries, or their respective Affiliates with the
same rights it would have if it were not Trustee. Any Agent may do the same with
like rights. However, the Trustee must comply with Sections 7.10 and 7.11
hereof.

SECTION 7.4. TRUSTEE'S DISCLAIMER

                  The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Notes and it shall not be accountable for the
Company's use of the proceeds from the Notes, and it shall not be responsible
for any statement in the Notes, other than the Trustee's certificate of
authentication, or the use or application of any funds received by a Paying
Agent other than the Trustee.



                                       82


SECTION 7.5. NOTICE OF DEFAULT

                  If a Default or an Event of Default occurs and is continuing
and if it is known to the Trustee, the Trustee shall mail to each Securityholder
notice of the uncured Default or Event of Default within 90 days after such
Default or Event of Default occurs.

SECTION 7.6. REPORTS BY TRUSTEE TO HOLDERS

                  Within 60 days after each May 15 beginning with the May 15
following the date of this Indenture, the Trustee shall, if required by law,
mail to each Securityholder a brief report dated as of such May 15 that complies
with TIA Section 313(a). The Trustee also shall comply with TIA Sections 313(b)
and 313(c).

                  The Company shall promptly notify the Trustee in writing if
the Notes become listed on any stock exchange or automatic quotation system or
of any delisting thereof.

                  A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Company and filed with the SEC and each
stock exchange, if any, on which the Notes are listed.

SECTION 7.7. COMPENSATION AND INDEMNITY

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

                  The Company and the Guarantors jointly and severally agree to
indemnify each of the Trustee (in its capacity as Trustee) and each predecessor
Trustee and each of its officers, directors, attorneys-in-fact and agents for,
and hold it harmless against, any claim, demand, expense (including but not
limited to reasonable compensation, disbursements and expenses of the Trustee's
agents and counsel), loss or liability incurred by it without negligence or bad
faith on the part of the Trustee, arising out of or in connection with the
acceptance and the administration of this trust and its rights or duties
hereunder, including the reasonable costs and expenses of defending itself
against any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder. The Trustee shall notify the Company
promptly of any claim asserted against the Trustee for which it may seek
indemnity; provided, however, that any failure to so notify the Company shall
not relieve the Company or any Guarantor of its indemnity obligations hereunder.
The Company and the Guarantors shall defend the claim and the Trustee shall
provide reasonable cooperation at the Company's and the Guarantors' expense in
the defense. The Trustee may have separate counsel and the Company and the
Guarantors shall pay the reasonable fees and expenses of such counsel; provided,
that



                                       83






the Company and the Guarantors will not be required to pay such fees and
expenses if they assume the Trustee's defense and if the Trustee is advised by
counsel that there is no conflict of interest between the Company and the
Guarantors and the Trustee in connection with such defense. The Company and the
Guarantors need not pay for any settlement made without their written consent,
which shall not be unreasonably withheld. The Company and the Guarantors need
not reimburse any expense or indemnify against any loss or liability to the
extent incurred by the Trustee through its negligence, bad faith or willful
misconduct.

                  To secure the Company's and the Guarantors' payment
obligations in this Section 7.7, the Trustee shall have a lien prior to the
Notes on all assets held or collected by the Trustee, in its capacity as
Trustee, except assets held in trust to pay principal and premium, if any, of or
interest on particular Notes.

                  When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.1(4) or (5) of this Indenture occurs,
the expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.

                  The Company's and the Guarantors' obligations under this
Section 7.7 and any lien arising hereunder shall survive the resignation or
removal of the Trustee, the discharge of the Company's and the Guarantors'
obligations pursuant to Article VIII of this Indenture and any rejection or
termination of this Indenture under any Bankruptcy Law.

SECTION 7.8. REPLACEMENT OF TRUSTEE

                  The Trustee may resign by so notifying the Company in writing.
The Holder or Holders of a majority in aggregate principal amount of the
outstanding Notes may remove the Trustee by so notifying the Company and the
Trustee in writing and may appoint a successor trustee with the Company's
consent. The Company may remove the Trustee if:

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

                  (b) the Trustee is adjudged bankrupt or insolvent;

                  (c) a receiver, Custodian or other public officer takes charge
         of the Trustee or its property; or

                  (d) the Trustee becomes incapable of acting.

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



                                       84


                  A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that
and provided that all sums owing to the retiring Trustee provided for in Section
7.7 hereof have been paid, the retiring Trustee shall transfer all property held
by it as trustee to the successor Trustee, subject to the lien, if any, provided
in Section 7.7 hereof, the resignation or removal of the retiring Trustee shall
become effective, and the successor Trustee shall have all the rights, powers
and duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.

                  If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee (at the
Company's cost and expense), the Company or the Holder or Holders of at least
10% in aggregate principal amount of the outstanding Notes may petition any
court of competent jurisdiction for the appointment of a successor Trustee.

                  If the Trustee fails to comply with Section 7.10 hereof, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.

                  Notwithstanding replacement of the Trustee pursuant to this
Section 7.8, the Company's and the Guarantors' obligations under Section 7.7
hereof shall continue for the benefit of the retiring Trustee.

SECTION 7.9. SUCCESSOR TRUSTEE BY MERGER, ETC.

                  If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee.

SECTION 7.10. ELIGIBILITY; DISQUALIFICATION

                  The Trustee shall at all times satisfy the requirements of TIA
Section 310(a)(1), (2) and (5). The Trustee shall have a combined capital and
surplus of at least $25,000,000, as set forth in its most recent published
annual report of condition. The Trustee shall comply with TIA Section 310(b).

SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.

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



                                       85


                                  ARTICLE VIII

                    LEGAL DEFEASANCE AND COVENANT DEFEASANCE
                         AND SATISFACTION AND DISCHARGE

SECTION 8.1. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE

                  The Company may elect to have Section 8.2, at the Company's
option and at any time, or Section 8.3, at the Company's option and at any time,
of this Indenture applied to all outstanding Notes upon compliance with the
conditions set forth below in this Article VIII.

SECTION 8.2. LEGAL DEFEASANCE AND DISCHARGE

                  Upon the Company's exercise under Section 8.1 hereof of the
option applicable to this Section 8.2, the Company and the Guarantors shall be
deemed to have been discharged from their respective obligations with respect to
all outstanding Notes and Guarantees on the date the conditions set forth below
are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the Notes, and this Indenture shall cease
to be of further effect as to all outstanding Notes and Guarantees, except as to
be deemed to be "outstanding" only for the purposes of the Sections of this
Indenture referred to in (a) and (b) below, and the Company and the Guarantors
shall be deemed to have satisfied all other of their respective obligations
under such Notes and this Indenture (and the Trustee, on demand of and at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (a) the rights of Holders of outstanding Notes to
receive payments in respect of the principal of, premium, if any, and interest
(and Liquidated Damages, if any) on such Notes when such payments are due from
the trust described in Section 8.5, (b) the Company's obligations with respect
to such Notes under Sections 2.3, 2.4, 2.6, 2.7, 2.10, 4.2, 8.5, 8.6 and 8.7
hereof, and (c) the rights, powers, trusts, duties and immunities of the Trustee
hereunder and the Company's obligations in connection therewith. Subject to
compliance with this Article VIII, the Company may exercise its option under
this Section 8.2 notwithstanding the prior exercise of its option under Section
8.3 hereof with respect to the Notes.

SECTION 8.3. COVENANT DEFEASANCE

                  Upon the Company's exercise under Section 8.1 hereof of the
option applicable to this Section 8.3, the Company and the Guarantors shall be
released from their respective obligations under the covenants contained in
Sections 4.3, 4.6, 4.8, 4.10, 4.11, 4.12, 4.13, 4.14, 4.16, 4.17, 4.18, 4.19 and
4.20, Article V, Article X and the third and fourth paragraphs of Section
11.1(a) hereof with respect to the outstanding Notes on and after the date the
conditions set forth below are satisfied (hereinafter, "Covenant Defeasance"),
and the Notes shall thereafter be deemed not "outstanding" for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but



                                       86






shall continue to be deemed "outstanding" for all other purposes hereunder. For
this purpose, such Covenant Defeasance means that, with respect to the
outstanding Notes, neither the Company nor any Guarantor need comply with and
shall have any liability in respect of any term, condition or limitation set
forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.1(3), but, except as specified above, the remainder of this
Indenture and such Notes shall be unaffected thereby. In addition, upon the
Company's exercise under Section 8.1 hereof of the option applicable to this
Section 8.3, and subject to Section 8.4, Sections 6.1(6) through 6.1(8) hereof
shall not constitute Events of Default with respect to the Notes.


SECTION 8.4. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE

                  The following shall be the conditions to the application of
either Section 8.2 or 8.3 hereof to the outstanding Notes:

                  (a) (i) The Company shall irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders of the Notes, U.S. legal
tender, U.S. Government Obligations or a combination thereof, in such amounts as
will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest (and Liquidated Damages, if any) on such Notes on the stated date for
payment thereof or on the redemption date of such principal or installment of
principal of, premium, if any, or interest (and Liquidated Damages, if any) on
such Notes, and the Trustee must have, for the benefit of the Holders of Notes,
a valid, perfected, exclusive security interest in such trust; (ii) in the case
of Legal Defeasance, the Company shall have delivered to the Trustee an opinion
of counsel in the United States reasonably acceptable to the Trustee confirming
that: (A) the Company has received from, or there has been published by the
Internal Revenue Service, a ruling or (B) since the date of this Indenture,
there has been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion of counsel shall confirm
that, the Holders of such Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such Legal Defeasance had not
occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to such Trustee confirming that the Holders of such Notes will not
recognize income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Covenant Defeasance had not occurred; (iv) no Default or Event of Default
(other than a Default resulting from the borrowing of funds to be applied to
such deposit and the grant of any Lien securing such borrowing) shall have
occurred and be continuing on the date of such deposit or insofar as Events of
Default from bankruptcy or insolvency events are concerned, at any time in the
period ending on the 91st day



                                       87






after the date of deposit; (v) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a default under this
Indenture (other than a Default resulting from the borrowing of funds to be
applied to such deposit and the grant of any Lien securing such borrowing) or
any other material agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is
bound; (vi) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the intent
of preferring the Holders of such Notes over any other creditors of the Company
or with the intent of defeating, hindering, delaying or defrauding any other
creditors of the Company or others; and (vii) the Company shall have delivered
to the Trustee an Officers' Certificate and an opinion of counsel, each stating
that the conditions precedent provided for in, in the case of the Officers'
Certificate, (i) through (vi) and, in the case of the opinion of counsel,
clauses (i) (with respect to the validity and perfection of the security
interest), (ii), (iii) and (v) of this paragraph have been complied with and the
Company shall have delivered to the Trustee an Officers' Certificate, subject to
such qualifications and exceptions as the Trustee deems appropriate, to the
effect that, assuming no Holder of the Notes is an insider of the Company, the
trust funds will not be subject to the effect of any applicable Federal
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally. Any Legal Defeasance or Covenant Defeasance shall be effective
on the earlier of (i) the 91st day after the date of such deposit, and (ii) the
day on which all of the conditions set forth in this Section 8.4 have been
satisfied.

         If the funds deposited with the Trustee to effect Covenant Defeasance
are insufficient to pay the principal of, premium, if any, and interest (and
Liquidated Damages, if any) on the Notes when due, or if any court enters an
order directing the repayment of the deposit to the Company or otherwise making
the deposit unavailable to make payments under the Notes when due, then (so long
as the insufficiency exists or the order remains in effect) the obligations of
the Company and the Guarantors under this Indenture will be revived and no such
defeasance will be deemed to have occurred.

SECTION 8.5. DEPOSITED CASH AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST;
             OTHER MISCELLANEOUS PROVISIONS

                  Subject to Section 8.6 hereof, all cash and U.S. Government
Obligations (including the proceeds thereof) deposited with the Trustee (or
other qualifying trustee, collectively for purposes of this Section 8.5, the
"Paying Agent") pursuant to Section 8.4 hereof in respect of the outstanding
Notes shall be held in trust and applied by the Paying Agent, in accordance with
the provisions of such Notes and this Indenture, to the payment, either directly
or through any other Paying Agent as the Trustee may determine, to the Holders
of such Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest (and Liquidated Damages, if any), but such money
need not be segregated from other funds except to the extent required by law.

                  The Company shall pay and indemnify the Trustee against any
tax, fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to



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Section 8.4 or the principal and interest received in respect thereof other than
any such tax, fee or other charge which by law is for the account of the Holders
of outstanding Notes.

SECTION 8.6. REPAYMENT TO THE COMPANY

                  (a) Anything in this Article VIII to the contrary
notwithstanding, the Trustee or the Paying Agent shall deliver or pay to the
Company from time to time upon the request of the Company any cash or U.S.
Government Obligations held by it as provided in Section 8.4 hereof which, in
the opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee (which may
be the opinion delivered under Section 8.4(a) hereof), are in excess of the
amount thereof that would then be required to be deposited to effect an
equivalent Legal Defeasance or Covenant Defeasance.

                  (b) Any cash and U.S. Government Obligations (including the
proceeds thereof) deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, premium, if any,
or interest (and Liquidated Damages, if any) on any Note and remaining unclaimed
for two years after such principal, and premium, if any, or interest (and
Liquidated Damages, if any) has become due and payable shall be paid to the
Company on its request; and the Holder of such Note shall thereafter look only
to the Company for payment thereof, and all liability of the Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of the Company cause to be published
once, in the New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such notification
or publication, any unclaimed balance of such money then remaining will be
repaid to the Company.

SECTION 8.7. REINSTATEMENT

                  If the Trustee or Paying Agent is unable to apply any cash or
U.S. Government Obligations in accordance with Section 8.2 or 8.3 hereof, as the
case may be, of this Indenture by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Guarantors' obligations under this
Indenture and the Notes shall be revived and reinstated as though no deposit had
occurred pursuant to Section 8.2 or 8.3 hereof until such time as the Trustee or
Paying Agent is permitted to apply such money in accordance with Sections 8.2
and 8.3 hereof, as the case may be; provided, however, that, if the Company
makes any payment of principal of, premium, if any, or interest (and Liquidated
Damages, if any) on any Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the cash or U.S. Government Obligations held by the
Trustee or Paying Agent.



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SECTION 8.8. SATISFACTION AND DISCHARGE

         (a) All outstanding Notes have been delivered to the Trustee for
cancellation; or

         (b)(1) the Company has given irrevocable and unconditional notice of
redemption for all of the outstanding Notes under Article III hereof, or all
outstanding Notes have otherwise become due and payable, and we have irrevocably
deposited or caused to be deposited with the Trustee an amount of money
sufficient to pay and discharge the entire Indebtedness (including all
principal, premium, if any, and accrued interest, and Liquidated Damages, if
any) on all outstanding Notes,

         (2) the Company has delivered irrevocable instructions to the Trustee
to apply the deposited money toward the payment of the Notes at maturity or the
redemption date, as the case may be,

         (3) the Trustee, for the benefit of the Holders of the Notes, has a
valid, perfected, exclusive security interest in the trust,

         (4) the deposit does and will not result in a breach or violation of,
or constitute a default under this Indenture or any other material agreement or
instrument to which the Company or any of its Subsidiaries is a party or is
otherwise bound,

         (5) the Company has paid all other amounts payable by it under this
Indenture, and

         (6) the Company has delivered to the Trustee and Officers' Certificate
stating that the deposit was not made by it with the intent to hinder, delay, or
defraud any other of its creditors.

         The Company must also deliver to the Trustee an Officers' Certificate
and an Opinion of Counsel confirming the satisfaction of the conditions in
clauses (3) (with respect to the validity and perfection of the security
interest) and (4) above.

                                   ARTICLE IX

                       AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS

                  Without the consent of any Holder, the Company or any
Guarantor, when authorized by Board Resolutions, and the Trustee, at any time
and from time to time, may enter into one or more indentures supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:

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



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                  (2) to add to the covenants of the Company or the Guarantors
         for the benefit of the Holders, or to surrender any right or power
         herein conferred upon the Company or the Guarantors;

                  (3) to provide for collateral for or additional Guarantors of
         the Notes;

                  (4) to evidence the succession of another Person to the
         Company, and the assumption by any such successor of the obligations of
         the Company, herein and in the Notes in accordance with Article V;

                  (5) to comply with the TIA;

                  (6) to evidence the succession of another corporation to any
         Guarantor and assumption by any such successor of the Guarantee of such
         Guarantor (as set forth in Section 11.4) in accordance with Article XI;

                  (7) to evidence the release of any Guarantor in accordance
         with Article XI;

                  (8) to evidence and provide for the acceptance of appointment
         hereunder by a successor Trustee with respect to the Notes;

                  (9) in any other case where a supplemental indenture is
         required or permitted to be entered into pursuant to the provisions of
         this Indenture without the consent of any Holder;

                  (10) to provide for the issuance and authorization of the
         Exchange Notes; or

                  (11) to make any change that does not adversely affect the
         rights of any Holder.

SECTION 9.2. AMENDMENTS, SUPPLEMENTAL INDENTURES AND WAIVERS WITH CONSENT OF
             HOLDERS

                  Subject to Section 6.8 hereof, with the consent of the Holders
of not less than a majority in aggregate principal amount of the Notes then
outstanding (including consents obtained in connection with a tender offer or
exchange offer for such Notes), by written act of said Holders delivered to the
Company and the Trustee, the Company and the Guarantors, when authorized by
Board Resolutions, and the Trustee may amend or supplement this Indenture or
enter into an indenture or indentures supplemental hereto for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of modifying in any manner the rights of the
Holders under this Indenture or the Notes. Subject to Section 6.8, the Holder or
Holders of not less than a majority in aggregate principal amount of Notes then
outstanding may waive compliance by the Company or any Guarantor with any
provision of this Indenture or the Notes.



                                       91







                  Notwithstanding any of the above, however, no such amendment,
supplemental indenture or waiver shall, without the consent of Holders of at
least 66 2/3% in aggregate principal amount of the Notes then outstanding,
modify the provisions (including the defined terms used therein) governing the
terms of the Guarantees or, except as set forth in clause (1) below, the
provisions (including the defined terms used therein) of Article X, in either
case in a manner adverse to the Holders.

                  Notwithstanding any of the above, however, no such amendment,
supplemental indenture or waiver shall, without the consent of the Holder of
each outstanding Note affected thereby:

                  (1) change the Stated Maturity on any Note, or reduce the
         principal amount thereof or the rate (or extend the time for payment)
         of interest thereon or any premium payable upon the redemption thereof
         at the Company's option, or change the city of payment where, or the
         coin or currency in which, any Note or any premium or the interest
         thereon is payable, or impair the right to institute suit for the
         enforcement of any such payment on or after the Stated Maturity thereof
         (or, in the case of redemption at the Company's option, on or after the
         Redemption Date), or after an Asset Sale or Change of Control has
         occurred, reduce the Change of Control Purchase Price or the Asset Sale
         Offer Price with respect to the corresponding Asset Sale or Change of
         Control or alter the provisions (including the defined terms used
         therein) regarding the Company's right to redeem the Notes as a right,
         or at the Company's option, in a manner adverse to the Holders; or

                  (2) reduce the percentage in principal amount of the
         outstanding Notes, the consent of whose Holders is required for any
         such amendment, supplemental indenture or waiver provided for in this
         Indenture; or

                  (3) modify any of the waiver provisions, except to increase
         any required percentage or to provide that certain other provisions of
         this Indenture cannot be modified or waived without the consent of the
         Holder of each outstanding Note affected thereby; or

                  (4) cause the Notes or any Guarantee to become subordinate in
         right of payment to any other Indebtedness.

                  It shall not be necessary for the consent of the Holders under
this Section 9.2 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.

                  After an amendment, supplement or waiver under this Section
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any



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defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture or waiver.

                  After an amendment, supplement or waiver under this Section
9.2 or under Section 9.4 hereof becomes effective, it shall bind each Holder.

                  In connection with any amendment, supplement or waiver under
this Article IX, the Company may, but shall not be obligated to, offer to any
Holder who consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.

SECTION 9.3. COMPLIANCE WITH TIA

                  Every amendment, waiver or supplement of this Indenture or the
Notes shall comply with the TIA as then in effect.

SECTION 9.4. REVOCATION AND EFFECT OF CONSENTS

                  Until an amendment, waiver or supplement becomes effective, a
consent to it by a Holder is a continuing consent by the Holder and every
subsequent Holder of a Note or portion of a Note that evidences the same debt as
the consenting Holder's Note, even if notation of the consent is not made on any
Note. However, any such Holder or subsequent Holder may revoke the consent as to
his Note or portion of his Note by written notice to the Company or the Person
designated by the Company as the Person to whom consents should be sent if such
revocation is received by the Company or such Person before the date on which
the Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver.

                  The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to consent to any
amendment, supplement or waiver, which record date shall be the date so fixed by
the Company notwithstanding the provisions of the TIA. If a record date is
fixed, then notwithstanding the last sentence of the immediately preceding
paragraph, those Persons who were Holders at such record date, and only those
Persons (or their duly designated proxies), shall be entitled to revoke any
consent previously given, whether or not such Persons continue to be Holders
after such record date.

                  After an amendment, supplement or waiver becomes effective, it
shall bind every Securityholder, unless it makes a change described in any of
clauses (1) through (3) of Section 9.2 hereof, in which case, the amendment,
supplement or waiver shall bind only each Holder of a Note who has consented to
it and every subsequent Holder of a Note or portion of a Note that evidences the
same debt as the consenting Holder's Note; provided, that any such waiver shall
not impair or affect the right of any Holder to receive payment of principal and
premium of and interest (and Liquidated Damages, if any) on a Note, on or after
the respective dates set



                                       93






for such amounts to become due and payable expressed in such Note, or to bring
suit for the enforcement of any such payment on or after such respective dates.

SECTION 9.5. NOTATION ON OR EXCHANGE OF NOTES

                  If an amendment, supplement or waiver changes the terms of a
Note, the Trustee may require the Holder of the Note to deliver it to the
Trustee or require the Holder to put an appropriate notation on the Note. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms. Any failure to
make the appropriate notation or to issue a new Note shall not affect the
validity of such amendment, supplement or waiver.

SECTION 9.6. TRUSTEE TO SIGN AMENDMENTS, ETC.

                  The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article IX; provided, that the Trustee may, but
shall not be obligated to, execute any such amendment, supplement or waiver
which affects the Trustee's own rights, duties or immunities under this
Indenture. The Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article IX is
authorized or permitted by this Indenture.


                                    ARTICLE X

                           RIGHT TO REQUIRE REPURCHASE

SECTION 10.1. REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF
              CONTROL.

                  (a) In the event that a Change of Control has occurred, each
Holder of Notes will have the right, at such Holder's option, pursuant to an
offer (subject only to conditions required by applicable law, if any) by the
Company (the "Change of Control Offer"), to require the Company to repurchase
all or any part of such Holder's Notes (provided, that the principal amount of
such Notes must be $1,000 or an integral multiple thereof) on a date (the
"Change of Control Purchase Date") that is no later than 60 days after the
occurrence of such Change of Control, at a cash price equal to 101% of the
principal amount thereof (the "Change of Control Purchase Price"), together with
accrued and unpaid interest and Liquidated Damages, if any, to the Change of
Control Purchase Date.

         Notwithstanding the foregoing, the Company will not be required to make
a Change of Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in


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the manner, at the times and otherwise in compliance with the requirements set
forth herein applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn under such Change of
Control Offer. In addition, if the Convertible Note is outstanding on the date
of a Change of Control that also constitutes a "Change of Control" as defined in
the Convertible Note, the Change of Control notice delivered to Holders pursuant
to this Indenture shall include a statement that the Company will prepay or
redeem the Convertible Note upon the completion of the Change of Control Offer
in accordance with clause (z) of Section 4.3.

                  (b) In the event that, pursuant to this Section 10.1, the
Company shall be required to commence a Change of Control Offer, the Company
shall follow the procedures set forth in this Section 10.1 as follows:

                  (1) the Change of Control Offer shall commence within 30 days
         following the occurrence of a Change of Control;

                  (2) the Change of Control Offer shall remain open for 20
         Business Days following its commencement (the "Change of Control Offer
         Period") or such other period as may be required by applicable law;

                  (3) upon the expiration of the Change of Control Offer Period,
         the Company promptly shall purchase all of the properly tendered Notes
         at the Change of Control Purchase Price;

                  (4) if the Change of Control Purchase Date is on or after an
         interest payment Record Date and on or before the associated Interest
         Payment Date, any accrued and unpaid interest (and Liquidated Damages,
         if any) due on such Interest Payment Date will be paid to the Person in
         whose name a Note is registered at the close of business on such Record
         Date on the corresponding Interest Payment Date;

                  (5) the Company shall provide the Trustee and the Paying Agent
         with written notice of the Change of Control Offer at least three
         Business Days before the commencement of any Change of Control Offer;
         and

                  (6) on or before the commencement of any Change of Control
         Offer, the Company or the Trustee (upon the request and at the expense
         of the Company) shall send, by first-class mail, a notice to each of
         the Securityholders, which (to the extent consistent with this
         Indenture) shall govern the terms of the Change of Control Offer and
         shall state:

                                    (A) that the Change of Control Offer is
                  being made pursuant to this Section 10.1 and that all Notes,
                  or portions thereof, tendered will be accepted for payment;




                                       95






                                    (B) the Change of Control Purchase Price
                  (including the amount of accrued but unpaid interest (and
                  Liquidated Damages, if any)) and the Change of Control
                  Purchase Date;

                                    (C) that any Note, or portion thereof, not
                  tendered or accepted for payment will continue to accrue
                  interest (and Liquidated Damages, if any);

                                    (D) that, unless the Company defaults in
                  depositing cash with the Paying Agent in accordance with the
                  penultimate paragraph of this Section 10.1, or such payment is
                  prevented for any reason, any Note, or portion thereof,
                  accepted for payment pursuant to the Change of Control Offer
                  shall cease to accrue interest (and Liquidated Damages, if
                  any) after the Change of Control Purchase Date;

                                    (E) that Holders electing to have a Note, or
                  portion thereof, purchased pursuant to a Change of Control
                  Offer will be required to surrender the Note, with the form
                  entitled "Option of Holder to Elect Purchase" on the reverse
                  of the Note completed, to the Paying Agent (which may not for
                  purposes of this Section 10.1, notwithstanding anything in
                  this Indenture to the contrary, be the Company or any
                  Affiliate of the Company) at the address specified in the
                  notice prior to the expiration of the Change of Control Offer;

                                    (F) that Holders will be entitled to
                  withdraw their election, in whole or in part, if the Paying
                  Agent receives, prior to the expiration of the Change of
                  Control Offer, a facsimile transmission or letter setting
                  forth the name of the Holder, the principal amount of the
                  Notes the Holder is withdrawing and a statement containing a
                  facsimile signature and stating that such Holder is
                  withdrawing his election to have such principal amount of
                  Notes purchased;

                                    (G) that Holders whose Notes are purchased
                  only in part will be issued new Notes equal in principal
                  amount to the unpurchased portion of the Notes surrendered;
                  and

                                    (H) a brief description of the events
                  resulting in such Change of Control.

                  On or before the Change of Control Purchase Date, the Company
shall:



                                       96






                  (1) accept for payment Notes or portions thereof properly
         tendered pursuant to the Change of Control Offer;

                  (2) deposit with the Paying Agent an amount in cash sufficient
         to pay the Change of Control Purchase Price (together with accrued and
         unpaid interest and Liquidated Damages, if any) of all Notes so
         tendered; and

                  (3) deliver to the Trustee the Notes so accepted together with
         an Officers' Certificate listing the Notes or portions thereof being
         purchased by the Company.

                  The Paying Agent promptly shall pay the Holders of Notes so
accepted an amount equal to the Change of Control Purchase Price (together with
accrued and unpaid interest and Liquidated Damages, if any), and the Trustee
promptly will authenticate and deliver to such Holders a new Note equal in
principal amount to any unpurchased portion of the Note surrendered. Any Notes
not so accepted will be delivered promptly by the Company to the Holder thereof.
The Company publicly will announce the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Purchase Date.

                  Any Change of Control Offer shall be made in compliance with
all applicable laws, rules and regulations, including, if applicable, Regulation
14E under the Exchange Act and the rules thereunder and all other applicable
Federal and state securities laws. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Article X,
the Company's compliance or compliance by any of the Guarantors with such laws
and regulations shall not in and of itself cause a breach of their obligations
under this Article X.

                                   ARTICLE XI

                                    GUARANTEE

SECTION 11.1. GUARANTEE

                  (a) Each of the Guarantors shall, jointly and severally,
irrevocably and unconditionally guarantee, on a senior basis (the "Guarantee"),
to each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, irrespective of the validity and
enforceability against the Company and any other Guarantors of this Indenture,
the Notes or the obligations of the Company under this Indenture or the Notes,
that: (x) the principal of and premium (if any), and interest (and Liquidated
Damages, if any) on the Notes will be paid in full when due, whether at the
Maturity Date or Interest Payment Date, by acceleration, call for redemption,
upon a Change of Control Offer, upon an Asset Sale Offer or otherwise; (y) all
other obligations of the Company to the Holders or the Trustee under this
Indenture or the Notes will be promptly paid in full or performed, all in
accordance with the terms of this Indenture and the Notes; and (z) in case of
any extension of time of payment or



                                       97






renewal of any Notes or any of such other obligations, the same will be promptly
paid in full when due or performed in accordance with the terms of the extension
or renewal, whether at maturity, by acceleration, call for redemption, upon a
Change of Control Offer, upon an Asset Sale Offer or otherwise. Failing payment
when due of any amount so guaranteed for whatever reason, each Guarantor shall
be obligated to pay the same before failure so to pay becomes an Event of
Default. Each Guarantor agrees that this is a guarantee of payment and not a
guarantee of collection.

                  If the Company or a Guarantor defaults in the payment of the
principal of, premium, if any, or interest (or Liquidated Damages, if any) on,
the Notes when and as the same shall become due, whether upon maturity,
acceleration, call for redemption, upon a Change of Control Offer, upon an Asset
Sale Offer or otherwise, without the necessity of action by the Trustee or any
Holder, each Guarantor shall be required, jointly and severally, to promptly
make such payment in full.

                  The Company shall cause each Subsidiary that is formed or
acquired after the date hereof and each subsidiary that becomes a Subsidiary
after the date hereof, in each case other than Foreign Subsidiaries,
concurrently upon becoming a Subsidiary, to become a Guarantor hereunder and
execute and deliver to the Trustee a supplemental indenture as provided pursuant
to the terms of this Indenture.

                  Notwithstanding anything herein to the contrary, if any of the
Company's Subsidiaries (including Foreign Subsidiaries) that is not a Guarantor
guarantees any of the Company's other Indebtedness or any other Indebtedness of
any of its Subsidiaries, or the Company or any of its Subsidiaries, individually
or collectively, pledges more than 65% of the Voting Equity Interests of such
Subsidiary to a United States lender to secure Indebtedness of the Company or
Indebtedness of any Guarantor, then such Subsidiary must become a Guarantor in
accordance with the terms hereof.

                  (b) Each Guarantor hereby agrees to the fullest extent
permitted by applicable law, that its obligations with regard to this Guarantee
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any delays in obtaining or realizing upon or failures to
obtain or realize upon collateral, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstances that might
otherwise constitute a legal or equitable discharge or defense of a Guarantor.
Each Guarantor hereby waives, to the fullest extent permitted by applicable law,
diligence, presentment, demand of payment, filing of claims with a court in the
event of insolvency or bankruptcy of the Company, any right to require a
proceeding first against the Company or right to require the prior disposition
of the assets of the Company to meet its obligations, protest, notice and all
demands whatsoever and covenants that this Guarantee will not be discharged
except by complete performance of the obligations contained in the Notes and
this Indenture.




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                  (c) If any Holder or the Trustee is required by any court or
otherwise to return to either the Company or any Guarantor, or any Custodian or
similar official acting in relation to either the Company or such Guarantor, any
amount paid by either the Company or such Guarantor to the Trustee or such
Holder, this Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Guarantor agrees that it will not be
entitled to any right of subrogation in relation to the Holders in respect of
any obligations guaranteed hereby until payment in full of all obligations
guaranteed hereby. Each Guarantor further agrees that, as between such
Guarantor, on the one hand, and the Holders and the Trustee, on the other hand,
(i) the maturity of the obligations guaranteed hereby may be accelerated as
provided in Section 6.2 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration as to the Company of the obligations guaranteed hereby, and (ii) in
the event of any declaration of acceleration of those obligations as provided in
Section 6.2 hereof, those obligations (whether or not due and payable) will
forthwith become due and payable by each of the Guarantors for the purpose of
this Guarantee.

                  (d) It is the intention of each Guarantor and the Company that
the obligations of each Guarantor hereunder shall be in, but not in excess of,
the maximum amount permitted by applicable law. Accordingly, if the obligations
in respect of the Guarantee would be annulled, avoided or subordinated to the
creditors of any Guarantor by a court of competent jurisdiction in a proceeding
actually pending before such court as a result of a determination both that such
Guarantee was made by such Guarantor without fair consideration and, immediately
after giving effect thereto, such Guarantor was insolvent or unable to pay its
debts as they mature or left with an unreasonably small capital, then the
obligations of such Guarantor under such Guarantee shall be reduced by such
court if and to the extent such reduction would result in the avoidance of such
annulment, avoidance or subordination; provided, however, that any reduction
pursuant to this paragraph shall be made in the smallest amount as is strictly
necessary to reach such result. For purposes of this paragraph, "fair
consideration", "insolvency", "unable to pay its debts as they mature",
"unreasonably small capital" and the effective times of reductions, if any,
required by this paragraph shall be determined in accordance with applicable
law.

SECTION 11.2. EXECUTION AND DELIVERY OF GUARANTEE

                  Each Guarantor shall, by virtue of such Guarantor's execution
and delivery of an indenture supplement pursuant to Section 11.1 hereof, be
deemed to have signed on each Note issued hereunder the notation of guarantee
set forth on the form of the Notes attached hereto as Exhibit A to the same
extent as if the signature of such Guarantor appeared on such Note.

                  The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery of the guarantee
set forth in Section 11.1 on behalf of each Guarantor. The notation of a
guarantee set forth on any Note shall be null and void and of no further effect
with respect to the guarantee of any Guarantor which, pursuant to Section 11.4,
is released from such Guarantee.


                                       99





SECTION 11.3. CERTAIN BANKRUPTCY EVENTS

                  Each Guarantor hereby covenants and agrees, to the fullest
extent that it may do so under applicable law, that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, such Guarantor shall not file (or join in any filing of), or otherwise
seek to participate in the filing of, any motion or request seeking to stay or
to prohibit (even temporarily) execution on the Guarantee and hereby waives and
agrees not to take the benefit of any such stay of execution, whether under
Section 362 or 105 of the United States Bankruptcy Code or otherwise.

SECTION 11.4. LIMITATION ON MERGER OF SUBSIDIARIES AND RELEASE OF GUARANTORS

                  No Guarantor shall consolidate or merge with or into (whether
or not such Guarantor is the surviving Person) another Person unless, subject to
the provisions of the following paragraph and the other provisions of this
Indenture, (1) the Person formed by or surviving any such consolidation or
merger (if other than such Guarantor) assumes all the obligations of such
Guarantor pursuant to a supplemental indenture in form reasonably satisfactory
to the Trustee, pursuant to which such Person shall unconditionally guarantee,
on a senior basis, all of such Guarantor's obligations under such Guarantor's
Guarantee on the terms set forth herein; (2) immediately before and immediately
after giving effect to such transaction on a pro forma basis, no Default or
Event of Default shall have occurred or be continuing; and (3) immediately after
giving effect to such transaction on a pro forma basis, the Company could incur
at least $1.00 of additional Indebtedness pursuant to the Debt Incurrence Ratio
set forth in Section 4.11. The provisions of this Section 11.4 shall not apply
to the merger of any Guarantors with and into each other or with or into the
Company.

         Upon the sale or disposition (whether by merger, stock purchase, Asset
Sale or otherwise) of a Guarantor (as an entirety) to an entity which is not,
and is not required to become, a Guarantor, or the designation of a Subsidiary
to become an Unrestricted Subsidiary, which transaction is otherwise in
compliance with this Indenture (including, without limitation, the provisions of
Section 4.14), such Guarantor will be deemed released from its obligations under
its Guarantee of the Notes; provided, however, that any such release shall occur
only to the extent that all obligations of such Guarantor under all of its
guarantees of, and under all of its pledges of assets or other security
interests that secure, any of the Company's Indebtedness or any Indebtedness of
any other of the Company's Subsidiaries shall also terminate upon such release,
sale or transfer and none of its Equity Interests are pledged for the benefit of
any holder of any of the Company's Indebtedness or any Indebtedness of any of
the Company's Subsidiaries.




                                      100


                                   ARTICLE XII

                                  MISCELLANEOUS

SECTION 12.1. TIA CONTROLS

                  If any provision of this Indenture limits, qualifies, or
conflicts with the duties imposed by operation of the TIA, the imposed duties,
upon qualification of this Indenture under the TIA, shall control.

SECTION 12.2. NOTICES

                  Any notices or other communications required or permitted
hereunder shall be in writing, and shall be sufficiently given if made by hand
delivery, by telex, by telecopier, recognized overnight courier or registered or
certified mail, postage prepaid, return receipt requested, and addressed as
follows:

                  if to the Company or any Guarantor:

                           Radiologix, Inc.
                           3600 Chase Tower
                           2200 Ross Avenue
                           Dallas, Texas 75201
                           Attention: Chief Financial Officer

                  with a copy to:

                           Haynes & Boone, LLP
                           901 Main Street, Suite 3100
                           Dallas, Texas 75202
                           Attention: William R. Hays III, Esq.

                  if to the Trustee:

                           U.S. Bank, N.A.
                           180 East Fifth Street
                           St. Paul, Minnesota 55101
                           Attention: Corporate Trust Department

                  Any party by notice to each other party may designate
additional or different addresses as shall be furnished in writing by such
party. Any notice or communication to any party shall be deemed to have been
given or made as of the date so delivered, if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; the next
Business Day after timely delivery to a recognized overnight courier, if sent by
such courier guaranteeing next day delivery; and five Business Days after
mailing if sent by registered or certified mail, postage prepaid (except that a
notice of change of address shall not be deemed to have been given until
actually received by the addressee).




                                       101


                  Any notice or communication mailed to a Securityholder shall
be mailed to him by first class mail or other equivalent means at his address as
it appears on the registration books of the Registrar and shall be sufficiently
given to him if so mailed within the time prescribed.

                  Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.

SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS

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

SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT

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

                  (1) an Officers' Certificate (in form and substance reasonably
         satisfactory to the Trustee) stating that, in the opinion of the
         signers, all conditions precedent, if any, provided for in this
         Indenture relating to the proposed action have been met; and

                  (2) an Opinion of Counsel (in form and substance reasonably
         satisfactory to the Trustee) stating that, in the opinion of such
         counsel, all such conditions precedent have been met.

SECTION 12.5. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION

                  Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:

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

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

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







                                      102








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

SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR

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

SECTION 12.7. LEGAL HOLIDAYS

                  A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in New York, New York are authorized or obligated by law or
executive order to close. If a payment date is a Legal Holiday at such place,
payment may be made at such place on the next succeeding day that is not a Legal
Holiday, and no interest (or Liquidated Damages, if any) shall accrue for the
intervening period.

SECTION 12.8. GOVERNING LAW

                  THIS INDENTURE, THE GUARANTEES AND THE NOTES SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS
APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND RULE 327(b) OF THE NEW YORK CIVIL PRACTICE LAWS AND RULES.
EACH OF THE COMPANY AND THE GUARANTORS HEREBY IRREVOCABLY SUBMITS TO THE
JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN
THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS INDENTURE AND THE NOTES, AND IRREVOCABLY ACCEPTS FOR ITSELF
AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, JURISDICTION OF
THE AFORESAID COURTS. EACH OF THE COMPANY AND THE GUARANTORS IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY
SECURITYHOLDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE COMPANY AND THE
GUARANTORS IN ANY OTHER JURISDICTION.



                                      103






SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS

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

SECTION 12.10. NO RECOURSE AGAINST OTHERS

                  No direct or indirect incorporator, stockholder, employee,
officer or director, as such, past, present or future, of the Company or any
Guarantor, or any successor entity, shall have any personal liability in respect
of the obligations of the Company or the Guarantors under this Indenture or the
Notes solely by reason of his or its status as such incorporator, stockholder,
employee, officer or director; provided, that this Section 12.10 shall in no way
limit the obligation of any Guarantor pursuant to any Guarantee of the Notes.
Each Securityholder by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Notes.

SECTION 12.11. SUCCESSORS

                  All agreements of the Company and the Guarantors in this
Indenture and the Notes shall bind its successor. All agreements of the Trustee
in this Indenture shall bind its successor.

SECTION 12.12. DUPLICATE ORIGINALS

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

SECTION 12.13. SEVERABILITY

                  In case any one or more of the provisions in this Indenture or
in the Notes or in the Guarantees shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions shall not in any way be affected or impaired thereby, it being
intended that all of the provisions hereof shall be enforceable to the full
extent permitted by law.

SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC.

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




                                      104






SECTION 12.15. QUALIFICATION OF INDENTURE

                  The Company shall qualify this Indenture under the TIA in
accordance with the terms and conditions of the Registration Rights Agreement
and shall pay all costs and expenses (including attorneys' fees for the Company
and the Trustee) incurred in connection therewith, including, but not limited
to, costs and expenses of qualification of this Indenture and the Notes and
printing this Indenture and the Notes. The Trustee shall be entitled to receive
from the Company any such Officers' Certificates, Opinions of Counsel or other
documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.

SECTION 12.16. REGISTRATION RIGHTS

                  Certain Holders of the Notes may be entitled to certain
registration rights with respect to such Notes pursuant to, and subject to the
terms of, the Registration Rights Agreement.





                                      105






                                   SIGNATURES

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

                                  RADIOLOGIX, INC.,
                                  a Delaware corporation


                                  By:
                                      ------------------------------------------
                                      Name:  Mark L. Wagar
                                      Title: Chairman of the Board and Chief
                                             Executive Officer


                                  GUARANTORS:

                                  IDE IMAGING PARTNERS, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  PACIFIC IMAGING PARTNERS, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR IMAGING, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  WB&A IMAGING PARTNERS, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:








                                  TREASURE COAST IMAGING PARTNERS,
                                  INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  RADIOLOGIX SERVICES, INC.


                                  By:
                                       Name:
                                       Title:

                                  ADVANCED IMAGING PARTNERS, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  MID ROCKLAND IMAGING PARTNERS,
                                  INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  RADIOLOGY AND NUCLEAR MEDICINE
                                  IMAGING PARTNERS, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:









                                  COMMUNITY IMAGING PARTNERS, INC


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  VALLEY IMAGING PARTNERS, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:

                                  SAN JOSE IMAGING PARTNERS, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  ADVANCED RADIOLOGY, LLC


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  ADVANCED MEDICAL IMAGING, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  M&S IMAGING PARTNERS I, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:



                                  M&S IMAGING PARTNERS, L.P.


                                  By: M&S Imaging Partners I, Inc., its general
                                      partner

                                      By:
                                          --------------------------------------
                                          Name:
                                          Title:



                                  QUESTAR CLEVELAND, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR TAMPA, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR ORLANDO, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  ROCKY MOUNTAIN OPENSCAN MRI, LLC


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:








                                  PREMIER ADVANCED IMAGING
                                  NETWORK, LTD.

                                  By: Questar Orlando, Inc., its general partner


                                      By:
                                          --------------------------------------
                                          Name:
                                          Title:


                                  QUESTAR IMAGING MB, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:

                                  QUESTAR KANSAS, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR PVH, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR SAN FRANCISCO, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR HENDERSON, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:






                                  QUESTAR TRISTATES, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR PHILADELPHIA, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR WESTWOOD, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR DULUTH, INC


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR LINCOLN, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:



                                  QUESTAR H F M C, INC.


                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:









                                  QUESTAR PALM SPRINGS, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR ATLANTA, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR MT. LAUREL, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR LOWER BUCKS, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR TOLEDO, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR SOUTH CHICAGO, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:










                                  QUESTAR NORTH GEORGIA, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR LOS ALAMITOS, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR DES PLAINES, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR VICTORVILLE, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR COLUMBUS, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR NAPERVILLE, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:









                                  QUESTAR QUAKERTOWN, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:


                                  QUESTAR TUCSON, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:



                                  M&S IMAGING INVESTMENTS, INC.

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:



                                  U.S. BANK, N.A., as Trustee

                                  By:
                                      ------------------------------------------
                                      Name:
                                      Title:







                                                                       EXHIBIT A

                                 [FORM OF NOTE]

                                RADIOLOGIX, INC.

                   10.5% [SERIES A] [SERIES B](1) SENIOR NOTE
                                    DUE 2008

                                                         CUSIP No.:  __________
No.                                                            $________________


         Radiologix, Inc., a Delaware corporation (hereinafter called the
"Company", which term includes any successors under the Indenture hereinafter
referred to), for value received, hereby promises to pay to __________, or
registered assigns, the principal sum of __________ Dollars, on December 15,
2008.

         Interest Payment Dates: June 15 and December 15 commencing June 15,
2002.

         Record Dates:  June 1 and December 1.

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

- --------

(1) Series A should be replaced with Series B in the Exchange Notes.

                                       A-1






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


                                  RADIOLOGIX, INC.,
                                  a Delaware corporation


                                  By:
                                      ---------------------------------------
                                      Name:  Mark L. Wagar
                                      Title: Chairman of the Board and Chief
                                             Executive Officer



                                  By:
                                      ---------------------------------------
                                      Name:  Sami Abbasi
                                      Title: Chief Financial Officer and
                                             Executive Vice President


Dated:

                                       A-2






                [FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

         This is one of the Notes described in the within-mentioned Indenture.


                                                U.S. BANK, N.A.


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

Dated:

                                       A-3






                                 (Back of Note)

              10.5% [Series A] [Series B](2) Senior Notes due 2008

[THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.](3)

[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.](4)

[THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR DEFINITIVE NOTES,  ARE AS
SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN).  NEITHER THE HOLDER NOR THE

- --------

(2) Series A should be replaced with Series B in the Exchange Notes.

(3) To be included only on Global Notes deposited with DTC as Depositary.

(4) To be included only on Global Notes deposited with DTC as Depositary.


                                       A-4






BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED
TO RECEIVE CASH PAYMENTS OF INTEREST DURING THE PERIOD WHICH SUCH HOLDER HOLDS
THIS NOTE. NOTHING IN THIS LEGEND SHALL BE DEEMED TO PREVENT INTEREST FROM
ACCRUING ON THIS NOTE.](5)

[THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY PRIOR TO THE DATE
WHICH IS TWO YEARS (OR SUCH OTHER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER
RULE 144(k) UNDER THE SECURITIES ACT AS PERMITTING RESALES OF RESTRICTED
SECURITIES BY NON-AFFILIATES WITHOUT RESTRICTION) AFTER THE LATER OF THE
ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY
AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE") ONLY (A) TO THE
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, IN THE UNITED STATES
TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) THAT PURCHASES FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A UNDER THE
SECURITIES ACT, (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7)
OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL "ACCREDITED INVESTOR," FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT OR (F) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER

- --------

(5) To be included only on Reg S Temporary Global Notes.

                                       A-5






TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION SATISFACTORY TO EACH OF THEM AND IN EACH OF THE FOREGOING CASES A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED AND
DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND IN EACH CASE IN ACCORDANCE WITH
APPLICABLE SECURITIES LAWS OF ANY U.S. STATE OR ANY OTHER APPLICABLE
JURISDICTION. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL DELIVER TO EACH
PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT
OF THIS LEGEND. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER
THE RESALE RESTRICTION TERMINATION DATE.](6)

         Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

                  1. Interest. Radiologix, Inc., a Delaware corporation (the
"Company"), promises to pay interest on the principal amount of this Note at
10.5% per annum from December 12, 2001 until maturity and shall pay the
Liquidated Damages, if any, payable pursuant to Section 4 of the Registration
Rights Agreement referred to below. The Company will pay interest and Liquidated
Damages, if any, semi-annually in arrears on June 15 and December 15 of each
year, or if any such day is not a Business Day, on the next succeeding Business
Day (each an "Interest Payment Date"). Interest on the Notes will accrue from
the most recent date to which interest has been paid or provided for or, if no
interest has been paid, from the Issue Date; provided, that if there is no
existing Default in the payment of interest, and if this Note is authenticated
between a Record Date (defined below) referred to on the face hereof and the
next succeeding Interest Payment Date, interest shall accrue from such next
succeeding Interest Payment Date; provided, further, that the first Interest
Payment Date shall be June 15, 2002. The Company shall pay interest on overdue
principal and premium, if any, from time to time on demand at the rate then in
effect; it shall pay interest on overdue installments of interest and Liquidated
Damages, if any, (without regard to any applicable grace periods) from time to
time on demand at the same rate to the extent lawful. Interest will be computed
on the basis of a 360-day year of twelve 30-day months.

                  2. Method of Payment. The Company will pay interest on the
Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons
who are registered Holders of Notes at the close of business on June 1 or
December 1 next preceding the Interest Payment Date (each a "Record Date"), even
if such Notes are cancelled after such Record Date and on or before such
Interest Payment Date, except as provided in Section 2.12 of the Indenture (as
defined below) with respect to defaulted interest. The Notes will be payable as
to principal, premium, if any, interest and

- --------

(6) To be included only on Transfer Restricted Notes.


                                       A-6






Liquidated Damages, if any, at the office or agency of the Company maintained in
the Borough of Manhattan, The City and State of New York for such purpose, or,
at the option of the Company, payment of interest and Liquidated Damages, if
any, may be made by check mailed to the Holders at their addresses set forth in
the register of Holders, and provided, that payment by wire transfer of
immediately available funds to an account within the United States will be
required with respect to principal of and interest, premium, if any, and
Liquidated Damages, if any, on all Global Notes. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.

                  3. Paying Agent and Registrar. Initially, U.S. Bank, N.A., the
Trustee under the Indenture, will act as Paying Agent and Registrar. The Company
may change any Paying Agent or Registrar without notice to any Holder. The
Company or any of its Subsidiaries may act in any such capacity.

                  4. Indenture. The Company issued the Notes under an Indenture
dated as of December 12, 2001 ("Indenture") among the Company, the Guarantors
party thereto and the Trustee. The terms of the Notes include those stated in
the Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms.

                  5. Optional Redemption.

                  (a) Except as set forth in clause (b) of this Section, the
Company shall not have the option to redeem the Notes pursuant to this Section
prior to December 15, 2005. The Notes will be redeemable for cash at the option
of the Company, in whole or in part, at any time on or after December 15, 2005,
upon not less than 30 days nor more than 60 days prior notice mailed by first
class mail to each Holder at its last registered address, at the following
redemption prices (expressed as percentages of the principal amount) if redeemed
during the 12-month period commencing December 15 of the years indicated below,
in each case (subject to the right of Holders of record on a Record Date to
receive the corresponding interest due (and the corresponding Liquidated
Damages, if any) on the corresponding Interest Payment Date that is on or prior
to such Redemption Date), together with accrued and unpaid interest and
Liquidated Damages, if any, thereon to the Redemption Date:




           YEAR                                                           PERCENTAGE
           ----                                                           ----------
                                                                       
           2005.............................................................105.250%
           2006.............................................................102.625%
           2007 and thereafter..............................................100.000%


                  (b) Notwithstanding the provisions of clause (a) of this
Section, at any time or from time to time on or prior to December 15, 2004, upon
any Public Equity

                                       A-7






Offering, up to 35% of the aggregate principal amount of the Notes issued
pursuant to the Indenture may be redeemed at the option of the Company within 90
days of such Public Equity Offering, on not less than 30 days, but not more than
60 days, notice to each Holder of the Notes to be redeemed, with cash from the
Net Cash Proceeds of such Public Equity Offering, at a redemption price equal to
110.500% of the principal amount thereof (subject to the right of Holders of
record on a Record Date to receive the corresponding interest (and the
corresponding Liquidated Damages, if any) due on the Interest Payment Date that
is on or prior to such Redemption Date), together with accrued and unpaid
interest and Liquidated Damages, if any, thereon to the Redemption Date;
provided, however, that immediately following such redemption not less than 65%
of the aggregate principal amount of the Notes originally issued pursuant to the
Indenture on the Issue Date remain outstanding.

                  (c) Notice of redemption will be mailed by first class mail at
least 30 days but not more than 60 days before the Redemption Date to each
Holder whose Notes are to be redeemed at its registered address. Notes in
denominations larger than $1,000 may be redeemed in part but only in integral
multiples of $1,000, unless all of the Notes held by a Holder are to be
redeemed. On and after the Redemption Date, interest (and Liquidated Damages, if
any) ceases to accrue on Notes or portions thereof called for redemption unless
the Company defaults in such payments due on the Redemption Date.

                  6. Mandatory Redemption. The Company shall not be required to
make mandatory redemption payments with respect to the Notes. The Notes shall
not have the benefit of any sinking fund.

                  7. Offers to Purchase.

                  (a) Change of Control. In the event that a Change of Control
has occurred, each Holder of Notes will have the right, at such Holder's option,
pursuant to an offer (subject only to conditions required by applicable law, if
any) by the Company (the "Change of Control Offer"), to require the Company to
repurchase all or any part of such Holder's Notes (provided, that the principal
amount of such Notes must be $1,000 or an integral multiple thereof) on a date
(the "Change of Control Purchase Date") that is no later than 60 days after the
occurrence of such Change of Control, at a cash price equal to 101% of the
principal amount thereof (the "Change of Control Purchase Price"), together with
accrued and unpaid interest and Liquidated Damages, if any, to the Change of
Control Purchase Date. The Change of Control Offer shall be made within 30 days
following a Change of Control and shall remain open for 20 Business Days
following its commencement (the "Change of Control Offer Period") or such other
period as may be required by applicable law. Upon expiration of the Change of
Control Offer Period, the Company promptly shall purchase all Notes properly
tendered in response to the Change of Control Offer.

                  On or before the Change of Control Purchase Date, the Company
shall (i) accept for payment Notes or portions thereof properly tendered and not
validly withdrawn pursuant to the Change of Control Offer, (ii) deposit with the
Paying Agent

                                       A-8






an amount in cash sufficient to pay the Change of Control Purchase Price
(together with accrued and unpaid interest and Liquidated Damages, if any) of
all Notes so tendered and (iii) deliver to the Trustee the Notes so accepted
together with an Officers' Certificate listing the Notes or portions thereof
being purchased by the Company. The Paying Agent promptly shall pay the Holders
of Notes so accepted an amount equal to the Change of Control Purchase Price
(together with accrued and unpaid interest and Liquidated Damages, if any) and
the Trustee promptly shall authenticate and deliver to such Holders a new Note
equal in principal amount to any unpurchased portion of the Note surrendered.
Any Notes not so accepted will be delivered promptly by the Company to the
Holder thereof. The Company publicly will announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Purchase
Date.

                  (b) Asset Sale. Except as otherwise set forth in Section 4.14
of the Indenture, the Company and the Guarantors shall not, and neither the
Company nor the Guarantors shall permit any of their respective Subsidiaries to,
in one or a series of related transactions, convey, sell, transfer, assign or
otherwise dispose of, directly or indirectly, any of their property, business or
assets, including by merger or consolidation (in the case of a Guarantor or a
Subsidiary of the Company), and including any sale or other transfer or issuance
of any Equity Interests of any Subsidiary of the Company, whether by the Company
or one of its Subsidiaries or through the issuance, sale or transfer of Equity
Interests by a Subsidiary of the Company, and including any sale and leaseback
transaction (any of the foregoing, an "Asset Sale"), unless: (1) at least 75% of
the total consideration for such Asset Sale or series of related Asset Sales
consists of cash or Cash Equivalents; and (2) the Company receives or such
Subsidiary receives, as applicable, fair market value for such Asset Sale, such
determination to be made in good faith by the Company's Board of Directors for
Asset Sales exceeding $2,000,000. Solely for purposes of (1) above, (a) any
Indebtedness (other than Subordinated Indebtedness) of the Company or such
Subsidiary that is expressly assumed by the transferee in such Asset Sale and
with respect to which the Company is and its Subsidiaries are fully and
unconditionally released from any and all obligations in connection therewith,
(b) property that within 30 days of such Asset Sale is converted into cash or
Cash Equivalents; provided, that such cash and Cash Equivalents shall be treated
as Net Cash Proceeds attributable to the original Asset Sale for which such
property was received, and (c) the fair market value, as determined in good
faith by the Board of Directors, of any asset (other than securities) received
by the Company or any Subsidiary that, in the good faith reasonable judgment of
the Company's Board of Directors, will immediately constitute or be a part of a
Related Business shall be deemed to be cash or Cash Equivalents. Within 360 days
following such Asset Sale, the Net Cash Proceeds therefrom are: (a) invested in
fixed assets and property (other than notes, bonds, obligations and other
securities, except in connection with the acquisition of a Guarantor in a
Related Business) that in the good faith reasonable judgment of the Company's
Board of Directors will immediately constitute or be a part of a Related
Business of the Company or such Subsidiary (if it continues to be a Subsidiary)
immediately following such transaction; or (b) used to retire Purchase Money
Indebtedness secured by the asset that was the subject of the Asset Sale or to


                                       A-9






permanently reduce the amount of Indebtedness outstanding under the Credit
Agreement; or (c) applied to the optional redemption of the Notes in accordance
with the terms of the Indenture and the Company's other Indebtedness ranking on
a parity with the Notes and with similar provisions requiring the Company to
redeem such Indebtedness with the proceeds from such Asset Sale, pro rata in
proportion to the respective principal amounts (or accreted values in the case
of Indebtedness issued with an original issue discount) of the Notes and such
other Indebtedness then outstanding. Pending the final application of any Net
Cash Proceeds, the Company may temporarily reduce revolving credit borrowings or
otherwise invest the Net Cash Proceeds in any manner that is not prohibited by
the Indenture.

                  The accumulated Net Cash Proceeds from Asset Sales not applied
as set forth in (a), (b) or (c) of the preceding paragraph shall constitute
"Excess Proceeds". Within 30 days after the date that the amount of Excess
Proceeds exceeds $10,000,000, the Company shall apply the Excess Proceeds (the
"Asset Sale Offer Amount") to the repurchase of the Notes and such other
Indebtedness ranking on a parity with the Notes and with similar provisions
requiring the Company to make an offer to purchase such Indebtedness with the
proceeds from such Asset Sale pursuant to a cash offer (subject only to
conditions required by applicable law, if any) (pro rata in proportion to the
respective principal amounts (or accreted values in the case of Indebtedness
issued with an original issue discount) of the Notes and such other Indebtedness
then outstanding) (the "Asset Sale Offer") at a purchase price of 100% of the
principal amount (or accreted value in the case of Indebtedness issued with an
original issue discount) (the "Asset Sale Offer Price") together with accrued
and unpaid interest and Liquidated Damages, if any, to the date of payment. Each
Asset Sale Offer shall remain open for 20 Business Days following its
commencement (the "Asset Sale Offer Period"). Upon expiration of the Asset Sale
Offer Period, the Company shall apply the Asset Sale Offer Amount plus an amount
equal to accrued and unpaid interest and Liquidated Damages, if any, to the
purchase of all Indebtedness properly tendered in accordance with the provisions
hereof (on a pro rata basis if the Asset Sale Offer Amount is insufficient to
purchase all Indebtedness so tendered) at the Asset Sale Offer Price (together
with accrued interest and Liquidated Damages, if any). To the extent that the
aggregate amount of Notes and such other pari passu Indebtedness tendered
pursuant to an Asset Sale Offer is less than the Asset Sale Offer Amount, the
Company may use any remaining Net Cash Proceeds as otherwise permitted by the
Indenture (other than for making Restricted Payments that are not Investments)
and following the consummation of each Asset Sale Offer the Excess Proceeds
amount shall be reset to zero.

                  8. Denominations, Transfer, Exchange. The Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Company may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Company need not
exchange or register the transfer of any Note or portion of a Note selected for
redemption, except for the unredeemed portion of any Note being redeemed

                                      A-10






in part. Also, it need not exchange or register the transfer of any Notes for a
period of 15 days before a selection of Notes to be redeemed or during the
period between a Record Date and the corresponding Interest Payment Date.

                  9. Persons Deemed Owners. The registered Holder of a Note may
be treated as its owner for all purposes.

                  10. Amendment, Supplement and Waiver. Subject to certain
exceptions, the Indenture, the Notes or the Guarantees may be amended or
supplemented with the consent of the Holders of not less than a majority in
aggregate principal amount of the then outstanding Notes, and any existing
Default or compliance with any provision of the Indenture, the Notes or the
Guarantees may be waived with the consent of the Holders of a majority in
aggregate principal amount of the then outstanding Notes. Without the consent of
any Holder of a Note, the Indenture, the Notes or the Guarantees may be amended
or supplemented (a) to cure any ambiguity, defect or inconsistency, (b) to add
to the covenants of the Company or the Guarantors for the benefit of the
Holders, or to surrender any right or power conferred upon the Company or the
Guarantors by the Indenture or herein; (c) to provide for collateral for or
additional Guarantors of the Notes; (d) to evidence the succession of another
Person to the Company, and the assumption by any such successor of the
obligations of the Company, herein and in the Indenture in accordance with the
terms of the Indenture; (e) to comply with the TIA; (f) to evidence the
succession of another corporation to any Guarantor and assumption by any such
successor of the Guarantee of such Guarantor pursuant to the Indenture; (g) to
evidence the release of any Guarantor; (h) to evidence and provide for the
acceptance of appointment of a successor Trustee with respect to the Notes; (i)
in any other case where a supplemental indenture is required or permitted to be
entered into pursuant to the provisions of the Indenture without the consent of
any Holder; (j) to provide for the issuance and authorization of the Exchange
Notes; or (k) to make any change that does not adversely affect the rights of
any Holder.

                  11. Defaults and Remedies. The Indenture provides that each of
the following constitutes an Event of Default:

                  (i) the Company's failure to pay any installment of interest
(or Liquidated Damages, if any) on the Notes as and when the same becomes due
and payable and the continuance of any such failure for 30 days;

                  (ii) the Company's failure to pay all or any part of the
principal of, or premium, if any, on the Notes when and as the same becomes due
and payable at maturity, redemption, by acceleration or otherwise, including,
without limitation, payment of the Change of Control Purchase Price or the Asset
Sale Offer Price on Notes validly tendered and not properly withdrawn pursuant
to a Change of Control Offer or Asset Sale Offer, as applicable;

                  (iii) the Company's failure or the failure by any of its
Subsidiaries to observe or perform any other covenant or agreement contained in
the Notes or the


                                      A-11






Indenture and, except for the provisions under Section 4.3 and 4.14 and Articles
V and X of the Indenture, the continuance of such failure for a period of 60
days after written notice is given to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Notes outstanding;

                  (iv) a decree, judgment, or order by a court of competent
jurisdiction shall have been entered adjudicating the Company or any of its
Significant Subsidiaries as bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization of the Company or any of its Significant
Subsidiaries under any bankruptcy or similar law, and such decree or order shall
have continued undischarged and unstayed for a period of 60 days; or a decree,
judgment or order of a court of competent jurisdiction appointing a receiver,
liquidator, trustee, or assignee in bankruptcy or insolvency for the Company,
any of its Significant Subsidiaries, or any substantial part of the property of
any such Person, or for the winding up or liquidation of the affairs of any such
Person, shall have been entered, and such decree, judgment, or order shall have
remained in force undischarged and unstayed for a period of 60 days;

                  (v) the Company or any of its Significant Subsidiaries shall
institute proceedings to be adjudicated a voluntary bankrupt, or shall consent
to the filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under any bankruptcy or similar law or
similar statute, or shall consent to the filing of any such petition, or shall
consent to the appointment of a custodian, receiver, liquidator, trustee, or
assignee in bankruptcy or insolvency of it or any substantial part of its assets
or property, or shall make a general assignment for the benefit of creditors, or
shall admit in writing its inability to pay its debts generally as they become
due, or take any corporate action in furtherance of any of the foregoing;

                  (vi) a default in the Company's Indebtedness or the
Indebtedness of any of its Subsidiaries with an aggregate amount outstanding in
excess of $10,000,000 (a) resulting from the failure to pay principal at
maturity or (b) as a result of which the maturity of such Indebtedness has been
accelerated prior to its stated maturity;

                  (vii) unsatisfied judgments not covered by insurance
aggregating in excess of $5,000,000 at any one time rendered against the Company
or any of its Subsidiaries and not stayed, bonded or discharged within 60 days
after such judgment became final and nonappealable; and

                  (viii) any Guarantee of a Guarantor that is a Significant
Subsidiary ceases to be in full force and effect or becomes unenforceable or
invalid or is declared null and void (other than in accordance with the terms of
the Guarantee and the Indenture) or any Guarantor denies or disaffirms its
obligations under its Guarantee.

                  12. Trustee Dealings with Company. The Trustee, in its
individual or any other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may otherwise deal with
the Company or its Affiliates, as if it were not the Trustee.

                                      A-12







                  13. No Recourse Against Others. No direct or indirect
incorporator, stockholder, employee, officer or director, as such, past, present
or future, of the Company or any Guarantor, or any successor entity, shall have
any personal liability in respect of the obligations of the Company or the
Guarantors under the Notes or the Indenture solely by reason of his or its
status as such incorporator, stockholder, employee, officer or director;
provided, that this Section 13 shall in no way limit the obligation of any
Guarantor pursuant to any Guarantee of the Notes. Each Securityholder by
accepting a Note waives and releases all such liability. The waiver and release
are part of the consideration for the issuance of the Notes.

                  14. Authentication. This Note shall not be valid until
authenticated by the manual signature of the Trustee or an authenticating agent.

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

                  16. Additional Rights of Holders of Transfer Restricted
Notes.(7) In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Transfer Restricted Notes shall have all the rights set
forth in the Registration Rights Agreement dated as of the date of the
Indenture, among the Company, the Guarantors and the Initial Purchasers (the
"Registration Rights Agreement").

                  17. CUSIP Numbers. Pursuant to a recommendation promulgated by
the Committee on Uniform Security Identification Procedures, the Company has
caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP
numbers in notices of redemption as a convenience to Holders. No representation
is made as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon, and any such redemption shall not
be affected by any defect in or omission of such numbers.

                  18. Notation of Guarantee. As more fully set forth in the
Indenture, each of the Guarantors from time to time, in accordance with the
provisions of the Indenture, shall irrevocably and unconditionally and jointly
and severally guarantee, on a senior basis, in accordance with Article XI of the
Indenture, to each Holder of a Note authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, that: (a) the principal of,
and premium, if any, Liquidated Damages, if any, and interest on the Notes will
be paid in full when due, whether at the Maturity Date or Interest Payment Date,
by acceleration, call for redemption, upon a Change of Control

- --------

(7) To be included only on Transfer Restricted Notes.

                                      A-13






Offer, upon an Asset Sale Offer or otherwise; (b) all other obligations of the
Company to the Holders or the Trustee under the Indenture or under the Notes
will be promptly paid in full or performed, all in accordance with the terms of
the Indenture and the Notes; and (c) in case of any extension of time of payment
or renewal of any Notes or any of such other obligations, the same will be
promptly paid in full when due or performed in accordance with the terms of the
extension or renewal, whether at maturity, by acceleration, call for redemption,
upon a Change of Control Offer, upon an Asset Sale Offer or otherwise. Such
Guarantees shall cease to apply, and shall be null and void, with respect to any
Guarantor who, pursuant to Article XI of the Indenture, is released from its
Guarantee or whose Guarantee otherwise ceases to be applicable pursuant to the
terms of the Indenture.

                  When a successor assumes all the obligations of its
predecessor under the Notes and the Indenture, the predecessor will be released
from those obligations.

                  19. Governing Law. THE INDENTURE AND THE NOTES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
INCLUDING, WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW AND RULE 327(b) OF THE NEW YORK CIVIL PRACTICE LAWS AND
RULES.

                  The Company will furnish to any Holder upon written request
and without charge a copy of the Indenture and/or the Registration Rights
Agreement. Requests may be made to:

                           Radiologix, Inc.
                           3600 Chase Tower
                           2200 Ross Avenue
                           Dallas, Texas 75201
                           Attention: Chief Financial Officer
                           Telephone No.: (214) 303-2777


                                      A-14






                                 ASSIGNMENT FORM


To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to


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

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

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

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

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

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

and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.



Date:                          Your Signature:
      -----------------                       ----------------------------------
                                              (Sign exactly as your name appears
                                              on the face of this Note)

Signature Guarantee*


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



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



                                      A-15






                       OPTION OF HOLDER TO ELECT PURCHASE


         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or 10.1 of the Indenture, check the box below:

                  [ ]  Section 4.14               [ ]  Section 10.1

         If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.14 or Section 10.1 of the Indenture, state the
amount you elect to have purchased (in denominations of $1,000 only, except if
you have elected to have all of your Notes purchased): $___________


Date:                          Your Signature:
      -----------------                       ----------------------------------
                                              (Sign exactly as your name appears
                                              on the face of this Note)

Signature Guarantee*


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















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

                                      A-16



             SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE(8)


         The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:



                                                                        Principal Amount of
                                                                         this Global Note            Signature of
                        Amount of decrease in   Amount of increase in     following such        authorized officer of
                          Principal Amount of    Principal Amount of         decrease              Trustee or Note
   Date of Exchange        this Global Note        this Global Note        (or increase)              Custodian
   ----------------     ---------------------   ---------------------   -------------------     ---------------------
                                                                                    












- --------

(8) This should be included only if the Note is issued in global form.


                                      A-17






                                    GUARANTEE

                  The Guarantors listed below (hereinafter referred to as the
"Guarantors," which term includes any successors or assigns under the Indenture,
dated the date hereof, among the Guarantors, the Company (defined below) and
U.S. Bank, N.A., as trustee (the "Indenture") and any additional Guarantors),
jointly and severally, irrevocably and unconditionally guarantee, in accordance
with Article XI of the Indenture: (i) the due and punctual payment of the
principal of, premium, if any, and interest and Liquidated Damages, if any, on
the 10.5% Senior Notes due 2008 (the "Notes") of Radiologix, Inc., a Delaware
corporation (the "Company"), whether at the Maturity Date, or Interest Payment
Date, by acceleration, call for redemption, upon a Change of Control Offer, upon
an Asset Sale Offer or otherwise; (ii) the due and punctual payment or
performance of all other obligations of the Company to the Holders or the
Trustee under the Indenture and the Notes, all in accordance with the terms set
forth in Article XI of the Indenture; (iii) in case of any extension of time of
payment or renewal of any Notes or any of such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at maturity, by acceleration, call for
redemption, upon a Change of Control Offer, upon an Asset Sale Offer or
otherwise; and (iv) the payment of any and all costs and expenses (including
attorneys' fees) incurred by the Trustee in enforcing any rights under this
Guarantee.

                  The obligations of each Guarantor to the Holders and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article XI of the Indenture and reference is hereby made to such Indenture for
the precise terms of this Guarantee.

                  No direct or indirect stockholder, employee, officer or
director, as such, past, present or future, of any of the Guarantors, or any
successor entity, shall have any personal liability in respect of the
obligations of any of the Guarantors under the Guarantees or the Indenture
solely by reason of his or its status as such stockholder, employee, officer or
director; provided, that this provision shall in no way limit the obligation of
any Guarantor pursuant to this Guarantee.

                  This is a continuing Guarantee and shall remain in full force
and effect and shall be binding upon each Guarantor and its successors and
assigns until full and final payment of all of the Company's obligations under
the Notes and Indenture or until released or legally defeased in accordance with
the Indenture and shall inure to the benefit of the successors and assigns of
the Trustee and the Holders, and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all

                                      A-18






subject to the terms and conditions hereof. This is a Guarantee of payment and
not of collectibility.

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

                  The obligations of each Guarantor under its Guarantee shall be
limited to the extent necessary to insure that it does not constitute a
fraudulent conveyance under applicable law.

                  THE TERMS OF ARTICLE XI OF THE INDENTURE IS  INCORPORATED
HEREIN BY REFERENCE.

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



                                      A-19






                  IN WITNESS WHEREOF, each of the Guarantors has caused this
instrument to be duly executed.

Dated:

                                          IDE IMAGING PARTNERS, INC.

                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                          PACIFIC IMAGING PARTNERS, INC.

                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                          QUESTAR IMAGING, INC.

                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:

                                          WB&A IMAGING PARTNERS, INC.

                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:


                                          TREASURE COAST IMAGING PARTNERS, INC.

                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:


                                          RADIOLOGIX SERVICES, INC.

                                          By:
                                              ----------------------------------
                                              Name:
                                              Title:




                                            ADVANCED IMAGING PARTNERS, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            MID ROCKLAND IMAGING PARTNERS, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            RADIOLOGY AND NUCLEAR MEDICINE
                                            IMAGING PARTNERS, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            COMMUNITY IMAGING PARTNERS, INC

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            VALLEY IMAGING PARTNERS, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            SAN JOSE IMAGING PARTNERS, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:







                                            ADVANCED RADIOLOGY, LLC


                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            ADVANCED MEDICAL IMAGING, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            M&S IMAGING PARTNERS I, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            M&S IMAGING PARTNERS, L.P.

                                            By: M&S Imaging Partners I, Inc.,
                                                its general partner

                                                     By:
                                                         ----------------------
                                                         Name:
                                                         Title:


                                            QUESTAR CLEVELAND, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR TAMPA, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:






                                            QUESTAR ORLANDO, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            ROCKY MOUNTAIN OPENSCAN MRI, LLC

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            PREMIER ADVANCED IMAGING NETWORK,
                                            LTD.

                                            By: Questar Orlando, Inc., its
                                                general partner

                                                By:
                                                    ---------------------------
                                                    Name:
                                                    Title:


                                            QUESTAR IMAGING MB, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR KANSAS, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR PVH, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:







                                            QUESTAR SAN FRANCISCO, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR HENDERSON, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR TRISTATES, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR PHILADELPHIA, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR WESTWOOD, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR DULUTH, INC

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR LINCOLN, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:



                                            QUESTAR H F M C, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR PALM SPRINGS, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR ATLANTA, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR MT. LAUREL, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR LOWER BUCKS, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR TOLEDO, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR SOUTH CHICAGO, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:







                                            QUESTAR NORTH GEORGIA, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR LOS ALAMITOS, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR DES PLAINES, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR VICTORVILLE, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR COLUMBUS, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR NAPERVILLE, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:


                                            QUESTAR QUAKERTOWN, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:







                                            QUESTAR TUCSON, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:



                                            M&S IMAGING INVESTMENTS, INC.

                                            By:
                                                -------------------------------
                                                Name:
                                                Title:























                                    EXHIBIT B
                         FORM OF CERTIFICATE OF TRANSFER

Radiologix, Inc.
3600 Chase Tower
2200 Ross Avenue
Dallas, Texas 75201
Attention: Chief Financial Officer

U.S. Bank, N.A.
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department

         Re:  10.5% Senior Notes due 2008

Ladies and Gentlemen:

         Reference is hereby made to the Indenture, dated as of December 12,
2001 (the "Indenture"), among Radiologix, Inc., as issuer (the "Company"), the
Guarantors party thereto and U.S. Bank, N.A., as trustee. Capitalized terms used
but not defined herein shall have the meanings given to them in the Indenture.
______________, (the "Transferor") owns and proposes to transfer the Note[s] or
interest[s] in such Note[s] specified in Annex A hereto, in the principal amount
of $___________ in such Note[s] or interest[s] (the "Transfer"), to __________
(the "Transferee"), as further specified in Annex A hereto. In connection with
the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
144A GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO RULE 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Note is being transferred to a Person that the Transferor
reasonably believed and believes is purchasing the beneficial interest or
Definitive Note for its own account, or for one or more accounts with respect to
which such Person exercises sole investment discretion, and such Person and each
such account is a "qualified institutional buyer" within the meaning of Rule
144A in a transaction meeting the requirements of Rule 144A and such Transfer is
in compliance with any applicable blue sky



                                       B-1






securities laws of any State of the United States. Upon consummation of the
proposed Transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Note will be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the 144A Global
Note and/or the Definitive Note and in the Indenture and the Securities Act.

2. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN THE
REGULATION S GLOBAL NOTE OR A DEFINITIVE NOTE PURSUANT TO REGULATION S. The
Transfer is being effected pursuant to and in accordance with Rule 903 or Rule
904 under the Securities Act and, accordingly, the Transferor hereby further
certifies that (i) the Transfer is not being made to a person in the United
States and (x) at the time the buy order was originated, the Transferee was
outside the United States or such Transferor and any Person acting on its behalf
reasonably believed and believes that the Transferee was outside the United
States or (y) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither such Transferor nor any Person
acting on its behalf knows that the transaction was prearranged with a buyer in
the United States, (ii) no directed selling efforts have been made in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S
under the Securities Act, (iii) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities Act and (iv) if the
proposed Transfer is being made prior to the expiration of the Distribution
Compliance Period, the Transfer is not being made to a U.S. Person or for the
account or benefit of a U.S. Person (other than an Initial Purchaser) and the
interest transferred will be held immediately thereafter through Euroclear or
Clearstream. Upon consummation of the proposed Transfer in accordance with the
terms of the Indenture, the transferred beneficial interest or Definitive Note
will be subject to the restrictions on transfer enumerated in the Private
Placement Legend printed on the Regulation S Global Note and/or the Definitive
Note and in the Indenture and the Securities Act.

3. [ ] CHECK AND COMPLETE IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL
INTEREST IN A DEFINITIVE NOTE PURSUANT TO ANY PROVISION OF THE SECURITIES ACT
OTHER THAN RULE 144A OR REGULATION S. The Transfer is being effected in
compliance with the transfer restrictions applicable to beneficial interests in
Restricted Global Notes and Restricted Definitive Notes and pursuant to and in
accordance with the Securities Act and any applicable blue sky securities laws
of any State of the United States, and accordingly the Transferor hereby further
certifies that (check one):

         (a) [ ] Such Transfer is being effected pursuant to and in accordance
         with Rule 144 under the Securities Act; or




                                       B-2






         (b) [ ] Such Transfer is being effected to the Company or a subsidiary
         thereof; or

         (c) [ ] Such Transfer is being effected pursuant to an effective
         registration statement under the Securities Act and in compliance with
         the prospectus delivery requirements of the Securities Act; or

         (d) [ ] such Transfer is being effected to an Institutional Accredited
         Investor and pursuant to an exemption from the registration
         requirements of the Securities Act other than Rule 144A, Rule 144 or
         Rule 904, and the Transferor hereby further certifies that it has not
         engaged in any general solicitation within the meaning of Regulation D
         under the Securities Act and the Transfer complies with the transfer
         restrictions applicable to beneficial interests in a Restricted Global
         Note or Restricted Definitive Note and the requirements of the
         exemption claimed, which certification is supported by (1) a
         certificate executed by the Transferee in a form of Exhibit D to the
         Indenture and (2) if such Transfer is in respect of a principal amount
         of Notes at the time of transfer of less than $250,000, an Opinion of
         Counsel provided by the Transferor or the Transferee (a copy of which
         the Transferor has attached to this certification and provided to the
         Company, which has confirmed its acceptability), to the effect that
         such Transfer is in compliance with the Securities Act. Upon
         consummation of the proposed Transfer in accordance with the terms of
         the Indenture, the Definitive Note will be subject to the restrictions
         on transfer enumerated in the Private Placement Legend printed on the
         Definitive Notes and in the Indenture and the Securities Act.

4. [ ] CHECK IF TRANSFEREE WILL TAKE DELIVERY OF A BENEFICIAL INTEREST IN AN
UNRESTRICTED GLOBAL NOTE OR OF AN UNRESTRICTED DEFINITIVE NOTE.

         (a) [ ] CHECK IF TRANSFER IS PURSUANT TO RULE 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any State of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Note will no longer be subject to the restrictions on transfer enumerated in the
Private Placement Legend printed on the Restricted Global Notes, on Restricted
Definitive Notes and in the Indenture and the Securities Act.




                                       B-3






         (b) [ ] CHECK IF TRANSFER IS PURSUANT TO REGULATION S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Notes and in the Indenture and the
Securities Act.

         (c) [ ] CHECK IF TRANSFER IS PURSUANT TO OTHER EXEMPTION. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Note will not be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the Restricted Global
Notes or Restricted Definitive Notes and in the Indenture.




                                       B-4






This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.

                                                 Dated:
- ----------------------------

- ----------------------------
[Insert Name of Transferor]


By:
    -------------------------
    Name:
    Title:



                                       B-5






                       ANNEX A TO CERTIFICATE OF TRANSFER

1.       The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

         (a)      [ ]      a beneficial interest in the:

                  (i)               144A Global Note (CUSIP 75040K AA 7), or

                  (ii)              501 Global Note (CUSIP 75040K AB 5), or

                  (iii)             Reg S Global Note (CUSIP U7492W AA 4); or

         (b)      [ ]      a Restricted Definitive Note.

2.       After the Transfer the Transferee will hold:

[CHECK ONE]

         (a)      [ ]      a beneficial interest in the:

                  (i)      [ ]     144A Global Note (CUSIP 75040K AA 7), or

                  (ii)     [ ]     501 Global Note (CUSIP 75040K AB 5), or

                  (iii)    [ ]     Reg S Global Note (CUSIP U7492W AA 4),

                  (iv)     [ ]     Unrestricted Global Note (CUSIP 75040K AC 3);
                                   or

         (b)      [ ]      a Restricted Definitive Note; or

         (c)      [ ]      an Unrestricted Definitive Note,

in accordance with the terms of the Indenture.




                                       B-6






                                    EXHIBIT C
                         FORM OF CERTIFICATE OF EXCHANGE


Radiologix, Inc.
3600 Chase Tower
2200 Ross Avenue
Dallas, Texas 75201
Attention: Chief Financial Officer

U.S. Bank, N.A.
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department

         Re: 10.5% Senior Notes due 2008

Ladies and Gentlemen:

                  Reference is hereby made to the Indenture, dated as of
December 12, 2001 (the "Indenture"), between Radiologix, Inc., as issuer (the
"Company"), the Guarantors party thereto and U.S. Bank, N.A., as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

                  ____________, (the "Owner") owns and proposes to exchange the
Note[s] or interest[s] in such Note[s] specified herein, in the principal amount
of $____________ in such Note[s] or interest[s] (the "Exchange"). In connection
with the Exchange, the Owner hereby certifies that:

                  1. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL
INTERESTS IN A RESTRICTED GLOBAL NOTE FOR UNRESTRICTED DEFINITIVE NOTES OR
BENEFICIAL INTERESTS IN AN UNRESTRICTED GLOBAL NOTE.

                           (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL
NOTE. In connection with the Exchange of the Owner's beneficial interest in a
Restricted Global Note for a beneficial interest in an Unrestricted Global Note
in an equal principal amount, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account



                                       C-1


without transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the United States Securities Act of 1933, as amended (the
"Securities Act"), (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest in an
Unrestricted Global Note is being acquired in compliance with any applicable
blue sky securities laws of any State of the United States.

                           (b) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note for
an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive
Note is being acquired for the Owner's own account without transfer, (ii) such
Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive Note is
being acquired in compliance with any applicable blue sky securities laws of any
State of the United States.

                           (c) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN AN UNRESTRICTED GLOBAL NOTE. In
connection with the Owner's Exchange of a Restricted Definitive Note for a
beneficial interest in an Unrestricted Global Note, the Owner hereby certifies
(i) the beneficial interest is being acquired for the Owner's own account
without transfer, (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to Restricted Definitive Notes and pursuant to
and in accordance with the Securities Act, (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest is being acquired in compliance with any applicable blue sky securities
laws of any State of the United States.

                           (d) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO UNRESTRICTED DEFINITIVE NOTE. In connection with the Owner's
Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note,
the Owner hereby certifies (i) the Unrestricted Definitive Note is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Notes and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted



                                       C-2






Definitive Note is being acquired in compliance with any applicable blue sky
securities laws of any State of the United States.

         2. EXCHANGE OF RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS IN
RESTRICTED GLOBAL NOTES FOR RESTRICTED DEFINITIVE NOTES OR BENEFICIAL INTERESTS
IN RESTRICTED GLOBAL NOTES.

                           (a) [ ] CHECK IF EXCHANGE IS FROM BENEFICIAL INTEREST
IN A RESTRICTED GLOBAL NOTE TO RESTRICTED DEFINITIVE NOTE. In connection with
the Exchange of the Owner's beneficial interest in a Restricted Global Note for
a Restricted Definitive Note with an equal principal amount, the Owner hereby
certifies that (i) the Restricted Definitive Note is being acquired for the
Owner's own account without transfer and (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any State of the
United States. Upon consummation of the proposed Exchange in accordance with the
terms of the Indenture, the Restricted Definitive Note issued will continue to
be subject to the restrictions on transfer enumerated in the Private Placement
Legend printed on the Restricted Definitive Note and in the Indenture and the
Securities Act.

                           (b) [ ] CHECK IF EXCHANGE IS FROM RESTRICTED
DEFINITIVE NOTE TO BENEFICIAL INTEREST IN A RESTRICTED GLOBAL NOTE. In
connection with the Exchange of the Owner's Restricted Definitive Note for a
beneficial interest in the: [CHECK ONE] [ ] 144A Global Note, [ ] Reg S Global
Note, or [ ] Rule 501 Global Note with an equal principal amount, the Owner
hereby certifies (i) the beneficial interest is being acquired for the Owner's
own account without transfer and (ii) such Exchange has been effected in
compliance with the transfer restrictions applicable to the Restricted Global
Notes and pursuant to and in accordance with the Securities Act, and in
compliance with any applicable blue sky securities laws of any State of the
United States. Upon consummation of the proposed Exchange in accordance with the
terms of the Indenture, the beneficial interest issued will be subject to the
restrictions on transfer enumerated in the Private Placement Legend printed on
the relevant Restricted Global Note and in the Indenture and the Securities Act.




                                       C-3






This certificate and the statements contained herein are made for your benefit
and the benefit of the Company.


- --------------------------
[Insert Name of Owner]



By:
    ------------------------
    Name:
    Title:


Dated:
       -------------



                                       C-4






                                    EXHIBIT D
                       FORM OF CERTIFICATE FROM ACQUIRING
                        INSTITUTIONAL ACCREDITED INVESTOR


Radiologix, Inc.
3600 Chase Tower
2200 Ross Avenue
Dallas, Texas 75201
Attention: Chief Financial Officer

U.S. Bank, N.A.
180 East Fifth Street
St. Paul, Minnesota 55101
Attention: Corporate Trust Department

         Re: 10.5% Senior Notes due 2008

Ladies and Gentlemen:

                  Reference is hereby made to the Indenture, dated as of
December 12, 2001 (the "Indenture"), between Radiologix, Inc., as issuer (the
"Company"), the Guarantors party thereto and U.S. Bank, N.A., as trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.

                  In connection with our proposed purchase of $____________
aggregate principal amount of: (a) a beneficial interest in a Global Note, or
(b) a Definitive Note, we confirm that:

                  1. We understand and acknowledge that the Notes have not been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or any other applicable securities law, and may not be offered, sold or
otherwise transferred except in compliance with the registration requirements of
the Securities Act or any other applicable securities law or pursuant to an
exemption therefrom and in each case in compliance with the conditions for
transfer set forth below.

                  2. We are an institutional "accredited investor" under the
Securities Act within the meaning of subparagraph (a)(1), (2), (3) or (7) of
Rule 501 under the Securities Act



                                       D-1






("Rule 501") or, if the Notes are to be purchased for one or more accounts
("investor accounts") for which we are acting as fiduciary or agent, each such
investor account is an institutional "accredited investor" on a like basis. We
have such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of purchasing the Notes and invest in
or purchase securities similar to the Notes in the normal course of our
business. We and any accounts for which we are acting are each aware that we may
be required, and are each able, to bear the economic risk of our or its
investment in the Notes for an indefinite period of time.

                  3. We are purchasing the Notes for our own account, or for one
or more investor accounts for which we are acting as a fiduciary or agent, in
each case for investment, and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the Securities Act,
subject to any requirement of law that the disposition of our property or the
property of such investor account or accounts be at all times within our or
their control and subject to our or their ability to resell such Notes pursuant
to Rule 144A under the Securities Act ("Rule 144A") or any exemption from
registration available under the Securities Act.

                  4. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Notes to offer, sell or otherwise transfer
such Notes prior to the date which is two years (or such other period that may
hereafter be provided under Rule 144(k) under the Securities Act as permitting
resales of restricted securities by non-affiliates without restriction) after
the later of the date of original issue and the last date on which the Company
or any affiliate of the Company was the owner of such Notes (or any predecessor
thereof) (the "Resale Restriction Termination Date") only (a) to the Company,
(b) pursuant to a registration statement which has been declared effective under
the Securities Act, (c) for so long as the Notes are eligible for resale
pursuant to Rule 144A to a person we reasonably believe is a "qualified
institutional buyer" as defined in Rule 144A (a "QIB") that purchases for its
own account or for the account of a QIB and to whom notice is given that the
transfer is being made in reliance on Rule 144A, (d) outside the United States
in an offshore transaction in accordance with Rule 904 under the Securities Act,
(e) to an institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 that is purchasing the Notes for its own
account or for the account of such an institutional "accredited investor" for
investment purposes only, and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act, or (f)
pursuant to any other available exemption from the registration requirements of
the Securities Act, subject in each of the foregoing cases to any requirement of
law that the disposition of our property or the property of such investor
account or accounts be at all times within our, its or their control and in each
case in



                                       D-2






compliance with any applicable securities laws of any U.S. state or any other
applicable jurisdiction. The foregoing restrictions on resale will not apply
subsequent to the Resale Restriction Termination Date. If any resale or other
transfer of the Notes is proposed to be made pursuant to clause (e) above prior
to the Resale Restriction Termination Date, the transferor shall deliver a
letter from the transferee substantially in the form of this letter to the
Company and the Trustee, which shall provide, among other things, that the
transferee is an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 and that it is acquiring such
Notes for investment purposes and not for distribution in violation of the
Securities Act. Each purchaser acknowledges that the Company and the Trustee
reserve the right prior to the offer, sale or other transfer made prior to the
Resale Termination Date to require the delivery of an opinion of counsel,
certifications and/or other information satisfactory to the Company and the
Trustee. We further understand that any subsequent transfer by us of the Notes
or beneficial interests in therein acquired by us must be effected through one
of the Initial Purchasers.

                  5. We understand that the Notes will be delivered in
registered form only and that the certificates delivered to us in respect of the
Notes will contain a legend substantially to the following effect:

         THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
         AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS.
         NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE
         REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
         OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS
         SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE
         HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL
         OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE WHICH IS TWO
         YEARS (OR SUCH OTHER PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE
         144(K) UNDER THE SECURITIES ACT AS PERMITTING RESALES OF RESTRICTED
         SECURITIES BY NON-AFFILIATES WITHOUT RESTRICTION) AFTER THE LATER OF
         THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY
         OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY
         PREDECESSOR OF THIS SECURITY) (THE "RESALE RESTRICTION TERMINATION
         DATE") ONLY (A) TO THE COMPANY, (B) PURSUANT



                                       D-3






         TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
         SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
         PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, IN THE UNITED STATES TO
         A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
         (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) THAT PURCHASES FOR
         ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
         TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
         RULE 144A UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL "ACCREDITED
         INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (a)(1), (2), (3) OR (7) OF
         RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR
         ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
         "ACCREDITED INVESTOR," FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO,
         OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION
         OF THE SECURITIES ACT, (E) OUTSIDE OF THE UNITED STATES IN AN OFFSHORE
         TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT OR (F)
         PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
         REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
         TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE
         THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
         INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING
         CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY
         IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE AND IN EACH
         CASE IN ACCORDANCE WITH APPLICABLE SECURITIES LAWS OF ANY U.S. STATE OR
         ANY OTHER APPLICABLE JURISDICTION. THE HOLDER OF THIS SECURITY AGREES
         THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS
         TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. THIS
         LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE
         RESTRICTION TERMINATION DATE.




                                       D-4





                  6. If we are acquiring any of the Notes as a fiduciary or
agent for one or more investor accounts, we represent that we have sole
investment discretion with respect to each such account and we have full power
to make the foregoing acknowledgments, representations, warranties and
agreements on behalf of each such investor account.

                  You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.


                                               Dated:                   ,
- ------------------------------------                  ------------------  ----
[Insert Name of Accredited Investor]



By:
    ------------------------------
    Name:
    Title:


                                      D-5

EX-4.2

                                                                     EXHIBIT 4.2

                                RADIOLOGIX, INC.

                           10.5% SERIES B SENIOR NOTE
                                    DUE 2008

                                                            CUSIP No.: 75040KAC3
No. 1                                                            $______________


         Radiologix, Inc., a Delaware corporation (hereinafter called the
"Company", which term includes any successors under the Indenture hereinafter
referred to), for value received, hereby promises to pay to Cede & Co., or
registered assigns, the principal sum of _______________________ Dollars, on
December 15, 2008.

         Interest Payment Dates: June 15 and December 15 commencing June 15,
2002.

         Record Dates:  June 1 and December 1.

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






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

                                   RADIOLOGIX, INC.,
                                   a Delaware corporation


                                   By:
                                      ------------------------------------------
                                   Name:    Mark L. Wagar
                                   Title:   Chairman of the Board and Chief
                                            Executive Officer



                                   By:
                                      ------------------------------------------
                                   Name:    Sami Abbasi
                                   Title:   Chief Financial Officer and
                                            Executive Vice President



Dated:              , 2002
        ------------


                                       2



         This is one of the Notes described in the within-mentioned Indenture.

                                   U.S. BANK, N.A.


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

Dated:              , 2002
        ------------


                                       3



                                 (Back of Note)

                      10.5% Series B Senior Notes due 2008

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.6(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.11 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE
FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A
SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS
CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY (55 WATER STREET, NEW YORK, NEW YORK) ("DTC"), TO THE COMPANY OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

         Capitalized terms used herein shall have the meanings assigned to them
in the Indenture referred to below unless otherwise indicated.

         1. Interest. Radiologix, Inc., a Delaware corporation (the "Company"),
promises to pay interest on the principal amount of this Note at 10.5% per annum
from December 12, 2001 until maturity. The Company will pay interest
semi-annually in arrears on June 15 and December 15 of each year, or if any such
day is not a Business Day, on the next succeeding Business Day (each an
"Interest Payment Date"). Interest on the Notes will accrue from the most recent
date to which interest has been paid or provided for or, if no interest has been
paid, from the Issue Date; provided, that if there is no existing Default in the
payment of interest, and if this Note is authenticated between a Record Date
(defined below) referred to on the face hereof and the next succeeding Interest
Payment Date, interest shall accrue from such next succeeding Interest Payment
Date; provided, further, that the first Interest Payment Date shall be June 15,
2002. The Company shall pay interest on overdue principal and premium, if any,
from time to time on demand at the rate then in effect; it shall pay interest on
overdue installments of interest (without regard to any applicable grace
periods) from time to time on demand at the same rate to the extent lawful.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months.

         2. Method of Payment. The Company will pay interest on the Notes
(except defaulted interest) to the Persons who are registered Holders of Notes
at the close of business on June 1 or December 1 next preceding the Interest
Payment Date (each a "Record Date"), even if such Notes are cancelled after such
Record Date and on or before such Interest Payment Date, except as provided in


                                       4


Section 2.12 of the Indenture (as defined below) with respect to defaulted
interest. The Notes will be payable as to principal, premium, if any, and
interest at the office or agency of the Company maintained in the Borough of
Manhattan, The City and State of New York for such purpose, or, at the option of
the Company, payment of interest may be made by check mailed to the Holders at
their addresses set forth in the register of Holders, and provided, that payment
by wire transfer of immediately available funds to an account within the United
States will be required with respect to principal of and interest and premium,
if any, on all Global Notes. Such payment shall be in such coin or currency of
the United States of America as at the time of payment is legal tender for
payment of public and private debts.

         3. Paying Agent and Registrar. Initially, U.S. Bank, N.A., the Trustee
under the Indenture, will act as Paying Agent and Registrar. The Company may
change any Paying Agent or Registrar without notice to any Holder. The Company
or any of its Subsidiaries may act in any such capacity.

         4. Indenture. The Company issued the Notes under an Indenture dated as
of December 12, 2001 ("Indenture") among the Company, the Guarantors party
thereto and the Trustee. The terms of the Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939, as amended (15 U.S. Code Sections 77aaa-77bbbb). The
Notes are subject to all such terms, and Holders are referred to the Indenture
and such Act for a statement of such terms.

         5. Optional Redemption.

                  (a) Except as set forth in clause (b) of this Section, the
         Company shall not have the option to redeem the Notes pursuant to this
         Section prior to December 15, 2005. The Notes will be redeemable for
         cash at the option of the Company, in whole or in part, at any time on
         or after December 15, 2005, upon not less than 30 days nor more than 60
         days prior notice mailed by first class mail to each Holder at its last
         registered address, at the following redemption prices (expressed as
         percentages of the principal amount) if redeemed during the 12-month
         period commencing December 15 of the years indicated below, in each
         case (subject to the right of Holders of record on a Record Date to
         receive the corresponding interest due on the corresponding Interest
         Payment Date that is on or prior to such Redemption Date), together
         with accrued and unpaid interest thereon to the Redemption Date:



        YEAR                                                PERCENTAGE
        ----                                                ----------
                                                 
        2005........................................         105.250%
        2006........................................         102.625%
        2007 and thereafter.........................         100.000%


                  (b) Notwithstanding the provisions of clause (a) of this
         Section, at any time or from time to time on or prior to December 15,
         2004, upon any Public Equity Offering, up to 35% of the aggregate
         principal amount of the Notes issued pursuant to the Indenture may be
         redeemed at the option of the Company within 90 days of such Public
         Equity Offering, on not less than 30 days, but not more than 60 days,
         notice to each Holder of the Notes to be redeemed, with cash from the
         Net Cash Proceeds of such Public Equity Offering, at a redemption price
         equal to 110.500% of the principal amount thereof (subject to the right
         of Holders of record on a Record Date to receive the corresponding
         interest due on the Interest Payment Date that is on or prior to such
         Redemption Date), together with accrued and unpaid interest thereon to
         the Redemption Date; provided, however, that immediately following such
         redemption not less than 65% of the aggregate principal amount of the
         Notes originally issued pursuant to the Indenture on the Issue Date
         remain outstanding.


                                       5



                  (c) Notice of redemption will be mailed by first class mail at
         least 30 days but not more than 60 days before the Redemption Date to
         each Holder whose Notes are to be redeemed at its registered address.
         Notes in denominations larger than $1,000 may be redeemed in part but
         only in integral multiples of $1,000, unless all of the Notes held by a
         Holder are to be redeemed. On and after the Redemption Date, interest
         ceases to accrue on Notes or portions thereof called for redemption
         unless the Company defaults in such payments due on the Redemption
         Date.

         6. Mandatory Redemption. The Company shall not be required to make
mandatory redemption payments with respect to the Notes. The Notes shall not
have the benefit of any sinking fund.

         7. Offers to Purchase.

                  (a) Change of Control. In the event that a Change of Control
         has occurred, each Holder of Notes will have the right, at such
         Holder's option, pursuant to an offer (subject only to conditions
         required by applicable law, if any) by the Company (the "Change of
         Control Offer"), to require the Company to repurchase all or any part
         of such Holder's Notes (provided, that the principal amount of such
         Notes must be $1,000 or an integral multiple thereof) on a date (the
         "Change of Control Purchase Date") that is no later than 60 days after
         the occurrence of such Change of Control, at a cash price equal to 101%
         of the principal amount thereof (the "Change of Control Purchase
         Price"), together with accrued and unpaid interest to the Change of
         Control Purchase Date. The Change of Control Offer shall be made within
         30 days following a Change of Control and shall remain open for 20
         Business Days following its commencement (the "Change of Control Offer
         Period ") or such other period as may be required by applicable law.
         Upon expiration of the Change of Control Offer Period, the Company
         promptly shall purchase all Notes properly tendered in response to the
         Change of Control Offer.

                  On or before the Change of Control Purchase Date, the Company
         shall (i) accept for payment Notes or portions thereof properly
         tendered and not validly withdrawn pursuant to the Change of Control
         Offer, (ii) deposit with the Paying Agent an amount in cash sufficient
         to pay the Change of Control Purchase Price of all Notes so tendered
         and (iii) deliver to the Trustee the Notes so accepted together with an
         Officers' Certificate listing the Notes or portions thereof being
         purchased by the Company. The Paying Agent promptly shall pay the
         Holders of Notes so accepted an amount equal to the Change of Control
         Purchase Price (together with accrued and unpaid interest) and the
         Trustee promptly shall authenticate and deliver to such Holders a new
         Note equal in principal amount to any unpurchased portion of the Note
         surrendered. Any Notes not so accepted will be delivered promptly by
         the Company to the Holder thereof. The Company publicly will announce
         the results of the Change of Control Offer on or as soon as practicable
         after the Change of Control Purchase Date.

                  (b) Asset Sale. Except as otherwise set forth in Section 4.14
         of the Indenture, the Company and the Guarantors shall not, and neither
         the Company nor the Guarantors shall permit any of their respective
         Subsidiaries to, in one or a series of related transactions, convey,
         sell, transfer, assign or otherwise dispose of, directly or indirectly,
         any of their property, business or assets, including by merger or
         consolidation (in the case of a Guarantor or a Subsidiary of the
         Company), and including any sale or other transfer or issuance of any
         Equity Interests of any Subsidiary of the Company, whether by the
         Company or one of its Subsidiaries or through the issuance, sale or
         transfer of Equity Interests by a Subsidiary of the Company, and
         including any sale and leaseback transaction (any of the foregoing, an
         "Asset Sale "), unless: (1) at least 75% of the total consideration for
         such Asset Sale or series of related Asset Sales consists of cash or
         Cash Equivalents; and (2) the Company receives or such Subsidiary
         receives, as applicable, fair market value for such Asset Sale, such
         determination to be made in good faith by the Company's Board of
         Directors for Asset Sales exceeding $2,000,000. Solely for purposes of
         (1) above, (a) any


                                       6



         Indebtedness (other than Subordinated Indebtedness) of the Company or
         such Subsidiary that is expressly assumed by the transferee in such
         Asset Sale and with respect to which the Company is and its
         Subsidiaries are fully and unconditionally released from any and all
         obligations in connection therewith, (b) property that within 30 days
         of such Asset Sale is converted into cash or Cash Equivalents;
         provided, that such cash and Cash Equivalents shall be treated as Net
         Cash Proceeds attributable to the original Asset Sale for which such
         property was received, and (c) the fair market value, as determined in
         good faith by the Board of Directors, of any asset (other than
         securities) received by the Company or any Subsidiary that, in the good
         faith reasonable judgment of the Company's Board of Directors, will
         immediately constitute or be a part of a Related Business shall be
         deemed to be cash or Cash Equivalents. Within 360 days following such
         Asset Sale, the Net Cash Proceeds therefrom are: (a) invested in fixed
         assets and property (other than notes, bonds, obligations and other
         securities, except in connection with the acquisition of a Guarantor in
         a Related Business) that in the good faith reasonable judgment of the
         Company's Board of Directors will immediately constitute or be a part
         of a Related Business of the Company or such Subsidiary (if it
         continues to be a Subsidiary) immediately following such transaction;
         or (b) used to retire Purchase Money Indebtedness secured by the asset
         that was the subject of the Asset Sale or to permanently reduce the
         amount of Indebtedness outstanding under the Credit Agreement; or (c)
         applied to the optional redemption of the Notes in accordance with the
         terms of the Indenture and the Company's other Indebtedness ranking on
         a parity with the Notes and with similar provisions requiring the
         Company to redeem such Indebtedness with the proceeds from such Asset
         Sale, pro rata in proportion to the respective principal amounts (or
         accreted values in the case of Indebtedness issued with an original
         issue discount) of the Notes and such other Indebtedness then
         outstanding. Pending the final application of any Net Cash Proceeds,
         the Company may temporarily reduce revolving credit borrowings or
         otherwise invest the Net Cash Proceeds in any manner that is not
         prohibited by the Indenture.

                  The accumulated Net Cash Proceeds from Asset Sales not applied
         as set forth in (a), (b) or (c) of the preceding paragraph shall
         constitute "Excess Proceeds". Within 30 days after the date that the
         amount of Excess Proceeds exceeds $10,000,000, the Company shall apply
         the Excess Proceeds (the "Asset Sale Offer Amount") to the repurchase
         of the Notes and such other Indebtedness ranking on a parity with the
         Notes and with similar provisions requiring the Company to make an
         offer to purchase such Indebtedness with the proceeds from such Asset
         Sale pursuant to a cash offer (subject only to conditions required by
         applicable law, if any) (pro rata in proportion to the respective
         principal amounts (or accreted values in the case of Indebtedness
         issued with an original issue discount) of the Notes and such other
         Indebtedness then outstanding) (the "Asset Sale Offer") at a purchase
         price of 100% of the principal amount (or accreted value in the case of
         Indebtedness issued with an original issue discount) (the "Asset Sale
         Offer Price") together with accrued and unpaid interest to the date of
         payment. Each Asset Sale Offer shall remain open for 20 Business Days
         following its commencement (the "Asset Sale Offer Period"). Upon
         expiration of the Asset Sale Offer Period, the Company shall apply the
         Asset Sale Offer Amount plus an amount equal to accrued and unpaid
         interest, if any, to the purchase of all Indebtedness properly tendered
         in accordance with the provisions hereof (on a pro rata basis if the
         Asset Sale Offer Amount is insufficient to purchase all Indebtedness so
         tendered) at the Asset Sale Offer Price (together with accrued
         interest). To the extent that the aggregate amount of Notes and such
         other pari passu Indebtedness tendered pursuant to an Asset Sale Offer
         is less than the Asset Sale Offer Amount, the Company may use any
         remaining Net Cash Proceeds as otherwise permitted by the Indenture
         (other than for making Restricted Payments that are not Investments)
         and following the consummation of each Asset Sale Offer the Excess
         Proceeds amount shall be reset to zero.

         8. Denominations, Transfer, Exchange. The Notes are in registered form
without coupons in denominations of $1,000 and integral multiples of $1,000. The
transfer of Notes may be registered and


                                       7



Notes may be exchanged as provided in the Indenture. The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and the Company may require a Holder to pay
any taxes and fees required by law or permitted by the Indenture. The Company
need not exchange or register the transfer of any Note or portion of a Note
selected for redemption, except for the unredeemed portion of any Note being
redeemed in part. Also, it need not exchange or register the transfer of any
Notes for a period of 15 days before a selection of Notes to be redeemed or
during the period between a Record Date and the corresponding Interest Payment
Date.

         9. Persons Deemed Owners. The registered Holder of a Note may be
treated as its owner for all purposes.

         10. Amendment, Supplement and Waiver. Subject to certain exceptions,
the Indenture, the Notes or the Guarantees may be amended or supplemented with
the consent of the Holders of not less than a majority in aggregate principal
amount of the then outstanding Notes, and any existing Default or compliance
with any provision of the Indenture, the Notes or the Guarantees may be waived
with the consent of the Holders of a majority in aggregate principal amount of
the then outstanding Notes. Without the consent of any Holder of a Note, the
Indenture, the Notes or the Guarantees may be amended or supplemented (a) to
cure any ambiguity, defect or inconsistency; (b) to add to the covenants of the
Company or the Guarantors for the benefit of the Holders, or to surrender any
right or power conferred upon the Company or the Guarantors by the Indenture or
herein; (c) to provide for collateral for or additional Guarantors of the Notes;
(d) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the obligations of the Company, herein and
in the Indenture in accordance with the terms of the Indenture; (e) to comply
with the TIA; (f) to evidence the succession of another corporation to any
Guarantor and assumption by any such successor of the Guarantee of such
Guarantor pursuant to the Indenture; (g) to evidence the release of any
Guarantor; (h) to evidence and provide for the acceptance of appointment of a
successor Trustee with respect to the Notes; (i) in any other case where a
supplemental indenture is required or permitted to be entered into pursuant to
the provisions of the Indenture without the consent of any Holder; (j) to
provide for the issuance and authorization of the Exchange Notes; or (k) to make
any change that does not adversely affect the rights of any Holder.

         11. Defaults and Remedies. The Indenture provides that each of the
following constitutes an Event of Default:

                  (a) the Company's failure to pay any installment of interest
         on the Notes as and when the same becomes due and payable and the
         continuance of any such failure for 30 days;

                  (b) the Company's failure to pay all or any part of the
         principal of, or premium, if any, on the Notes when and as the same
         becomes due and payable at maturity, redemption, by acceleration or
         otherwise, including, without limitation, payment of the Change of
         Control Purchase Price or the Asset Sale Offer Price on Notes validly
         tendered and not properly withdrawn pursuant to a Change of Control
         Offer or Asset Sale Offer, as applicable;

                  (c) the Company's failure or the failure by any of its
         Subsidiaries to observe or perform any other covenant or agreement
         contained in the Notes or the Indenture and, except for the provisions
         under Section 4.3 and 4.14 and Articles V and X of the Indenture, the
         continuance of such failure for a period of 60 days after written
         notice is given to the Company by the Trustee or to the Company and the
         Trustee by the Holders of at least 25% in aggregate principal amount of
         the Notes outstanding;

                  (d) a decree, judgment, or order by a court of competent
         jurisdiction shall have been entered adjudicating the Company or any of
         its Significant Subsidiaries as bankrupt or insolvent,


                                       8



         or approving as properly filed a petition seeking reorganization of the
         Company or any of its Significant Subsidiaries under any bankruptcy or
         similar law, and such decree or order shall have continued undischarged
         and unstayed for a period of 60 days; or a decree, judgment or order of
         a court of competent jurisdiction appointing a receiver, liquidator,
         trustee, or assignee in bankruptcy or insolvency for the Company, any
         of its Significant Subsidiaries, or any substantial part of the
         property of any such Person, or for the winding up or liquidation of
         the affairs of any such Person, shall have been entered, and such
         decree, judgment, or order shall have remained in force undischarged
         and unstayed for a period of 60 days;

                  (e) the Company or any of its Significant Subsidiaries shall
         institute proceedings to be adjudicated a voluntary bankrupt, or shall
         consent to the filing of a bankruptcy proceeding against it, or shall
         file a petition or answer or consent seeking reorganization under any
         bankruptcy or similar law or similar statute, or shall consent to the
         filing of any such petition, or shall consent to the appointment of a
         custodian, receiver, liquidator, trustee, or assignee in bankruptcy or
         insolvency of it or any substantial part of its assets or property, or
         shall make a general assignment for the benefit of creditors, or shall
         admit in writing its inability to pay its debts generally as they
         become due, or take any corporate action in furtherance of any of the
         foregoing;

                  (f) a default in the Company's Indebtedness or the
         Indebtedness of any of its Subsidiaries with an aggregate amount
         outstanding in excess of $10,000,000 (i) resulting from the failure to
         pay principal at maturity or (ii) as a result of which the maturity of
         such Indebtedness has been accelerated prior to its stated maturity;

                  (g) unsatisfied judgments not covered by insurance aggregating
         in excess of $5,000,000 at any one time rendered against the Company or
         any of its Subsidiaries and not stayed, bonded or discharged within 60
         days after such judgment became final and nonappealable; and

                  (h) any Guarantee of a Guarantor that is a Significant
         Subsidiary ceases to be in full force and effect or becomes
         unenforceable or invalid or is declared null and void (other than in
         accordance with the terms of the Guarantee and the Indenture) or any
         Guarantor denies or disaffirms its obligations under its Guarantee.

         12. Trustee Dealings with Company. The Trustee, in its individual or
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not the Trustee.

         13. No Recourse Against Others. No direct or indirect incorporator,
stockholder, employee, officer or director, as such, past, present or future, of
the Company or any Guarantor, or any successor entity, shall have any personal
liability in respect of the obligations of the Company or the Guarantors under
the Notes or the Indenture solely by reason of his or its status as such
incorporator, stockholder, employee, officer or director; provided, that this
Section 13 shall in no way limit the obligation of any Guarantor pursuant to any
Guarantee of the Notes. Each Securityholder by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.

         14. Authentication. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.

         15. Abbreviations. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN


                                       9



(= joint tenants with right of survivorship and not as tenants in common), CUST
(= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

         16. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers
in notices of redemption as a convenience to Holders. No representation is made
as to the accuracy of such numbers either as printed on the Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon, and any such redemption shall not
be affected by any defect in or omission of such numbers.

         17. Notation of Guarantee. As more fully set forth in the Indenture,
each of the Guarantors from time to time, in accordance with the provisions of
the Indenture, shall irrevocably and unconditionally and jointly and severally
guarantee, on a senior basis, in accordance with Article XI of the Indenture, to
each Holder of a Note authenticated and delivered by the Trustee and to the
Trustee and its successors and assigns, that: (a) the principal of, and premium,
if any, and interest on the Notes will be paid in full when due, whether at the
Maturity Date or Interest Payment Date, by acceleration, call for redemption,
upon a Change of Control Offer, upon an Asset Sale Offer or otherwise; (b) all
other obligations of the Company to the Holders or the Trustee under the
Indenture or under the Notes will be promptly paid in full or performed, all in
accordance with the terms of the Indenture and the Notes; and (c) in case of any
extension of time of payment or renewal of any Notes or any of such other
obligations, the same will be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration, call for redemption, upon a Change of Control Offer, upon an Asset
Sale Offer or otherwise. Such Guarantees shall cease to apply, and shall be null
and void, with respect to any Guarantor who, pursuant to Article XI of the
Indenture, is released from its Guarantee or whose Guarantee otherwise ceases to
be applicable pursuant to the terms of the Indenture.

         When a successor assumes all the obligations of its predecessor under
the Notes and the Indenture, the predecessor will be released from those
obligations.

         18. Governing Law. THE INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING,
WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW AND RULE 327(b) OF THE NEW YORK CIVIL PRACTICE LAWS AND RULES.

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

                                Radiologix, Inc.
                           3600 JP Morgan Chase Tower
                                2200 Ross Avenue
                               Dallas, Texas 75201
                       Attention: Chief Financial Officer
                          Telephone No.: (214) 303-2777


                                       10



                                 ASSIGNMENT FORM


To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to

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

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

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

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

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

and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.

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

Date:                   Your Signature:
     ---------------                   -----------------------------------------
                                             (Sign exactly as your name appears
                                                  on the face of this Note)

Signature Guarantee*


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



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


                                       11



                       OPTION OF HOLDER TO ELECT PURCHASE


         If you want to elect to have this Note purchased by the Company
pursuant to Section 4.14 or 10.1 of the Indenture, check the box below:

                      [ ] Section 4.14    [ ] Section 10.1

         If you want to elect to have only part of the Note purchased by the
Company pursuant to Section 4.14 or Section 10.1 of the Indenture, state the
amount you elect to have purchased (in denominations of $1,000 only, except if
you have elected to have all of your Notes purchased): $___________

Date:                   Your Signature:
     ---------------                   -----------------------------------------
                                             (Sign exactly as your name appears
                                                  on the face of this Note)

Signature Guarantee*


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


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


                                       12



              SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE


         The following exchanges of a part of this Global Note for an interest
in another Global Note or for a Definitive Note, or exchanges of a part of
another Global Note or Definitive Note for an interest in this Global Note, have
been made:



                                                                        Principal Amount of       Signature of
                        Amount of decrease in  Amount of increase in     this Global Note      authorized officer
                         Principal Amount of    Principal Amount of       following such       of Trustee or Note
   Date of Exchange       this Global Note        this Global Note    decrease (or increase)        Custodian
   ----------------     ---------------------  ---------------------  ----------------------   ------------------
                                                                                   





                                       13



                                    GUARANTEE

         The Guarantors listed below (hereinafter referred to as the
"Guarantors," which term includes any successors or assigns under the Indenture,
dated the date hereof, among the Guarantors, the Company (defined below) and
U.S. Bank, N.A., as trustee (the "Indenture") and any additional Guarantors),
jointly and severally, irrevocably and unconditionally guarantee, in accordance
with Article XI of the Indenture: (i) the due and punctual payment of the
principal of, premium, if any, and interest on the 10.5% Senior Notes due 2008
(the "Notes") of Radiologix, Inc., a Delaware corporation (the "Company"),
whether at the Maturity Date, or Interest Payment Date, by acceleration, call
for redemption, upon a Change of Control Offer, upon an Asset Sale Offer or
otherwise; (ii) the due and punctual payment or performance of all other
obligations of the Company to the Holders or the Trustee under the Indenture and
the Notes, all in accordance with the terms set forth in Article XI of the
Indenture; (iii) in case of any extension of time of payment or renewal of any
Notes or any of such other obligations, that the same will be promptly paid in
full when due or performed in accordance with the terms of the extension or
renewal, whether at maturity, by acceleration, call for redemption, upon a
Change of Control Offer, upon an Asset Sale Offer or otherwise; and (iv) the
payment of any and all costs and expenses (including attorneys' fees) incurred
by the Trustee in enforcing any rights under this Guarantee.

         The obligations of each Guarantor to the Holders and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Article
XI of the Indenture and reference is hereby made to such Indenture for the
precise terms of this Guarantee.

         No direct or indirect stockholder, employee, officer or director, as
such, past, present or future, of any of the Guarantors, or any successor
entity, shall have any personal liability in respect of the obligations of any
of the Guarantors under the Guarantees or the Indenture solely by reason of his
or its status as such stockholder, employee, officer or director; provided, that
this provision shall in no way limit the obligation of any Guarantor pursuant to
this Guarantee.

         This is a continuing Guarantee and shall remain in full force and
effect and shall be binding upon each Guarantor and its successors and assigns
until full and final payment of all of the Company's obligations under the Notes
and Indenture or until released or legally defeased in accordance with the
Indenture and shall inure to the benefit of the successors and assigns of the
Trustee and the Holders, and, in the event of any transfer or assignment of
rights by any Holder or the Trustee, the rights and privileges herein conferred
upon that party shall automatically extend to and be vested in such transferee
or assignee, all subject to the terms and conditions hereof. This is a Guarantee
of payment and not of collectibility.

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

         The obligations of each Guarantor under its Guarantee shall be limited
to the extent necessary to insure that it does not constitute a fraudulent
conveyance under applicable law.

         THE TERMS OF ARTICLE XI OF THE INDENTURE IS INCORPORATED HEREIN BY
REFERENCE.

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


                                       14



         IN WITNESS WHEREOF, each of the Guarantors has caused this instrument
to be duly executed.

Dated:                , 2002
       ---------------
                                        IDE IMAGING PARTNERS, INC.
                                        PACIFIC IMAGING PARTNERS, INC.
                                        QUESTAR IMAGING, INC.
                                        WB&A IMAGING PARTNERS, INC.
                                        TREASURE COAST IMAGING PARTNERS, INC.
                                        RADIOLOGIX SERVICES, INC.
                                        ADVANCED IMAGING PARTNERS, INC.
                                        MID ROCKLAND IMAGING PARTNERS, INC.
                                        RADIOLOGY AND NUCLEAR MEDICINE
                                            IMAGING PARTNERS, INC.
                                        COMMUNITY IMAGING PARTNERS, INC.
                                        VALLEY IMAGING PARTNERS, INC.
                                        ADVANCED RADIOLOGY, LLC
                                        ADVANCED MEDICAL IMAGING, INC.
                                        M&S IMAGING PARTNERS I, INC.
                                        M&S IMAGING PARTNERS, L.P. (BY M&S
                                            IMAGING PARTNERS, INC., ITS GENERAL
                                            PARTNER)
                                        QUESTAR CLEVELAND, INC.
                                        QUESTAR TAMPA, INC.
                                        QUESTAR ORLANDO, INC.
                                        ROCKY MOUNTAIN OPENSCAN MRI, LLC
                                        PREMIER ADVANCED IMAGING NETWORK,
                                            LTD. (BY QUESTAR ORLANDO, INC., ITS
                                            GENERAL PARTNER)
                                        QUESTAR KANSAS, INC.
                                        QUESTAR PVH, INC.
                                        QUESTAR SAN FRANCISCO, INC.
                                        QUESTAR HENDERSON, INC.
                                        QUESTAR TRISTATES, INC.
                                        QUESTAR DULUTH, INC.
                                        QUESTAR LINCOLN, INC.
                                        QUESTAR PALM SPRINGS, INC.
                                        QUESTAR LOWER BUCKS, INC.
                                        QUESTAR TOLEDO, INC.
                                        QUESTAR LOS ALAMITOS, INC.
                                        QUESTAR VICTORVILLE, INC.
                                        QUESTAR COLUMBUS, INC.
                                        QUESTAR NAPERVILLE, INC.
                                        QUESTAR QUAKERTOWN, INC.
                                        QUESTAR TUCSON, INC.

                                        By:
                                           -------------------------------------
                                           Mark L. Wagar
                                           Chairman of the Board and Chief
                                           Executive Officer



                                       15



                                        M&S IMAGING INVESTMENTS, INC.


                                        By:
                                           -------------------------------------
                                           Mark L. Wagar
                                           Chairman of the Board and Chief
                                           Executive Officer


                                       16

EX-4.3

                                                                     EXHIBIT 4.3


                                RADIOLOGIX, INC.

                    $160,000,000 10.5% SENIOR NOTES DUE 2008

                          REGISTRATION RIGHTS AGREEMENT



                                                               December 12, 2001

JEFFERIES & COMPANY, INC.
DEUTSCHE BANC ALEX. BROWN INC.
c/o Jefferies & Company, Inc.
11100 Santa Monica Boulevard
10th Floor
Los Angeles, California  90025

Ladies and Gentlemen:

                  Radiologix, Inc., a Delaware corporation (the "ISSUER"), is
issuing and selling to Jefferies & Company, Inc. and Deutsche Banc Alex. Brown
Inc. (the "INITIAL PURCHASERS"), upon the terms set forth in a purchase
agreement, dated as of December 7, 2001 (the "PURCHASE AGREEMENT"), $160,000,000
aggregate principal amount at maturity of the Issuer's 10.5% Senior Notes due
2008, Series A, including the Guarantees (as defined below) endorsed thereon
(the "NOTES"). As an inducement to the Initial Purchasers to enter into the
Purchase Agreement, the Issuer and each of the guarantors signatory to the
Purchase Agreement (the "GUARANTORS") jointly and severally agree with the
Initial Purchasers, for the benefit of the holders of the Securities (as defined
below) (including, without limitation, the Initial Purchasers), as follows:

1.       DEFINITIONS.

                  Capitalized terms used herein without definition shall have
the respective meanings set forth in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:

                  ADVICE: See the last paragraph of Section 5.

                  AGREEMENT: This Registration Rights Agreement.

                  APPLICABLE PERIOD: See Section 2(f).



                                       1


                  BUSINESS DAY: Any day, other than a Saturday, a Sunday or a
day on which banking institutions in The City of New York or at a place of
payment are authorized by law, regulation or executive order to remained closed.

                  CLOSING DATE: December 12, 2001.

                  CONTROLLING PERSON: See Section 7(a).

                  DTC: See Section 5(i).

                  EFFECTIVENESS DATE: The 180th day following the Closing Date.

                  EFFECTIVENESS PERIOD: See Section 3(a).

                  EVENT: See Section 4(a).

                  EVENT DATE: See Section 4(a).

                  EXCHANGE ACT: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.

                  EXCHANGE OFFER: See Section 2(a).

                  EXCHANGE OFFER REGISTRATION STATEMENT: See Section 2(a).

                  EXCHANGE SECURITIES: 10.5% Senior Notes due 2008, Series B, of
the Issuer, including the guarantees endorsed thereon, identical in all respects
to the Notes and the Guarantees, except for references to series and restrictive
legends.

                  FILING DATE: The 120th day following the Closing Date.

                  GUARANTEES: The full and unconditional guarantee, on a senior
basis by the Guarantors, as to payment of principal, interest, premium, if any,
and the Weekly Liquidated Damages Amount, if any, with respect to the Notes.

                  HOLDER: Each holder of Transfer Restricted Securities.

                  HOLDER INDEMNIFIED PARTIES: See Section 7(a).

                  INDEMNIFIED PARTY: See Section 7(c).

                  INDEMNIFYING PARTIES: See Section 7(c).



                                       2


                  INDENTURE: The Indenture, dated as of the date hereof, by and
among the Issuer, the Guarantors and U.S. Bank, N.A., as trustee, pursuant to
which the Notes are being issued, as amended or supplemented from time to time,
in accordance with the terms thereof.

                  INITIAL SHELF REGISTRATION: See Section 3(a).

                  LOSSES: See Section 7(a).

                  MAXIMUM CONTRIBUTION AMOUNT: See Section 7(d).

                  NASD: The National Association of Securities Dealers, Inc.

                  PARTICIPATING BROKER-DEALER: See Section 2(f).

                  PERSON: An individual, trustee, corporation, limited liability
company, partnership, limited liability partnership, joint stock company, joint
venture, trust, unincorporated organization or association, government or any
agency or political subdivision thereof, union, business association, firm or
other entity.

                  PRIVATE EXCHANGE: See Section 2(g).

                  PRIVATE EXCHANGE SECURITIES: See Section 2(g).

                  PROSPECTUS: The prospectus included in a Registration
Statement at the time that such Registration Statement is declared effective
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A under the Securities Act), as amended or
supplemented by any prospectus supplement with respect to the terms of the
offering of any portion of the Securities covered by such Registration
Statement, and all other amendments and supplements to such prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such prospectus.

                  REGISTRATION STATEMENT: Any registration statement of the
Issuer that covers any of the Securities and that is filed pursuant to the
provisions of this Agreement, including the Prospectus included therein, all
amendments and supplements to such registration statement and Prospectus
(including post-effective amendments), all exhibits thereto and all material
incorporated by reference or deemed to be incorporated by reference therein.



                                       3


                  RULE 144: Rule 144 under the Securities Act, as such rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC.

                  RULE 144A: Rule 144A under the Securities Act, as such rule
may be amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.

                  RULE 415: Rule 415 under the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the SEC.

                  SEC: The Securities and Exchange Commission.

                  SECURITIES: The Notes, the Private Exchange Securities and the
Exchange Securities, collectively.

                  SECURITIES ACT: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.

                  SHELF EFFECTIVENESS DATE: With respect to a Shelf
Registration, the 90th day after the filing of such Shelf Registration.

                  SHELF FILING DATE: With respect to a Shelf Registration, the
30th day following delivery of the Shelf Notice triggering the obligation to
file such Shelf Registration.

                  SHELF NOTICE: See Section 2(i).

                  SHELF REGISTRATION: The Initial Shelf Registration and any
Subsequent Shelf Registration.

                  SPECIAL COUNSEL: Counsel chosen by the holders of a majority
in aggregate principal amount of Securities.

                  SUBSEQUENT SHELF REGISTRATION: See Section 3(b).

                  TIA: The Trust Indenture Act of 1939, as amended.

                  TRANSFER RESTRICTED SECURITIES: Each Security until (i) the
date on which such Security has been exchanged by a person other than a
Participating Broker-Dealer for an Exchange Security in the Exchange Offer; (ii)
following receipt of an Exchange Security by a Participating Broker-Dealer in
the Exchange Offer, the



                                       4

date on which such Exchange Security is sold to a purchaser who receives from
such Participating Broker-Dealer on or prior to the date of such sale a copy of
the Prospectus contained in the Exchange Offer Registration Statement, (iii) the
date on which such Security has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration or (iv) the date
on which such Security is distributed to the public pursuant to Rule 144 under
the Securities Act or may be distributed to the public pursuant to Rule 144(k)
under the Securities Act.

                  TRUSTEE: The trustee under the Indenture and, if any, the
trustee under any indenture governing the Exchange Securities or the Private
Exchange Securities.

                  UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A
registration in which securities of the Issuer are sold to an underwriter for
reoffering to the public.

                  WEEKLY LIQUIDATED DAMAGES AMOUNT: With respect to any Event,
an amount per week per $1,000 principal amount of Transfer Restricted Securities
equal to $0.05 for the first 90-day period immediately following the applicable
Event Date, increasing by an additional $0.05 per week per $1,000 principal
amount of Transfer Restricted Securities with respect to each subsequent 90-day
period, up to a maximum amount of $0.25 per week per $1,000 principal amount of
Transfer Restricted Securities.

2.       EXCHANGE OFFER.

         (a) The Issuer and the Guarantors shall:

                  (i) prepare and file with the SEC as soon as practicable after
the date hereof, but in no event later than the Filing Date, a registration
statement (the "EXCHANGE OFFER REGISTRATION STATEMENT") on an appropriate form
under the Securities Act with respect to a proposed offer (the "EXCHANGE OFFER")
to the Holders to issue and deliver to such Holders, in exchange for the Notes,
a like aggregate principal amount of Exchange Securities;

                  (ii) use their respective best efforts to cause the Exchange
Offer Registration Statement to become effective on or prior to the
Effectiveness Date;

                  (iii) use their respective best efforts to keep the Exchange
Offer Registration Statement effective until the consummation of the Exchange
Offer pursuant to its terms; and



                                       5


                  (iv) unless the Exchange Offer would not be permitted by
applicable law or by a policy of the SEC, commence the Exchange Offer and use
their respective best efforts to, on or prior to the 30th Business Day after the
Exchange Offer Registration Statement is declared effective, consummate the
Exchange Offer and issue Exchange Securities in exchange for all Notes tendered
prior thereto in the Exchange Offer.

The Exchange Offer shall not be subject to any conditions, other than that the
Exchange Offer does not violate applicable law or any applicable interpretation
of the staff of the SEC.

         (b) The Exchange Securities shall be issued under, and entitled to the
benefits of, the Indenture or a trust indenture that is identical to the
Indenture (other than such changes as are necessary to comply with any
requirements of the SEC to effect or maintain the qualification thereof under
the TIA).

         (c) In connection with the Exchange Offer, the Issuer and the
Guarantors shall:

                  (i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal that is an exhibit to the Exchange Offer Registration
Statement, and any related documents;

                  (ii) keep the Exchange Offer open for not less than 20
Business Days after the date notice thereof is mailed to the Holders (or longer
if required by applicable law);

                  (iii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New York;

                  (iv) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York time, on the last Business Day on which
the Exchange Offer shall remain open; and

                  (v) otherwise comply with all laws applicable to the Exchange
Offer.

         (d) As soon as practicable after the close of the Exchange Offer, the
Issuer and the Guarantors shall:

                  (i) accept for exchange all Notes validly tendered and not
properly withdrawn pursuant to the Exchange Offer;



                                       6


                  (ii) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and

                  (iii) cause the Trustee promptly to authenticate and deliver
to each Holder of Notes, Exchange Securities equal in aggregate principal amount
to the Notes of such Holder so accepted for exchange.

         (e) Interest on each Exchange Security and each Private Exchange
Security will accrue from the last interest payment date on which interest was
paid on the Notes surrendered in exchange therefor or, if no interest has been
paid on the Notes, from the date of original issue of the Notes. Each Exchange
Security and each Private Exchange Security shall bear interest at the rate set
forth thereon; provided, that interest with respect to the period prior to the
issuance thereof shall accrue at the rate or rates borne by the Notes
surrendered in exchange therefor from time to time during such period.

         (f) The Issuer and the Guarantors shall include within the Prospectus
contained in the Exchange Offer Registration Statement a section entitled "Plan
of Distribution," containing a summary statement of the positions taken or
policies made by the staff of the SEC with respect to the potential
"underwriter" status of any broker-dealer that is the beneficial owner (as
defined in Rule 13d-3 under the Exchange Act) of Exchange Securities received by
such broker-dealer in the Exchange Offer (a "PARTICIPATING BROKER-DEALER"). Such
"Plan of Distribution" section shall also allow the use of the Prospectus by all
Persons subject to the prospectus delivery requirements of the Securities Act,
including (without limitation) all Participating Brokers-Dealers, and include a
statement describing the means by which Participating Broker-Dealers may resell
the Exchange Securities. The Issuer and the Guarantors shall use their
respective best efforts to keep the Exchange Offer Registration Statement
continuously effective and to amend and supplement the Prospectus to be lawfully
delivered by all Persons subject to the prospectus delivery requirement of the
Securities Act for such period of time as any such Person must comply with such
prospectus delivery requirement in order to resell the Exchange Securities;
provided that such period shall not exceed 180 days after consummation of the
Exchange Offer (as such period may be extended pursuant to the last paragraph of
Section 5 hereof)(the "APPLICABLE PERIOD").

         (g) If, prior to consummation of the Exchange Offer, any Initial
Purchaser holds any Notes acquired by it and having the status as an unsold
allotment in the initial distribution of the Notes, the Issuer and the
Guarantors shall, upon the request of such Initial Purchaser, simultaneously
with the delivery of the



                                       7


Exchange Securities in the Exchange Offer, issue (pursuant to the same indenture
as the Exchange Securities and subject to transfer restrictions thereon) and
deliver to such Initial Purchaser, in exchange for the Notes held by such
Initial Purchaser (the "PRIVATE EXCHANGE"), a like principal amount of debt
securities of the Issuer, including guarantees endorsed thereon, that are
identical to the Exchange Securities (the "PRIVATE EXCHANGE SECURITIES"). The
Private Exchange Securities shall bear the same CUSIP number as the Exchange
Securities.

         (h) The Issuer may require each Holder participating in the Exchange
Offer to represent to the Issuer and the Guarantors that, at the time of the
consummation of the Exchange Offer: (i) any Exchange Securities received by such
Holder in the Exchange Offer will be acquired in the ordinary course of its
business; (ii) such Holder will have no arrangement or understanding with any
Person to participate in the distribution of the Exchange Securities within the
meaning of the Securities Act or the resale of the Exchange Securities in
violation of the Securities Act; (iii) if such Holder is not a broker-dealer,
that it is not engaged in and does not intend to engage in, the distribution of
the Exchange Securities; (iv) if such Holder is a broker-dealer that will
receive Exchange Securities for its own account in exchange for Notes that were
acquired as a result of market-making or other trading activities, that it will
deliver a prospectus, as required by law, in connection with any resale of such
Exchange Securities; and (v) if such Holder is an affiliate of the Issuer, that
it will comply with the registration and prospectus delivery requirements of the
Securities Act applicable to it.

         (i) If: (i) the Issuer and the Guarantors are not required to file an
Exchange Offer Registration Statement or permitted to consummate the Exchange
Offer because the Exchange Offer is not permitted by applicable law or SEC
policy (after compliance with the procedures set forth in Section 5 below); (ii)
subsequent to the consummation of the Private Exchange, any Holder of Private
Exchange Securities so requests; (iv) the Exchange Offer is not consummated for
any reason within 30 Business Days of the Effectiveness Date; or (v) in the case
of (A) any Holder prohibited by applicable law or SEC policy from participating
in the Exchange Offer, (B) any Holder participating in the Exchange Offer that
receives Exchange Securities that may not be sold by such Holder to the public
without delivering a prospectus and the Prospectus contained in the Exchange
Offer Registration Statement is not available for such resales, or (C) any
broker-dealer that holds Notes acquired directly from the Issuer or any of its
affiliates and, in each such case contemplated by this clause (v), such Holder
notifies the Issuer within 20 Business Days of consummation of the Exchange
Offer, then the Issuer shall, within five Business Days thereof, deliver to the
Holders and the Trustee notice thereof (the "SHELF NOTICE") and shall as soon as
possible thereafter (and in any event on or prior to the Shelf Filing Date) file
an Initial Shelf Registration pursuant to Section 3.



                                       8


3.       SHELF REGISTRATION.

                  If at any time a Shelf Notice is required to be delivered
pursuant to Section 2(i), then:

         (a) Initial Shelf Registration. The Issuer and the Guarantors shall
prepare and file with the SEC a Registration Statement for an offering to be
made on a continuous basis pursuant to Rule 415 covering all of the Transfer
Restricted Securities (the "INITIAL SHELF REGISTRATION") subject to the Issuer's
right pursuant to Section 3(c) to exclude the Transfer Restricted Securities of
Holders that have not provided the information required to be furnished by such
Holders pursuant to Section 3(c) hereof. The Issuer and the Guarantors shall
file with the SEC the Initial Shelf Registration as soon as possible following
the occurrence of the event described in Section 2(i) that triggered such filing
obligation, but in no event later than the Shelf Filing Date. The Initial Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Transfer Restricted Securities for resale by such Holders
in the manner or manners designated by them (including, without limitation, one
or more underwritten offerings). The Issuer and the Guarantors (i) shall not
permit any securities other than the Transfer Restricted Securities to be
included in any Shelf Registration, and (ii) shall use their respective best
efforts to cause the Initial Shelf Registration to be declared effective under
the Securities Act on or prior to the Shelf Effectiveness Date) and to keep the
Initial Shelf Registration continuously effective under the Securities Act until
the date that is 24 months after the Closing Date (subject to extension pursuant
to the last paragraph of Section 5 hereof) (the "EFFECTIVENESS PERIOD"), or such
shorter period ending when (i) all Transfer Restricted Securities covered by the
Initial Shelf Registration have been sold in the manner set forth and as
contemplated in the Initial Shelf Registration, (ii) a Subsequent Shelf
Registration covering all of the Transfer Restricted Securities covered by and
not sold under the Initial Shelf Registration or an earlier Subsequent Shelf
Registration has been declared effective under the Securities Act; provided,
however, that the Effectiveness Period in respect of the Initial Shelf
Registration shall be extended to the extent required to permit dealers to
comply with the applicable prospectus delivery requirements of Rule 174 under
the Securities Act and as otherwise provided herein and shall be subject to
reduction to the extent that the applicable provisions of Rule 144 are amended
or revised, (iii) such Transfer Restricted Securities are eligible for resale
pursuant to Rule 144(k) under the Securities Act or (iv) there cease to be any
outstanding Transfer Restricted Securities.



                                       9


         (b) Subsequent Shelf Registrations. If any Shelf Registration ceases to
be effective for any reason at any time during the Effectiveness Period (other
than because of the sale of all of the Transfer Restricted Securities registered
thereunder), the Issuer and the Guarantors shall use their respective best
efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 30 days of such cessation
of effectiveness file an amendment to the Shelf Registration in a manner
reasonably expected to obtain the withdrawal of the order suspending the
effectiveness thereof, or file an additional "shelf" Registration Statement
pursuant to Rule 415 covering all of the Transfer Restricted Securities (a
"SUBSEQUENT SHELF REGISTRATION"). If a Subsequent Shelf Registration is filed,
the Issuer and the Guarantors shall use their respective best efforts to cause
the Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Subsequent Shelf Registration
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Initial
Shelf Registration, and any previously filed Subsequent Shelf Registration, were
previously effective.

         (c) Provision of Information. The Issuer and the Guarantors may exclude
from any Shelf Registration the Transfer Restricted Securities of any Holder
who, without reasonable basis, fails to furnish to the Issuer in writing, within
20 days after receipt of a written request therefor, the information specified
in Item 507 or 508, as applicable, of Regulation S-K under the Securities Act
for use in connection with any Shelf Registration or Prospectus or preliminary
Prospectus included therein. No such Holder shall be entitled to liquidated
damages pursuant to Section 4 unless and until such Holder shall have provided
all such information. Each Holder whose Transfer Restricted Securities are to be
included in a Shelf Registration Statement agrees to furnish to the Issuer all
additional information required to be disclosed in order to make the information
previously furnished to the Issuer by such Holder not materially misleading.

4.       LIQUIDATED DAMAGES.

         (a) The Issuer and the Guarantors acknowledge and agree that the
Holders will suffer damages, and that it would not be feasible to ascertain the
extent of such damages with precision, if the Issuer and the Guarantors fail to
fulfill their respective obligations hereunder. Accordingly, in the event of
such failure, the Issuer and the Guarantors jointly and severally agree to pay
liquidated damages to each Holder under the circumstances and to the extent set
forth below:

                  (i) if the Exchange Offer Registration Statement has not been
filed with the SEC on or prior to the Filing Date;

                  (ii) if the Exchange Offer Registration Statement is not
declared effective by the SEC on or prior to the Effectiveness Date; or



                                       10


                  (iii) if the Exchange Offer is not consummated on or before
the 30th Business Day after the date on which the Exchange Offer Registration
Statement is declared effective by the SEC;

                  (iv) if an Exchange Offer Registration Statement is filed and
declared effective by the SEC but thereafter ceases to be effective during the
Applicable Period;

                  (v) if obligated to file a Shelf Registration and the Issuer
and the Guarantors fail to file such Shelf Registration with the SEC on or prior
to the Shelf Filing Date;

                  (vi) if a Shelf Registration is filed and such Shelf
Registration is not declared effective on or prior to the Shelf Effectiveness
Date; or

                  (vii) if a Shelf Registration is filed and declared effective
by the SEC but thereafter ceases to be effective during the Effectiveness
Period;

(each of the foregoing an "EVENT," and the date on which the Event occurs being
referred to herein as an "EVENT DATE").

                  Upon the occurrence of any Event, the Issuer shall pay, or
cause to be paid (and the Guarantors hereby guarantee the payment of), in
addition to amounts otherwise due under the Indenture and the Transfer
Restricted Securities, as liquidated damages, and not as a penalty, to each
Holder for each weekly period beginning on the Event Date an amount equal to the
Weekly Liquidated Damages Amount per $1,000 principal amount of Transfer
Restricted Securities held by such Holder; provided, that such liquidated
damages will, in each case, cease to accrue (subject to the occurrence of
another Event) on the date on which all Events have been cured. The Issuer and
the Guarantors shall not be required to pay liquidated damages for more than one
Event at any given time. An Event under clause (i) above shall be cured on the
date that the Exchange Offer Registration Statement (or, if an Initial Shelf
Registration is required to be filed pursuant to clause (i) or (ii) of Section
2(i), the date that such Initial Shelf Registration) is filed with the SEC; an
Event under clause (ii) above shall be cured on the date that the Exchange Offer
Registration Statement (or, if an Initial Shelf Registration is required to be
filed pursuant to clause (i) or (ii) of Section 2(i), the date that such Initial
Shelf Registration) is declared effective by the SEC; an Event under clause
(iii) above shall be cured on the earlier of the date (A) the Exchange Offer is
consummated with respect to all Notes validly tendered or (B) the Issuer
delivers a Shelf Notice to the




                                       11


Holders and the Trustee pursuant to clause (i) or (ii) of Section 2(i); an Event
under clause (iv) above shall be cured on the date on which the Exchange Offer
Registration Statement is no longer subject to an order suspending the
effectiveness thereof or proceedings relating thereto; an Event under clause (v)
above shall be cured on the date that such Shelf Registration is filed with the
SEC; an Event under clause (vi) above shall be cured on the date that such Shelf
Registration is declared effective by the SEC; and an Event under clause (vii)
above shall be cured on the earlier of (A) the date on which the applicable
Shelf Registration is no longer subject to an order suspending the effectiveness
thereof or proceedings relating thereto or (B) a new Subsequent Shelf
Registration is declared effective.

         (b) The Issuer shall notify the Trustee of the occurrence of an Event
within five Business Days after each Event Date. The Issuer shall pay the
liquidated damages due on the Transfer Restricted Securities by depositing with
the Trustee, in trust, for the benefit of the Holders thereof, by 12:00 noon,
New York City time, on or before the applicable semi-annual interest payment
date for the Transfer Restricted Securities, immediately available funds in sums
sufficient to pay the liquidated damages then due. The liquidated damages amount
due shall be payable in the same manner as interest payments on the Notes on
each interest payment date to the record Holder entitled to receive the interest
payment to be made on such date as set forth in the Indenture.

5.       REGISTRATION PROCEDURES.

                  In connection with the registration of any Securities pursuant
to Sections 2 or 3 hereof, the Issuer and the Guarantors shall effect such
registrations to permit the sale of such Securities in accordance with the
intended method or methods of disposition thereof, and pursuant thereto the
Issuer and the Guarantors shall:

         (a) Prepare and file with the SEC, as soon as practicable after the
date hereof but in any event on or prior to the Filing Date, with respect to an
Exchange Offer Registration Statement, and on or prior to the Shelf Filing Date,
with respect to a Shelf Registration, as prescribed by Sections 2 and 3,
respectively, and use their respective best efforts to cause each such
Registration Statement to become effective and remain continuously effective for
the Applicable Period or Effectiveness Period, as applicable, as provided in
this Agreement; provided, that if (i) such filing is pursuant to Section 3 or
(ii) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, (A) the Issuer shall notify the Holders of
the Transfer Restricted Securities covered by such Registration




                                       12


Statement, their Special Counsel, each Participating Broker-Dealer, the managing
underwriters, if any, and their counsel of such filing at least five Business
Days prior to making such filing, (B) if requested, the Issuer and the
Guarantors shall furnish to and afford the Holders of the Transfer Restricted
Securities covered by such Registration Statement, their Special Counsel, each
Participating Broker-Dealer, the managing underwriters, if any, and their
counsel a reasonable opportunity to review, and shall make available for
inspection by such Persons, copies of all such documents (including copies of
any documents to be incorporated by reference therein and all exhibits thereto)
proposed to be filed and such financial and other information and books and
records of the Issuer and the Guarantors, as shall be necessary, in the opinion
of Special Counsel and the respective counsels to such Participating
Broker-Dealers and underwriters, to conduct a reasonable due diligence
investigation within the meaning of the Securities Act, and (C) the Issuer and
the Guarantors shall cause the members, managers, officers, directors and
employees of the Issuer and the Guarantors, and counsel and independent
certified public accountants of the Issuer and the Guarantors, to respond to
such inquiries, as shall be necessary, in the opinion of Special Counsel and the
respective counsels to such Participating Broker-Dealers and underwriters, to
conduct a reasonable due diligence investigation within the meaning of the
Securities Act. The Issuer and the Guarantors may require each Holder to enter
into a customary confidentiality agreement prepared by the Issuer and the
Guarantors and reasonably acceptable in form and substance to such Holders, that
requires such Holders to keep confidential any non-public information relating
to the Issuer and the Guarantors received by such Holder, to refrain from using
such information as the basis for any market transactions in the securities of
the Issuer and not to disclose such information (other than to an affiliate or
prospective purchaser who agrees in writing to respect the confidentiality
provisions of this Section 5(a)) until such information has been made generally
available to the public unless the release of such information is required by
law or necessary to respond to inquiries of regulatory authorities. The Issuer
and the Guarantors shall not file any Registration Statement or Prospectus or
any amendments or supplements thereto that the Holders must be afforded an
opportunity to review prior to the filing of such document, if the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities
covered by such Registration Statement, their Special Counsel, any Participating
Broker-Dealer or the managing underwriters, if any, or their counsel shall
reasonably object to such filing within five Business Days after receipt of the
Issuer's notice of filing described above in this Section 5(a). A Holder shall
be deemed to have reasonably objected to such filing if such Registration
Statement, amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains an untrue statement of a material fact or omits to state any
material fact necessary to make the statements therein not misleading or fails
to comply with the applicable requirements of the Securities Act.



                                       13


         (b) Provide an indenture trustee for the Transfer Restricted Securities
or the Exchange Securities, as the case may be, and cause the Indenture (or
other indenture relating to the Transfer Restricted Securities) to be qualified
under the TIA not later than the effective date of the first Registration
Statement; in connection therewith, effect such changes to such indenture as may
be required for such indenture to be so qualified in accordance with the terms
of the TIA; and execute, and use their respective best efforts to cause such
trustee to execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to enable such
indenture to be so qualified in a timely manner.

         (c) Prepare and file with the SEC such pre-effective amendments and
post-effective amendments to the Registration Statement as may be necessary in
order to cause the Registration Statement to become effective and to keep such
Registration Statement continuously effective for the time periods required
hereby; cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be filed
pursuant to Rule 424 (or any similar provisions then in force) under the
Securities Act, and comply in all material respects with Rules 424, 430A and
462, as applicable, under the Securities Act; and comply in all material
respects with the provisions of the Securities Act and the Exchange Act
applicable thereto with respect to the disposition of all securities covered by
such Registration Statement, as so amended, or in such Prospectus, as so
supplemented, in accordance with the intended methods of distribution set forth
in such Registration Statement, as so amended, and such Prospectus, as so
supplemented.

         (d) Furnish to such selling Holders and Participating Broker-Dealers
who so request (i) upon the Issuer's and the Guarantors' receipt, a copy of the
order of the SEC declaring such Registration Statement and any post-effective
amendment thereto effective, (ii) such reasonable number of copies of such
Registration Statement and of each amendment and supplement thereto (in each
case including any documents incorporated therein by reference and all exhibits
(including exhibits incorporated by reference) to such Registration Statement
and each such amendment and supplement), (iii) such reasonable number of copies
of the Prospectus included in such Registration Statement (including each
preliminary prospectus and each supplement thereto), and such reasonable number
of copies of the final Prospectus as filed by the Issuer and the Guarantors
pursuant to Rule 424(b) under the Securities Act, in conformity in all material
respects with the applicable requirements of the Securities Act, and (iv) such
other documents (including any amendments and supplements required to be filed
pursuant to Section 5(c) and any documents incorporated therein by reference and
all exhibits thereto, including exhibits



                                       14


incorporated by reference), as any such Person may reasonably request. The
Issuer and the Guarantors hereby consent to the use (in accordance with
applicable law) of the Prospectus by each of the selling Holders of Transfer
Restricted Securities and by each such Participating Broker-Dealer, as the case
may be, and the underwriters or agents, if any, and dealers (if any), in
connection with the offering and sale of the Transfer Restricted Securities
covered by, or the sale by Participating Broker-Dealers of the Exchange
Securities pursuant to, such Prospectus and any amendment or supplement thereto.

         (e) If (A) a Shelf Registration is filed pursuant to Section 3 or (B) a
Prospectus contained in an Exchange Offer Registration Statement filed pursuant
to Section 2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, notify the selling Holders of Transfer Restricted Securities,
their Special Counsel, each Participating Broker-Dealer and the managing
underwriters, if any, as soon as practicable (but in any event within five
Business Days), and, if requested by such Person, confirm such notice in
writing, (i) when a Prospectus or any Prospectus supplement or Registration
Statement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective under the Securities Act, (ii) of the issuance by the SEC of any stop
order suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of any Prospectus or the initiation of any
proceedings for that purpose, (iii) if, at any time when a Prospectus is
required by the Securities Act to be delivered in connection with sales of the
Transfer Restricted Securities, the representations and warranties of the Issuer
and the Guarantors contained in any agreement (including any underwriting
agreement) contemplated by Section 5(n) below cease to be true and correct in
any material respect, (iv) of the receipt by the Issuer or any of the Guarantors
of any notification with respect to the suspension of the qualification or
exemption from qualification of a Registration Statement or any of the Transfer
Restricted Securities or the Exchange Securities to be sold by any Participating
Broker-Dealer for offer or sale in any jurisdiction, or the contemplation,
initiation or threatening of any proceeding for such purpose, (v) of the
happening of any event that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference to be untrue in any material respect or that
requires the making of any additions to or changes in such Registration
Statement, Prospectus or documents so that it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which such statements were made, not misleading, (vi) of the
Issuer's and the Guarantors' reasonable determination that a post-effective
amendment to a Registration Statement would be



                                       15


appropriate, and (vii) of any request by the SEC for amendments to the
Registration Statement or supplements to the Prospectus or for additional
information relating thereto.

         (f) Use their respective best efforts to register or qualify, and, if
applicable, to cooperate with the selling Holders of Transfer Restricted
Securities, the underwriters, if any, and their respective counsel in connection
with the registration or qualification (or exemption from such registration or
qualification) of, Transfer Restricted Securities to be included in a
Registration Statement for offer and sale under the securities or Blue Sky laws
of such jurisdictions within the United States as any selling Holder,
Participating Broker-Dealer or the managing underwriters, if any, reasonably
request in writing; and, if Securities are offered other than through an
Underwritten Offering, the Issuer and the Guarantors shall cause their
respective counsel to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(f) at the expense
of the Issuer and the Guarantors; keep each such registration or qualification
(or exemption therefrom) effective during the period such Registration Statement
is required to be kept effective and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of the
Securities covered by the applicable Registration Statement; provided, however,
that neither the Issuer nor any Guarantor shall be required to (i) register or
qualify generally to do business in any jurisdiction where it is not then so
qualified, (ii) take any action that would subject it to general service of
process in any jurisdiction where it is not then so subject or (iii) take any
action that would subject it to general taxation in respect of doing business in
any such jurisdiction where it is not then so subject.

         (g) Use their respective commercially reasonable efforts to prevent the
issuance of any order suspending the effectiveness of a Registration Statement
or preventing or suspending the use of a Prospectus or suspending the
qualification (or exemption from qualification) of any of the Securities for
sale in any jurisdiction, and, if any such order is issued, use their respective
best efforts to obtain the withdrawal or lifting of any such order at the
earliest possible time.

         (h) If (i) a Shelf Registration is filed pursuant to Section 3 or (ii)
a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, and if requested by the managing underwriters, if any, such
Participating Broker-Dealer or the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities, (A) promptly incorporate in a
Prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, or such



                                       16


Holders reasonably request to be included therein as required to comply with any
applicable law and (B) make all required filings of such Prospectus supplement
or such post-effective amendment as soon as practicable after the Issuer and the
Guarantors have received notification of such matters required by applicable law
to be incorporated in such Prospectus supplement or post-effective amendment.

         (i) If (i) a Shelf Registration is filed pursuant to Section 3 or (ii)
a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, cooperate with the selling Holders, such Participating
Broker-Dealer and the managing underwriters, if any, to facilitate the
preparation and delivery of certificates representing Transfer Restricted
Securities to be sold, which certificates shall not bear any restrictive legends
and shall be in a form eligible for deposit with The Depository Trust Company
("DTC"); and enable such Transfer Restricted Securities to be in such
denominations and registered in such names as the managing underwriters, if any,
such Participating Broker-Dealer or the Holders may request.

         (j) If (i) a Shelf Registration is filed pursuant to Section 3 or (ii)
a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2 is required to be delivered under the Securities Act by
any Participating Broker-Dealer who seeks to sell Exchange Securities during the
Applicable Period, upon the occurrence of any event contemplated by Section
5(e)(v), 5(e)(vi) or 5(e)(vii), soon as practicable prepare a post-effective
amendment to the Registration Statement, a supplement to the related Prospectus
or a supplement or amendment to any such document incorporated or deemed to be
incorporated therein by reference, or file any other required document so that,
as thereafter delivered to the purchasers of the Transfer Restricted Securities
being sold thereunder or to the purchasers of the Exchange Securities to whom
such Prospectus will be delivered by a Participating Broker-Dealer, such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and, if SEC review is required, use their respective best
efforts to cause such post-effective amendment to be declared effective as soon
as practicable.

         (k) Use their respective best efforts to cause the Securities covered
by a Registration Statement to be rated with the appropriate rating agencies, if
appropriate, and if so requested by the holders of a majority in aggregate
principal amount of Securities covered by such Registration Statement or the
managing underwriters, if any.



                                       17


         (l) Prior to the effective date of the first Registration Statement
relating to the Securities, (i) provide the applicable trustee with printed
certificates for the Securities in a form eligible for deposit with DTC and (ii)
provide a CUSIP number for each of the Securities.

         (m) Use their respective best efforts to cause all Securities covered
by such Registration Statement to be listed on each securities exchange, if any,
on which similar debt securities issued by the Issuer are then listed.

         (n) If a Shelf Registration is filed pursuant to Section 3, enter into
such customary agreements (including, if requested, an underwriting agreement in
form, scope and substance as is customary in Underwritten Offerings) and take
all such other actions in connection therewith (including those reasonably
requested by the managing underwriters, if any, or the Holders of a majority in
aggregate principal amount of Transfer Restricted Securities being sold) in
order to expedite or facilitate the registration or the disposition of such
Transfer Restricted Securities, and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration is an
Underwritten Registration, (i) make such representations and warranties to the
Holders and the underwriters, if any, with respect to the business of the Issuer
and its respective subsidiaries, and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, in form, substance and scope as are customarily made by
issuers to underwriters in Underwritten Offerings, and confirm the same if and
when reasonably requested; (ii) obtain opinions of counsel to the Issuer and the
Guarantors and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters, if
any, and the Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities being sold), addressed to each selling Holder and each of
the underwriters, if any, covering the matters customarily covered in opinions
requested in Underwritten Offerings; (iii) obtain "cold comfort" letters and
updates thereof (which letters and updates (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters, if any, and the Holders
of a majority in aggregate principal amount of the Transfer Restricted
Securities being sold) from the independent certified public accountants of the
Issuer and the Guarantors (and, if necessary, any other independent certified
public accountants of any subsidiary of the Issuer or of any business acquired
by the Issuer for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each of
the underwriters, if any, and each selling Holder, such letters to be in
customary form and covering matters of the type customarily covered in "cold
comfort" letters in connection with Underwritten Offerings and such other
matters as reasonably requested by underwriters, if any, or the Holders of a
majority in aggregate principal amount of the Transfer Restricted Securities
being sold; and (iv)




                                       18


deliver such documents and certificates as may be reasonably requested by the
Holders of a majority in principal amount of the Transfer Restricted Securities
being sold and the managing underwriters, if any, to evidence the continued
validity of the representations and warranties of the Issuer and the Guarantors
and their respective subsidiaries made pursuant to clause (i) above and to
evidence compliance with any conditions contained in the underwriting agreement
or other similar agreement entered into by the Issuer and the Guarantors.

         (o) Comply with all applicable rules and regulations of the SEC and
make generally available to their respective security holders earnings
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 thereunder (or any similar rule promulgated under the Securities Act)
no later than 45 days after the end of any 12-month period (or 90 days after the
end of any 12-month period if such period is a fiscal year) (i) commencing on
the first day of the fiscal quarter following each fiscal quarter in which
Transfer Restricted Securities are sold to underwriters in a firm commitment or
best efforts Underwritten Offering and (ii) if not sold to underwriters in such
an offering, commencing on the first day of the first fiscal quarter of the
Issuer after the effective date of a Registration Statement, which statements
shall cover said 12-month periods.

         (p) Upon consummation of an Exchange Offer or Private Exchange, obtain
an opinion of counsel to the Issuer and the Guarantors (in form, scope and
substance reasonably satisfactory to the Initial Purchasers), addressed to all
Holders participating in the Exchange Offer or Private Exchange, as the case may
be, to the effect that (i) the Issuer and the Guarantors have duly authorized,
executed and delivered the Exchange Securities or the Private Exchange
Securities, as the case may be, and the Indenture and (ii) the Exchange
Securities or the Private Exchange Securities, as the case may be, and the
Indenture constitute legal, valid and binding obligations of the Issuer and the
Guarantors, enforceable against the Issuer and the Guarantors in accordance with
their respective terms, except as such enforcement may be limited by (A)
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
now or hereafter in effect relating to or affecting creditors' rights generally
and (B) general principles of equity (regardless of whether enforceability is
considered in a proceeding in equity or at law).

         (q) If an Exchange Offer or Private Exchange is to be consummated, upon
delivery of the Transfer Restricted Securities by such Holders to the Issuer and
the Guarantors (or to such other Person as directed by the Issuer and the
Guarantors) in exchange for the Exchange Securities or the Private Exchange
Securities, as the case may be, the Issuer and the Guarantors shall mark, or
caused to be marked, on such Transfer Restricted Securities that such Transfer
Restricted Securities are being



                                       19


cancelled in exchange for the Exchange Securities or the Private Exchange
Securities, as the case may be, and in no event shall such Transfer Restricted
Securities be marked as paid or otherwise satisfied.

         (r) Cooperate with each seller of Transfer Restricted Securities
covered by any Registration Statement and each underwriter, if any,
participating in the disposition of such Transfer Restricted Securities and
their respective counsel in connection with any filings required to be made with
the NASD.

         (s) Use their respective commercially reasonable efforts to take all
other steps necessary to effect the registration of the Transfer Restricted
Securities covered by a Registration Statement contemplated hereby.

                  Each Holder and each Participating Broker-Dealer agrees by
acquisition of such Transfer Restricted Securities or Exchange Securities that,
upon receipt of written notice from the Issuer and the Guarantors of the
happening of any event of the kind described in Section 5(e)(ii), 5(e)(iv),
5(e)(v), 5(e)(vi) or 5(e)(vii), such Holder will forthwith discontinue
disposition (in the jurisdictions specified in a notice of a 5(e)(iv) event, and
elsewhere in a notice of a 5(e)(ii), 5(e)(v), 5(e)(vi) or 5(e)(vii) event) of
such Securities covered by such Registration Statement or Prospectus until the
earlier of (i) such Holder's receipt of the copies of the supplemented
Prospectus contemplated by Section 5(j); or (ii) the time such Holder is advised
in writing (the "ADVICE") by the Issuer and the Guarantors that offers or sales
in a particular jurisdiction may be resumed, or that the use of the applicable
Prospectus may be resumed, as the case may be, and has received copies of any
amendments or supplements thereto. If so directed by the Issuer in such notice,
each Holder and each Participating Broker-Dealer will deliver to the Issuer (at
the Issuer's expense) all copies of the Prospectus covering such Securities that
was current at the time of such Holder's or Participating Broker-Dealer's
receipt of such notice. If the Issuer and the Guarantors shall give such notice,
each of the Effectiveness Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of such Securities
covered by such Registration Statement shall have received (x) the copies of the
amended or supplemented Prospectus contemplated by Section 5(j) or (y) the
Advice.

6.       REGISTRATION EXPENSES.

         (a) All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuer and the Guarantors shall be borne by the
Issuer and the Guarantors whether or not the Exchange Offer is consummated or
the Exchange Offer Registration Statement or a Shelf Registration is filed or
becomes effective, including, without limitation:



                                       20



                  (i) all registration and filing fees (including, without
limitation, (A) fees with respect to filings required to be made with the NASD
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Transfer Restricted Securities or
Exchange Securities and determination of the eligibility of the Transfer
Restricted Securities or Exchange Securities for investment under the laws of
such jurisdictions (x) where the Holders are located, in the case of the
Exchange Securities, or (y) as provided in Section 5(f), in the case of Transfer
Restricted Securities or Exchange Securities to be sold by a Participating
Broker-Dealer during the Applicable Period));

                  (ii) printing expenses (including, without limitation,
expenses of printing certificates for Transfer Restricted Securities or Exchange
Securities in a form eligible for deposit with DTC and of printing prospectuses
if the printing of prospectuses is requested by the managing underwriters, if
any, or, in respect of Transfer Restricted Securities or Exchange Securities to
be sold by a Participating Broker-Dealer during the Applicable Period, by the
Holders of a majority in aggregate principal amount of the Transfer Restricted
Securities included in any Registration Statement or of such Exchange
Securities, as the case may be);

                  (iii) messenger, telephone, duplication, word processing and
delivery expenses incurred by the Issuer and the Guarantors in the performance
of their obligations hereunder;

                  (iv) fees and disbursements of counsel for the Issuer, the
Guarantors and, subject to Section 6(b), the Holders;

                  (v) fees and disbursements of all independent certified public
accountants referred to in Section 5(n)(iii) (including, without limitation, the
expenses of any special audit and "cold comfort" letters required by or incident
to such performance);

                  (vi) fees and expenses of any "qualified independent
underwriter" or other independent appraiser participating in an offering
pursuant to Section 2720 of the Conduct Rules of the NASD, but only where the
need for such a "qualified independent underwriter" arises due to a relationship
with the Issuer and the Guarantors;

                  (vii) Securities Act liability insurance, if the Issuer and
the Guarantors so desire such insurance;



                                       21


                  (viii) fees and expenses of all other Persons, including
special experts, retained by the Issuer or the Guarantors, internal expenses of
the Issuer and the Guarantors (including, without limitation, all salaries and
expenses of their respective officers and employees performing legal or
accounting duties), and the expenses of any annual audit; and

                  (ix) rating agency fees and the fees and expenses incurred in
connection with the listing of the Securities to be registered on any securities
exchange.

         (b) The Issuer and the Guarantors shall reimburse the Holders for the
reasonable fees and disbursements of not more than one counsel (in addition to
appropriate local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Transfer Restricted Securities to be included in any
Registration Statement and other reasonable and necessary out-of-pocket expenses
of the Holders incurred in connection with the registration of the Transfer
Restricted Securities; provided, however, that neither the Issuer nor any
Guarantor shall be required pursuant hereto to pay any underwriting discounts or
commissions.

7.       INDEMNIFICATION.

         (a) Indemnification by the Issuer and the Guarantors. The Issuer and
the Guarantors, jointly and severally, shall, without limitation as to time,
indemnify and hold harmless each Holder, each Person who controls (within the
meaning of Section 15 of the Securities Act or Section 20(a) of the Exchange Act
(any of such persons being hereinafter referred to as a "CONTROLLING PERSON"))
each such Holder and the members, managers, officers, directors, partners,
employees, representatives and agents of each such Holder and controlling person
(collectively, the "HOLDER INDEMNIFIED PARTIES"), to the fullest extent lawful,
from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and reasonable attorneys'
fees) and expenses (including, without limitation, costs and expenses incurred
in connection with investigating, preparing, pursuing or defending against any
of the foregoing) (collectively, "LOSSES"), as incurred, directly or indirectly
caused by, related to, based upon, arising out of or in connection with any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary prospectus, Prospectus or form of
prospectus, or in any amendment or supplement thereto, or any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except insofar as such Losses are
based upon information relating to a Holder and furnished in writing to the
Issuer and the Guarantors by such Holder expressly for use therein; provided,
that the Issuer and the Guarantors shall




                                       22


not be liable under the indemnity provided in this Section 7(a) to any Holder
Indemnified Party to the extent that such Loss results solely from an untrue
statement of a material fact contained in, or the omission of a material fact
from, any preliminary prospectus, which untrue statement or omission was
corrected in the Prospectus (as then amended or supplemented) if it shall have
been determined by a court of competent jurisdiction by final and nonappealable
judgment that (i) such Holder sold the Securities concerned to the person
alleging such Loss and failed to send or give, at or prior to the written
confirmation of such sale, a copy of the Prospectus (as then amended or
supplemented), if required by law to have so delivered it, and (ii) the Issuer
had previously furnished copies thereof to such Holder within a reasonable
amount of time prior to such sale or such confirmation, and (iii) the corrected
Prospectus, if delivered, would have been a complete defense against the person
asserting such Loss. The Issuer and each of the Guarantors shall also indemnify
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, their members, managers,
officers, directors, agents and employees and each of their respective
controlling persons to the same extent as provided above with respect to the
indemnification of the Holder Indemnified Parties.

         (b) Indemnification by Holders of Transfer Restricted Securities. In
connection with any Registration Statement, preliminary prospectus, Prospectus
or form of prospectus, or any amendment or supplement thereto, in which a Holder
is participating, such Holder shall furnish to the Issuer and the Guarantors in
writing such information as the Issuer and the Guarantors reasonably request for
use in connection with any such Registration Statement, preliminary prospectus,
Prospectus or form of prospectus, any amendment or supplement thereto, and
shall, severally and not jointly, without limitation as to time, indemnify and
hold harmless the Issuer, the Guarantors and each other Holder and each of their
respective members, partners, managers, directors, officers, agents and
employees, each controlling person of the Issuer or any of the Guarantors and
the members, partners, managers, directors, officers, agents or employees of
such controlling persons, to the fullest extent lawful, from and against any and
all Losses, as incurred, arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any such Registration
Statement, preliminary prospectus, Prospectus or form of prospectus, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading to the extent, but only to the extent, that such untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission of a material fact is contained in or omitted from any information so
furnished in writing by such Holder to the Issuer and the Guarantors expressly
for use in any Registration



                                       23


Statement, preliminary prospectus, Prospectus or form of prospectus, or any
amendment or supplement thereto. In no event shall the liability of any selling
Holder be greater in amount than the dollar amount of the proceeds (net of
payment of any and all Losses such Holder has been required to pay) received by
such Holder upon the sale of the Transfer Restricted Securities giving rise to
such indemnification obligation.

         (c) Conduct of Indemnification Proceedings. If any Proceeding shall be
brought or asserted against any Person entitled to indemnification hereunder (an
"INDEMNIFIED PARTY"), such indemnified party shall promptly notify the party or
parties from which such indemnification is sought (the "INDEMNIFYING PARTIES")
in writing; provided, that the failure to so notify the indemnifying parties
shall not relieve the indemnifying parties from any obligation or liability
except to the extent (but only to the extent) that it shall be finally
determined by a court of competent jurisdiction (which determination is not
subject to appeal) that the indemnifying parties have been prejudiced materially
by such failure.

                  The indemnifying parties shall have the right, exercisable by
giving written notice to an indemnified party, within 20 Business Days after
receipt of written notice from such indemnified party of such Proceeding, to
assume, at their expense, the defense of any such Proceeding; provided, that an
indemnified party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such indemnified party or parties
unless: (i) the indemnifying parties have agreed to pay such fees and expenses;
(ii) the indemnifying parties shall have failed promptly to assume the defense
of such Proceeding or shall have failed to employ counsel reasonably
satisfactory to such indemnified party; or (iii) the named parties to any such
Proceeding (including any impleaded parties) include both such indemnified party
and one or more indemnifying parties (or any affiliates or controlling persons
of any of the indemnifying parties), and such indemnified party shall have been
advised by counsel that there may be one or more defenses available to such
indemnified party that are in addition to, or in conflict with, those defenses
available to the indemnifying party or such affiliate or controlling person (in
which case, if such indemnified party notifies the indemnifying parties in
writing that it elects to employ separate counsel at the expense of the
indemnifying parties, the indemnifying parties shall not have the right to
assume the defense thereof and the reasonable fees and expenses of such counsel
shall be at the expense of the indemnifying parties; it being understood,
however, that the indemnifying parties shall not, in connection with any one
such Proceeding or separate but substantially similar or related Proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate



                                       24


firm of attorneys (together with appropriate local counsel) at any time for such
indemnified party).

                  No indemnifying party shall be liable for any settlement of
any such Proceeding effected without its written consent, but if settled with
its written consent, or if there be a final judgment for the plaintiff in any
such Proceeding, each indemnifying party jointly and severally agrees, subject
to the exceptions and limitations set forth above, to indemnify and hold
harmless each indemnified party from and against any and all Losses by reason of
such settlement or judgment. The indemnifying party shall not consent to the
entry of any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
indemnified party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such Proceeding for
which such indemnified party would be entitled to indemnification hereunder
(whether or not any indemnified party is a party thereto).

         (d) Contribution. If the indemnification provided for in this Section 7
is unavailable to an indemnified party or is insufficient to hold such
indemnified party harmless for any Losses in respect of which this Section 7
would otherwise apply by its terms (other than by reason of exceptions provided
in this Section 7), then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall have a joint and several obligation
to contribute to the amount paid or payable by such indemnified party as a
result of such Losses, (i) in such proportion as is appropriate to reflect the
relative benefits received by the indemnifying party, on the one hand, and such
indemnified party, on the other hand, from their sale of Transfer Restricted
Securities, or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the indemnifying party, on the one hand, and such indemnified party, on
the other hand, in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such indemnifying party, on the one hand, and indemnified
party, on the other hand, shall be determined by reference to, among other
things, whether any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to information
supplied by such indemnifying party or indemnified party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent any such statement or omission. The amount paid or payable by an
indemnified party as a result of any Losses shall be deemed to include any legal
or other fees or expenses incurred by such party in connection with any
Proceeding, to the extent such party would have been indemnified for such fees
or expenses if the indemnification provided for in Section 7(a) or 7(b) were
available to such party.



                                       25


                  The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 7(d), an indemnifying
party that is a selling Holder shall not be required to contribute, in the
aggregate, any amount in excess of such Holder's Maximum Contribution Amount. A
selling Holder's "MAXIMUM CONTRIBUTION AMOUNT" shall equal the excess, if any,
of (i) the aggregate proceeds received by such Holder pursuant to the sale of
such Transfer Restricted Securities over (ii) the aggregate amount of damages
that such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. The Holders' obligations to
contribute pursuant to this Section 7(d) are several in proportion to the
respective principal amount of the Transfer Restricted Securities held by each
Holder hereunder and not joint. The Issuer's and the Guarantors' obligations to
contribute pursuant to this Section 7(d) are joint and several.

                  The indemnity and contribution agreements contained in this
Section 7 are in addition to any liability that the indemnifying parties
otherwise may have to the indemnified parties.

8.       RULE 144 AND RULE 144A.

                  The Issuer and each of the Guarantors covenants that it shall
(a) file the reports required to be filed by it (if so required) under the
Securities Act and the Exchange Act in a timely manner and, if at any time any
such Person is not required to file such reports, it will, upon the request of
any Holder, make available to each Holder or beneficial owner of Transfer
Restricted Securities and to any prospective purchaser of Transfer Restricted
Securities designated by such Holder or beneficial owner the information
required by Rule 144A(d)(4) under the Securities Act to permit sales pursuant to
Rule 144A and (b) take such further action as any Holder may reasonably request,
all to the extent required from time to time to enable such Holder to sell
Transfer Restricted Securities without registration under the Securities Act
pursuant to the exemptions provided by Rule 144 and Rule 144A. Upon the request
of any Holder, the Issuer and each of the Guarantors shall deliver to such
Holder a written statement as to whether the Issuer or such Guarantor has
complied with such information requirements. Nothing in this Section 8 shall be
deemed to require the Issuer or any of the Guarantors to register any Securities
pursuant to the Exchange Act.



                                       26


9.       UNDERWRITTEN REGISTRATIONS.

                  If any of the Transfer Restricted Securities covered by any
Shelf Registration are to be sold in an Underwritten Offering, the investment
banker or investment bankers and manager or managers that will manage the
offering will be selected by the Holders of a majority in aggregate principal
amount of such Transfer Restricted Securities included in such offering.

                  No Holder may participate in any Underwritten Registration
hereunder unless such Holder (a) agrees to sell such Holder's Transfer
Restricted Securities on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements.

10.      MISCELLANEOUS.

         (a) Remedies. In the event of a breach by the Issuer or any of the
Guarantors of any of their respective obligations under this Agreement, each
Holder, in addition to being entitled to exercise all rights provided herein, in
the Indenture or, in the case of the Initial Purchasers, in the Purchase
Agreement, or granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Issuer and the
Guarantors agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by the Issuer or any of the Guarantors
of any of the provisions of this Agreement and hereby further agree that, in the
event of any action for specific performance in respect of such breach, the
Issuer and the Guarantors shall waive the defense that a remedy at law would be
adequate.

         (b) No Inconsistent Agreements. The Issuer and the Guarantors have not
entered into, as of the date hereof, and shall not enter into, after the date of
this Agreement, any agreement with respect to any of their respective securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof.

         (c) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Issuer and the Guarantors have obtained the written consent of
Holders of at least a majority of the then outstanding aggregate principal
amount of Transfer Restricted Securities; provided, that Sections 4(a) and 7
shall not be amended, modified or supplemented, and waivers or consents to
departures from this




                                       27


proviso may not be given, unless the Issuer has obtained the written consent of
each Holder. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by Holders of at least a majority in aggregate principal
amount of the Transfer Restricted Securities being sold by such Holders pursuant
to such Registration Statement; provided that the provisions of this sentence
may not be amended, modified or supplemented except in accordance with the
provisions of the immediately preceding sentence.

         (d) Notices. All notices and other communications (including, without
limitation, any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, certified
first-class mail with return receipt requested, next-day air courier or
facsimile:

                  (i) if to a Holder, at the most current address given by such
Holder to the Issuer in accordance with the provisions of this Section 10(d),
which address initially is, with respect to each Holder, the address of such
Holder maintained by the Registrar (as defined in the Indenture), with a copy to
Skadden, Arps, Slate, Meagher & Flom LLP, 300 South Grand Avenue, Suite 3400,
Los Angeles, California 90071, facsimile number (213) 687-5600, Attention:
Rodrigo A. Guerra, Esq.; and

                  (ii) if to the Issuer or any of the Guarantors, initially at
3600 Chase Tower, 2200 Ross Avenue, Dallas, Texas 75201, Attention: Chief
Financial Officer, and Attention: General Counsel, with a copy to Haynes and
Boone, LLP, 901 Main Street, Suite 3100, Dallas, Texas 75202, facsimile number
(214) 651-5000, Attention: William R. Hays, III, Esq., and thereafter at such
other address, notice of which is given in accordance with the provisions of
this Section 10(d).

                  All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; one Business
Day after being timely delivered to a next-day air courier, if sent by next-day
air courier; and when receipt is acknowledged by the addressee, if sent by
facsimile.

                  Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in the Indenture.



                                       28


         (e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, without limitation and without the need for an express assignment,
subsequent Holders.

         (f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

         (g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof. When
a reference is made in this Agreement to a Section, paragraph, subparagraph,
Schedule or Exhibit, such reference shall mean a Section, paragraph,
subparagraph, Schedule or Exhibit to this Agreement unless otherwise indicated.
The words "INCLUDE," "INCLUDES," and "INCLUDING" when used in this Agreement
shall be deemed in each case to be followed by the words "WITHOUT LIMITATION."
The phrases "THE DATE OF THIS AGREEMENT," "THE DATE HEREOF," and terms of
similar import, unless the context otherwise requires, shall be deemed to refer
to December 12, 2001. The words "HEREOF," "HEREIN," "HEREWITH," "HEREBY" and
"HEREUNDER" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement.

         (h) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND INTERPRETED,
AND THE RIGHTS OF THE PARTIES SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, INCLUDING WITHOUT LIMITATION, SECTIONS 5-1401 AND 5-1402
OF THE NEW YORK GENERAL OBLIGATIONS LAW AND RULE 327(b) OF NEW YORK CIVIL
PRACTICE LAWS AND RULES. THE ISSUER AND EACH GUARANTOR HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF ANY NEW YORK STATE COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK OR ANY FEDERAL COURT SITTING IN THE BOROUGH
OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND IRREVOCABLY ACCEPTS
FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY,
JURISDICTION OF THE AFORESAID COURTS. THE ISSUER AND EACH GUARANTOR IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TRIAL BY JURY AND ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT



                                       29


AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. THE ISSUER AND EACH GUARANTOR IRREVOCABLY
CONSENTS, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO UNDER APPLICABLE LAW,
TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE ISSUER OR SUCH GUARANTOR, AS THE CASE MAY BE, AT ITS
ADDRESS SET FORTH HEREIN, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER SUCH
MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE INITIAL PURCHASERS TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL
PROCEEDINGS OR OTHERWISE PROCEED AGAINST THE ISSUER OR ANY OF THE GUARANTORS IN
ANY OTHER JURISDICTION.

         (i) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their respective best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

         (j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement, and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein, with respect to the registration rights granted by the Issuer and the
Guarantors in respect of securities sold pursuant to the Purchase Agreement.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to such subject matter.

         (k) Attorneys' Fees. In any Proceeding brought to enforce any provision
of this Agreement, or where any provision hereof is validly asserted as a
defense, the prevailing party, as determined by the courts, shall be entitled to
recover reasonable



                                       30


attorneys' fees in addition to its costs and expenses and any other available
remedy.

         (l) Securities Held by the Issuer or its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of the principal amount
of Transfer Restricted Securities is required hereunder, Transfer Restricted
Securities held by the Issuer or its affiliates (as such term is defined in Rule
405 under the Securities Act) (other than any Holder deemed to be such an
affiliate solely by reason of its holdings of such Transfer Restricted
Securities or any Initial Purchaser deemed to be such an affiliate) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.

                       [signature pages follow this page]



                                       31






                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.


                                               Very truly yours,

                                            RADIOLOGIX, INC.

                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            GUARANTORS:

                                            IDE IMAGING PARTNERS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            PACIFIC IMAGING PARTNERS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR IMAGING, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:






                                            WB&A IMAGING PARTNERS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            TREASURE COAST IMAGING PARTNERS,
                                            INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            RADIOLOGIX SERVICES, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            ADVANCED IMAGING PARTNERS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            MID ROCKLAND IMAGING PARTNERS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:







                                            RADIOLOGY AND NUCLEAR MEDICINE
                                            IMAGING PARTNERS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            COMMUNITY IMAGING PARTNERS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            VALLEY IMAGING PARTNERS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            SAN JOSE IMAGING PARTNERS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            ADVANCED RADIOLOGY, LLC


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:






                                            ADVANCED MEDICAL IMAGING, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            M&S IMAGING PARTNERS I, INC.

                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            M&S IMAGING PARTNERS, L.P.


                                            By: M&S Imaging Partners I, Inc.,
                                            its general partner

                                                By:
                                                    ----------------------------
                                                    Name:
                                                    Title:


                                            QUESTAR CLEVELAND, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR TAMPA, INC.

                                            By:
                                                --------------------------------
                                                Name:
                                                Title:







                                            QUESTAR ORLANDO, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:

                                            ROCKY MOUNTAIN OPENSCAN MRI, LLC


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            PREMIER ADVANCED IMAGING NETWORK,
                                            LTD.


                                            By: Questar Orlando, Inc., its
                                            general partner


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR IMAGING MB, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR KANSAS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:





                                            QUESTAR PVH, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR SAN FRANCISCO, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR HENDERSON, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR TRISTATES, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR PHILADELPHIA, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:







                                            QUESTAR WESTWOOD, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR DULUTH, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR LINCOLN, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR H F M C, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR PALM SPRINGS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:






                                            QUESTAR ATLANTA, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:

                                            QUESTAR MT. LAUREL, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:

                                            QUESTAR LOWER BUCKS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR TOLEDO, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR SOUTH CHICAGO, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:







                                            QUESTAR NORTH GEORGIA, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR LOS ALAMITOS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR DES PLAINES, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR VICTORVILLE, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR COLUMBUS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:







                                            QUESTAR NAPERVILLE, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR QUAKERTOWN, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:


                                            QUESTAR TUCSON, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:








                                            M&S IMAGING INVESTMENTS, INC.


                                            By:
                                                --------------------------------
                                                Name:
                                                Title:





ACCEPTED AND AGREED TO:


JEFFERIES & COMPANY, INC.


By:
    ---------------------------
    Name:
    Title:






DEUTSCHE BANC ALEX. BROWN INC.


By:
    ---------------------------
    Name:
    Title:

EX-5.1

                                                                     EXHIBIT 5.1

                       [Haynes and Boone, LLP Letterhead]

                                 March 29, 2002


Radiologix, Inc.                             Radiology and Nuclear Medicine
IDE Imaging Partners, Inc.                     Imaging Partners, Inc.
Pacific Imaging Partners, Inc.               Community Imaging Partners, Inc.
WB&A Imaging Partners, Inc.                  Valley Imaging Partners, Inc.
Treasure Coast Imaging Partners, Inc.        Advanced Radiology, LLC
Radiologix Services, Inc.                    Advanced Medical Imaging, Inc.
Advanced Imaging Partners, Inc.              M&S Imaging Partners I, Inc.
Mid Rockland Imaging Partners, Inc.          M&S Imaging Partners, L.P.


3600 JP Morgan Chase Tower
2200 Ross Avenue
Dallas, Texas 75201

Questar Imaging, Inc.                        Questar Duluth, Inc.
Questar Cleveland, Inc.                      Questar Lincoln, Inc.
Questar Tampa, Inc.                          Questar Palm Springs, Inc.
Questar Orlando, Inc.                        Questar Lower Bucks, Inc.
Rocky Mountain OpenScan MRI, LLC             Questar Toledo, Inc.
Premier Advanced Imaging Network, Ltd.       Questar Los Alamitos, Inc.
Questar Kansas, Inc.                         Questar Victorville, Inc.
Questar PVH, Inc.                            Questar Columbus, Inc.
Questar San Francisco, Inc.                  Questar Naperville, Inc.
Questar Henderson, Inc.                      Questar Quakertown, Inc.
Questar TriStates, Inc.                      Questar Tucson, Inc.

3650 JP Morgan Chase Tower
2200 Ross Avenue
Dallas, Texas 75201

M&S Imaging Investments, Inc.
300 Delaware Avenue, Suite 1704
Wilmington, Delaware 19801

Ladies and Gentlemen:

We have acted as counsel for Radiologix, Inc., a Delaware corporation (the
"COMPANY"), and the Guarantors (as defined below), in connection with the
preparation and filing of the Registration Statement on Form S-4 by the Company
and the Guarantors with the Securities and Exchange Commission (the
"COMMISSION") under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), on March 28, 2002 (the "REGISTRATION STATEMENT"), with respect to the
issuance of up to $160,000,000 aggregate principal amount of the Company's 10
1/2% Series B Senior Notes due 2008 (the "NEW NOTES") and the Guarantors'
guarantees thereof in exchange for up to $160,000,000 aggregate principal amount
of the Company's 10 1/2% Series A Senior Notes due 2008 (the "OLD NOTES") and
the related guarantees thereof. The New Notes and the related guarantees thereof
are to be issued pursuant to an exchange offer (the "EXCHANGE OFFER") by the
Company and the Guarantors to the holders of the issued and outstanding Old
Notes and the related guarantees thereof, as contemplated by the Registration
Rights Agreement dated December 12, 2001, among the Company, the Guarantors,
Jefferies & Company, Inc., and Deutsche Banc Alex. Brown Inc.

The Old Notes and the related guarantees thereof have been, and the New Notes
and the related guarantees thereof will be, issued pursuant to an Indenture
dated as of December 12, 2001 (the "INDENTURE"), among the Company, the
guarantor parties thereto (the "GUARANTORS") and U.S. Bank,



March 29, 2002
Page 2


N.A., as trustee (the "TRUSTEE"). Unless the context otherwise requires, each
capitalized term used and not defined herein shall have the meaning given such
term in the Indenture.

For the purpose of rendering the opinions expressed below, we have reviewed
originals or copies of the following documents:

         (i) the Certificate or Articles of Incorporation, as applicable,
         Certificate of Limited Partnership or Certificate of Organization, as
         certified by the Secretary or Department of State of the state of
         incorporation or organization of the Company and each of the
         Guarantors, as applicable, in each case as amended to date, as
         applicable;

         (ii) the Bylaws, Agreement of Limited Partnership or Operating
         Agreement, as certified by the secretary, partner or other
         appropriate officer of the Company and each of the Guarantors, as
         applicable, in each case as amended to date, as applicable;

         (iii) records of the corporate, limited partnership or limited
         liability company proceedings of the Company and each of the
         Guarantors, as applicable;

         (iv) certificates of officers and representatives of the Company and
         the Guarantors, dated the date hereof, certifying as to certain factual
         matters relevant to the opinions provided below; and

         (v) such other statutes, instruments and documents as we have deemed
         necessary or desirable as a basis for the opinions hereinafter
         expressed.

Our opinions expressed below are limited solely to matters governed by: (i) the
laws of the State of New York; (ii) the Delaware General Corporation Law; and
(iii) the Revised Uniform Limited Partnership Act, as adopted in Delaware. We
have not considered and express no opinion on the laws of any other
jurisdiction.

We have assumed, with your consent and without independent verification, for the
purpose of the opinions expressed below, that no mutual mistake,
misunderstanding or fraud exists with respect to any of the matters relevant to
such opinions. We also have assumed, with your consent and without independent
verification, for the purpose of the opinions expressed below, that (i) the
Trustee has full power and authority or the requisite capacity to execute, to
deliver and to perform its obligations under the Indenture and the New Notes and
under the documents required or permitted to be delivered and performed
thereunder; (ii) the Indenture and the New Notes have been duly authorized by
all necessary action of the Trustee, have been fully executed by the Trustee and
have been duly delivered by the Trustee; and (iii) the Indenture is or will be
the legal, valid and binding obligation of, and enforceable against, the
Trustee.

In connection with the opinions expressed below, the enforceability of the New
Notes and the guarantees to be endorsed on the New Notes are subject to the
effect of generally applicable rules of law that: (i) limit the availability of
a remedy under certain circumstances where another remedy has been elected; (ii)
based on federal or state securities laws or public policy relating thereto,
limit rights to indemnification and contribution; (iii) may, where less than all
of a contract may be enforceable, limit the enforceability of the balance of the
contract to circumstances in which the unenforceable portion is not an essential
part of the agreed exchange; and (iv) may, in the absence of a waiver or
consent, discharge a guarantor to the extent that guaranteed debt is materially
modified.

In addition, we express no opinion as to: (i) the subject matter jurisdiction of
the United States courts located in New York to adjudicate any controversy
relating to the New Notes and the guarantees to be






March 29, 2002
Page 3


endorsed on the New Notes; or (ii) the enforceability of the choice of New York
law or whether any court outside the State of New York would give effect to such
choice of law.

Based upon the foregoing and having due regard for such legal considerations as
we deem relevant, we are of the opinion, subject to the limitations and
qualifications set forth herein, as follows:

         (i) The New Notes have been duly authorized by the Company and, when
         issued and executed by the Company and authenticated by the Trustee in
         accordance with the terms of the Indenture and delivered in the
         Exchange Offer in exchange for the Old Notes, the New Notes will have
         been validly executed and delivered and will be the legal, valid and
         binding obligations of the Company, entitled to the benefits of the
         Indenture and enforceable against the Company in accordance with their
         terms, except that such enforceability may be limited by (a) applicable
         bankruptcy, insolvency, reorganization, moratorium, fraudulent
         conveyance or other similar laws now or hereafter in effect relating to
         or affecting creditors rights generally, and (b) general principles of
         equity (regardless of whether enforceability is considered in a
         proceeding in equity or at law).

         (ii) The guarantee to be endorsed on the New Notes by each of the
         Guarantors has been duly authorized by each such Guarantor and, when
         the New Notes have been issued and executed by the Company and
         authenticated by the Trustee in accordance with the terms of the
         Indenture and delivered in the Exchange Offer in exchange for the Old
         Notes, and when such guarantee has been executed and delivered by each
         Guarantor, such guarantee will have been validly executed and delivered
         by each such Guarantor and will be the legal, valid and binding
         obligation of each such Guarantor, enforceable against each such
         Guarantor in accordance with its terms, except that such enforceability
         may be limited by (a) applicable bankruptcy, insolvency,
         reorganization, moratorium, fraudulent conveyance or other similar laws
         now or hereafter in effect relating to or affecting creditors rights
         generally, and (b) general principles of equity (regardless of whether
         enforceability is considered in a proceeding in equity or at law).

This opinion may be filed as an exhibit to the Registration Statement. Consent
is also given to the reference to this firm under the caption "Legal Matters" in
the prospectus included in the Registration Statement as having passed upon
certain legal matters in connection with the New Notes. In giving this consent
we do not admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act or the rules and regulations of
the Commission promulgated thereunder.

We express no opinion as to any matter other than as expressly set forth above,
and no opinion on any other matter may be inferred or implied herefrom. The
opinions expressed herein are given as of the date hereof, and we undertake no,
and hereby disclaim any, obligation to advise you of any change in any matter
set forth herein. The opinions expressed herein are for the sole use and benefit
of, and may only be relied upon by, the Company and the Guarantors, and are not
to be used, circulated, quoted or otherwise referred to in connection with any
transaction other than the Exchange Offer or by or to any other person without
our prior written consent.

Very truly yours,


/s/ Haynes and Boone, LLP

EX-12.1

                                                                    EXHIBIT 12.1


         STATEMENT OF COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES




                                                                                         Year Ended December 31,
                                                                           -----------------------------------------------------
                                                                             1997        1998       1999       2000       2001
                                                                           --------    --------   --------   --------   --------
                                                                                        (in thousands, except ratios)
                                                                                                         

 Fixed Charges:
 Interest Expense                                                          $    617    $  7,541   $ 12,357   $ 18,036   $ 15,540
 Amortization of Deferred Financing Costs                                        54         737        777      1,012      1,857
 Implied Interest Component of Rents                                            204       2,713      4,468      5,036      6,876
                                                                           --------    --------   --------   --------   --------
 Total Fixed Charges                                                            875      10,991     17,602     24,084     24,273
                                                                           ========    ========   ========   ========   ========


 Earnings (before fixed charges, extraordinary loss and income taxes):
 Income before income taxes and extraordinary loss                           (3,928)     21,982     26,403      7,233     27,781
 Fixed Charges as above                                                         875      10,991     17,602     24,084     24,273
                                                                           --------    --------   --------   --------   --------
 Total                                                                       (3,053)     32,973     44,005     31,317     52,054
                                                                           ========    ========   ========   ========   ========

 Ratio of Earnings to Fixed Charges                                              NM        3.00       2.50       1.30       2.14

EX-23.2

                                                                    EXHIBIT 23.2

                   Consent of Independent Public Accountants

     As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated February 11,
2002 included in Radiologix, Inc.'s Form 10-K for the year ended December 31,
2001 and to all references to our Firm included in this registration statement.


                                                  /s/ ARTHUR ANDERSEN LLP

Dallas, Texas

March 29, 2002

EX-25.1

                                                                    EXHIBIT 25.1

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM T-1

                         STATEMENT OF ELIGIBILITY UNDER
                      THE TRUST INDENTURE ACT OF 1939 OF A
                    CORPORATION DESIGNATED TO ACT AS TRUSTEE
               Check if an Application to Determine Eligibility of
                   a Trustee Pursuant to Section 305(b)(2)___

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

                         U.S. BANK NATIONAL ASSOCIATION
               (Exact name of Trustee as specified in its charter)

                                   31-0841368
                       I.R.S. Employer Identification No.


180 EAST FIFTH STREET
ST. PAUL, MN                                                   55101
(Address of principal executive offices)                     (Zip Code)


                              Frank P. Leslie, III
                         U.S. Bank National Association
                              180 East Fifth Street
                               St. Paul, MN 55101
                                 (651) 244-8677
            (Name, address and telephone number of agent for service)

                                RADIOLOGIX, INC.
             (Exact name of Registrant as specified in its charter)

                                                                
DELAWARE                                                                       75-2648089
(State or other jurisdiction of incorporation or organization)     (I.R.S. Employer Identification No.)

3600 JP Morgan Chase Tower
2200 Ross Avenue
Dallas, TX                                                                        75201
(Address of Principal Executive Offices)                                        (Zip Code)



                             10 1/2% NOTES DUE 2008
                       (TITLE OF THE INDENTURE SECURITIES)

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






                                    FORM T-1


ITEM 1.      GENERAL INFORMATION. Furnish the following information as to the
             Trustee.

             a)  Name and address of each examining or supervising authority to
                 which it is subject.

                     Comptroller of the Currency
                     Washington, D.C.

             b)  Whether it is authorized to exercise corporate trust powers.

                     Yes

ITEM 2.      AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
             Trustee, describe each such affiliation.

                 None

ITEMS 3-15   Items 3-15 are not applicable because to the best of the Trustee's
             knowledge the obligor is not in default under any Indenture for
             which the Trustee acts as Trustee.

ITEM 16.     LIST OF EXHIBITS: List below all exhibits filed as a part of this
             statement of eligibility and qualification.

             1.  A copy of the Articles of Association of the Trustee.*

             2.  A copy of the certificate of authority of the Trustee to
                 commence business.*

             3.  A copy of the certificate of authority of the Trustee to
                 exercise corporate trust powers.*

             4.  A copy of the existing bylaws of the Trustee.*

             5.  A copy of each Indenture referred to in Item 4. Not applicable.

             6.  The consent of the Trustee required by Section 321(b) of the
                 Trust Indenture Act of 1939, attached as Exhibit 6.

             7.  Report of Condition of the Trustee as of September 30, 2001,
                 published pursuant to law or the requirements of its
                 supervising or examining authority, attached as Exhibit 7.



       * Incorporated by reference to Registration Number 333-67188.


                                       2




                                      NOTE

         The answers to this statement insofar as such answers relate to what
persons have been underwriters for any securities of the obligors within three
years prior to the date of filing this statement, or what persons are owners of
10% or more of the voting securities of the obligors, or affiliates, are based
upon information furnished to the Trustee by the obligors. While the Trustee has
no reason to doubt the accuracy of any such information, it cannot accept any
responsibility therefor.



                                    SIGNATURE

Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking association
organized and existing under the laws of the United States of America, has duly
caused this statement of eligibility and qualification to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of St.
Paul, State of Minnesota on the 22nd day of February, 2002.


                                            U.S. BANK NATIONAL ASSOCIATION

                                            By:   /s/ Julie Eddington
                                                  ------------------------------
                                                  Julie Eddington
                                                  Assistant Vice President




By:  /s/ Lori-Anne Rosenberg
     -----------------------------------
     Lori-Anne Rosenberg
     Assistant Vice President



                                       3



                                    EXHIBIT 6

                                     CONSENT


In accordance with Section 321(b) of the Trust Indenture Act of 1939, the
undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of
examination of the undersigned by Federal, State, Territorial or District
authorities may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.


Dated:  February 22, 2002


                                            U.S. BANK NATIONAL ASSOCIATION

                                            By:   /s/ Julie Eddington
                                                  ------------------------------
                                                  Julie Eddington
                                                  Assistant Vice President




By:  /s/ Lori-Anne Rosenberg
     -----------------------------------
     Lori-Anne Rosenberg
     Assistant Vice President


                                       4





                                    EXHIBIT 7
                         U.S. BANK NATIONAL ASSOCIATION
                        STATEMENT OF FINANCIAL CONDITION
                                 AS OF 9/30/2001

                                    ($000'S)



                                                                          9/30/2001
                                                                        ------------
                                                                     
ASSETS
     Cash and Due From Depository Institutions                            $7,424,578
     Federal Reserve Stock                                                         0
     Securities                                                           25,107,852
     Federal Funds                                                         1,509,608
     Loans & Lease Financing Receivables                                 108,011,203
     Fixed Assets                                                          1,455,348
     Intangible Assets                                                     7,830,028
     Other Assets                                                          6,597,674
                                                                        ------------
         TOTAL ASSETS                                                   $157,936,291

LIABILITIES
     Deposits                                                           $101,929,065
     Fed Funds                                                             3,823,703
     Treasury Demand Notes                                                         0
     Trading Liabilities                                                     168,430
     Other Borrowed Money                                                 24,037,743
     Acceptances                                                             184,931
     Subordinated Notes and Debentures                                     5,477,870
     Other Liabilities                                                     3,711,905
                                                                        ------------
     TOTAL LIABILITIES                                                  $139,333,647

EQUITY
     Minority Interest in Subsidiaries                                      $943,906
     Common and Preferred Stock                                              310,004
     Surplus                                                              11,775,689
     Undivided Profits                                                     5,573,045
                                                                        ------------
         TOTAL EQUITY CAPITAL                                           $ 18,602,644

TOTAL LIABILITIES AND EQUITY CAPITAL                                    $157,936,291


- --------------------------------------------------------------------------------
To the best of the undersigned's determination, as of this date the above
financial information is true and correct.

U.S. Bank National Association

By:      /s/ Julie Eddington
         ------------------------------
         Assistant Vice President

Date:  February 22, 2002

                                       5

EX-99.1

                                                                    EXHIBIT 99.1

                              LETTER OF TRANSMITTAL

                                RADIOLOGIX, INC.

                             TO TENDER FOR EXCHANGE

                     10 1/2% SERIES A SENIOR NOTES DUE 2008
                               CUSIP NO. 75040KAA7
                              CUSIP NO. 750401KAB5
                               CUSIP NO. U7492WAA4

                                       FOR

                     10 1/2% SERIES B SENIOR NOTES DUE 2008
                               CUSIP NO. 75040KAC3

              PURSUANT TO THE PROSPECTUS DATED             , 2002.
                                               ------------

- --------------------------------------------------------------------------------
            THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
       5:00 P.M., NEW YORK CITY TIME, ON _________, 2002 (THE "EXPIRATION
             DATE") UNLESS THE EXCHANGE OFFER IS EXTENDED, IN WHICH
         CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST TIME AND
           DATE TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY
             BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------


                             The Exchange Agent is:
                         U.S. BANK NATIONAL ASSOCIATION

                                             
By Overnight Courier or Hand Delivery:          By Registered or Certified Mail:
- -------------------------------------           -------------------------------
U.S. Bank National Association                  U.S. Bank National Association
180 East Fifth Street                           180 East Fifth Street
St. Paul, Minnesota 55101                       St. Paul, Minnesota 55101
Attention: Specialized Finance Department       Attention: Specialized Finance Department
Corporate Trust Services                        Corporate Trust Services

By Facsimile (eligible institutions only):      Confirm by Telephone:
- -----------------------------------------       --------------------
(651) 244-1537                                  (800) 934-6802




DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL
IS COMPLETED.


                                       1



         The undersigned acknowledges receipt of the Prospectus dated ____, 2002
(the "Prospectus") of Radiologix, Inc. (the "Company") and this Letter of
Transmittal (the "Letter of Transmittal"), which, together with the Prospectus,
constitutes the Company's offer (the "Exchange Offer") to exchange $1,000
principal amount of its 10 1/2% Series B Senior Notes due 2008 (the "New
Notes"), which have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), for each $1,000 principal amount of its outstanding 10
1/2% Series A Senior Notes due 2008 (the "Old Notes"). Recipients of the
Prospectus should read the requirements described in such Prospectus with
respect to eligibility to participate in the Exchange Offer. Capitalized terms
used but not defined herein have the meaning given to them in the Prospectus.

         The undersigned hereby tenders the Old Notes described in the box
entitled "Description of Old Notes" below pursuant to the terms and conditions
described in the Prospectus and this Letter of Transmittal. The undersigned is
the registered owner of all the Old Notes and the undersigned represents that it
has received from each beneficial owner of Old Notes ("Beneficial Owners") a
duly completed and executed form of "Instruction to Registered Holder from
Beneficial Owner" accompanying this Letter of Transmittal, instructing the
undersigned to take the action described in this Letter of Transmittal.

         This Letter of Transmittal is to be used only by a holder of Old Notes
(i) if certificates representing Old Notes are to be forwarded herewith or (ii)
if delivery of Old Notes is to be made by book-entry transfer to the Exchange
Agent's account at The Depository Trust Company (the "Depositary"), pursuant to
the procedures set forth in the section of the Prospectus entitled "The Exchange
Offer -- Procedures for Tendering Old Notes." If delivery of the Old Notes is to
be made by book-entry transfer to the account maintained by the Exchange Agent
at the Depositary, tenders of the Old Notes must be effected in accordance with
the procedures mandated by the Depositary's Automated Tender Offer Program
("ATOP") and the procedures set forth in the Prospectus under the caption "The
Exchange Offer -- Book-Entry Transfer." In such case, an agent's message may be
delivered in lieu of this Letter of Transmittal as described in the section of
the Prospectus entitled "The Exchange Offer - Procedures for Tendering Old
Notes." An agent's message is a message, transmitted to the Exchange Agent's
account at the Depositary and received by the Exchange Agent and forming a part
of the book-entry confirmation, which states that such participant has received
and agrees to be bound by the Letter of Transmittal and that the Company may
enforce this Letter of Transmittal against such participant.

         The undersigned hereby represents and warrants that the information set
forth in the box entitled "Beneficial Owner(s)" is true and correct.

         Any Beneficial Owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact such registered holder of Old Notes promptly and
instruct such registered holder of Old Notes to tender on behalf of the
Beneficial Owner. If such Beneficial Owner wishes to tender on its own behalf,
such Beneficial Owner must, prior to completing and executing this Letter of
Transmittal and delivering its Old Notes, either make appropriate arrangements
to register ownership of the Old Notes in such Beneficial Owner's name or obtain
a properly completed bond power from the registered holder of Old Notes. The
transfer of record ownership may take considerable time.

         In order to properly complete this Letter of Transmittal, a holder of
Old Notes must (i) complete the box entitled "Description of Old Notes," (ii) if
appropriate, check and complete the boxes relating to book-entry transfer,
guaranteed delivery, Special Issuance Instructions, Special Delivery
Instructions and Beneficial Owner(s), (iii) sign the Letter of Transmittal by
completing the box entitled "Sign Here" and (iv) complete the Substitute Form
W-9. Each holder of Old Notes should carefully read the detailed instructions
below prior to completing the Letter of Transmittal.

         Holders of Old Notes who desire to tender their Old Notes for exchange
and (i) whose Old Notes are not immediately available, (ii) who cannot deliver
their Old Notes and all other documents required hereby to the Exchange Agent on
or prior to the Expiration Date or (iii) who are unable to complete the
procedure for book-entry transfer on a timely basis, must tender the Old Notes
pursuant to the guaranteed delivery procedures set forth in the section of the
Prospectus entitled "The Exchange Offer -- Guaranteed Delivery Procedures." See
Instruction 2 of the Instructions beginning on page 9 hereof.


                                       2

]

         Holders of Old Notes who wish to tender their Old Notes for exchange
using this Letter of Transmittal must, at a minimum, complete columns (1), (2),
if applicable (see footnote 1 below), and (3) in the box below entitled
"Description of Old Notes" and sign the box on page 8 under the words "Sign
Here." If only those columns are completed, such holder of Old Notes will have
tendered for exchange all Old Notes listed in column (3) below. If the holder of
Old Notes wishes to tender for exchange less than all of such Old Notes, column
(4) must be completed in full. In such case, such holder of Old Notes should
refer to Instruction 5 on page 10.



- ----------------------------------------------------------------------------------------------------------------------
                                                    DESCRIPTION OF OLD NOTES
- ---------------------------------------------------------------------------------------------------------------------
                             (1)                                     (2)                (3)                (4)
                                                                                                        Principal
                                                                                                         Amount
                                                                                                        Tendered
                                                                                                           For
                                                                                                        Exchange
                                                                                                        (only if
                                                                                                        different
            Name(s) and Address(es) of Registered                                                      amount from
  Holder(s) of Old Note(s), exactly as name(s) appear(s) on        Old Note                            column (3))
      Certificate(s) for Old Note or as the Name of the           Number(s)                            (must be in
  Participant Appears on the Book-Entry Transfer Facility's        (Attach           Aggregate          integral
                  Security Position Listing                     signed List if       Principal          multiples
                 (Please fill in, if blank)                     necessary)(1)          Amount         of $1,000)(2)
- ------------------------------------------------------------- ------------------ ------------------ -----------------
                                                                                           
                                                              ------------------ ------------------ -----------------

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

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

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


- ----------

(1)      Column (2) need not be completed by holders of Old Notes tendering Old
         Notes for exchange by book-entry transfer. Please check the appropriate
         box on the next page and provide the requested information.

(2)      Column (4) need not be completed by holders of Old Notes who wish to
         tender for exchange the principal amount of Old Notes listed in column
         (3). Completion of column (4) will indicate that the holder of Old
         Notes wishes to tender for exchange only the principal amount of Old
         Notes indicated in column (4).


                                       3




[ ]      CHECK HERE IF OLD NOTES ARE ENCLOSED HEREWITH.

[ ]      CHECK HERE IF OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE
         TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE DEPOSITARY AND
         COMPLETE THE FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS (AS
         HEREINAFTER DEFINED) ONLY):

         Name of Tendering Institution:
                                        ----------------------------------------
         Account Number:
                                        ----------------------------------------
         Transaction Code Number:
                                        ----------------------------------------

[ ]      CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A
         NOTICE OF GUARANTEED DELIVERY ENCLOSED HEREWITH AND COMPLETE THE
         FOLLOWING (FOR USE BY ELIGIBLE INSTITUTIONS ONLY):

                                                                    
         Name of Registered Holder of Old Note(s):
                                                                       -----------------------------------
         Date of Execution of Notice of Guaranteed Delivery:
                                                                       -----------------------------------
         Window Ticket Number (if available):
                                                                       -----------------------------------
         Name of Institution which Guaranteed Delivery:
                                                                       -----------------------------------
         Account Number (if delivered by book-entry transfer):
                                                                       -----------------------------------




- --------------------------------------------------------------------------------
                   ATTENTION BROKER-DEALERS: IMPORTANT NOTICE
                 CONCERNING YOUR ABILITY TO RESELL THE NEW NOTES

EACH BROKER-DEALER WHO HOLDS OLD NOTES ACQUIRED FOR ITS OWN ACCOUNT MAY BE
DEEMED TO BE AN "UNDERWRITER" WITHIN THE MEANING OF THE SECURITIES ACT AND MUST,
THEREFORE, DELIVER A PROSPECTUS MEETING THE REQUIREMENTS OF THE SECURITIES ACT
IN CONNECTION WITH ITS INITIAL RESALE OF EACH NEW NOTE RECEIVED IN THE EXCHANGE
OFFER.

[ ]      CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE ADDITIONAL
         COPIES OF THE PROSPECTUS AND COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
         THERETO FOR USE IN CONNECTION WITH RESALES OF NEW NOTES:

         Name:
                     -----------------------------------------------------------
         Address:
                     -----------------------------------------------------------

         Telephone No. (     )

         Number of Additional Copies Desired:
                                             ----------------

         If you requested additional copies of the Prospectus, YOU MUST MAIL OR
SEND A PHOTOCOPY OF THIS PAGE to:

             By Mail:                             By Facsimile:
             Radiologix, Inc.                     or (214) 303-2777
             3600 JP Morgan Chase Tower           Attn: Investor Relations
             2200 Ross Avenue
             Dallas, Texas 75201
             Attn:  Investor Relations

DO NOT SEND THE LETTER OF TRANSMITTAL TO THE ABOVE ADDRESS AS IT WILL NOT
CONSTITUTE A VALID TENDER OF OLD NOTES UNDER THE TERMS OF THE EXCHANGE OFFER.
CONSULT THE PROSPECTUS FOR PROPER DELIVERY PROCEDURES.
- --------------------------------------------------------------------------------


                                       4


- --------------------------------------------------------------------------------
                          SPECIAL ISSUANCE INSTRUCTIONS
                        (See Instructions 1, 6, 7 and 8)

         To be completed ONLY (i) if the New Notes issued in exchange for Old
Notes (or if certificates for Old Notes not tendered for exchange for New Notes)
are to be issued in the name of someone other than the undersigned or (ii) if
Old Notes tendered by book-entry transfer which are not exchanged are to be
returned by credit to an account maintained at the Depositary.

Issue to:

Name
    ----------------------------------------------------------------------------
                                 (Please Print)

Address
       -------------------------------------------------------------------------

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

- --------------------------------------------------------------------------------
                               (Include Zip Code)


- --------------------------------------------------------------------------------
                   (Tax Identification or Social Security No.)

         Credit Old Notes not exchanged and delivered by book-entry transfer to
the Depositary account set forth below:


- --------------------------------------------------------------------------------
                                (Account Number)
- --------------------------------------------------------------------------------


- --------------------------------------------------------------------------------
                          SPECIAL DELIVERY INSTRUCTIONS
                        (See Instructions 1, 6, 7 and 8)

         To be completed ONLY if the New Notes issued in exchange for Old Notes
(or if certificates for Old Notes not tendered for exchange for New Notes) are
to be mailed or delivered (i) to someone other than the undersigned, or (ii) to
the undersigned at an address other than the address shown below the
undersigned's signature.

Mail or deliver to:


Name
    ----------------------------------------------------------------------------
                                 (Please Print)

Address
       -------------------------------------------------------------------------

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

- --------------------------------------------------------------------------------
                               (Include Zip Code)


- --------------------------------------------------------------------------------
                  (Tax Identification or Social Security No.)

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




- ----------------------------------------------------------------------------------------------------------------------
                                                     BENEFICIAL OWNER(S)
- ----------------------------------------------------------------------------------------------------------------------
      State of Principal Residence of Each Beneficial                 Principal Amount of Old Notes Held for
                    Owner of Old Notes                                    Account of Beneficial Owner(s)
- ------------------------------------------------------------ ---------------------------------------------------------
                                                          
- ------------------------------------------------------------ ---------------------------------------------------------

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

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

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


         If delivery of Old Notes is to be made by book-entry transfer to the
account maintained by the Exchange Agent at the Depositary, then tenders of Old
Notes must be effected in accordance with the procedures mandated by ATOP and
the procedures set forth in the Prospectus under the caption "The Exchange Offer
- -- Book-Entry Transfer."


                                       5



                        SIGNATURES MUST BE PROVIDED BELOW
               PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:

         Pursuant to the offer by Radiologix, Inc. (the "Company") upon the
terms and subject to the conditions set forth in the Prospectus dated
__________, 2002 (the "Prospectus") and this Letter of Transmittal (the "Letter
of Transmittal"), which, together with the Prospectus, constitutes the Company's
offer (the "Exchange Offer") to exchange $1,000 principal amount of its 10 1/2%
Series B Senior Notes due 2008 (the "New Notes"), which have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), for each
$1,000 principal amount of its outstanding 10 1/2% Series A Senior Notes due
2008 (the "Old Notes"), the undersigned hereby tenders to the Company for
exchange the Old Notes indicated above.

         By executing this Letter of Transmittal and subject to and effective
upon acceptance for exchange of the Old Notes tendered for exchange herewith,
the undersigned (i) acknowledges and agrees that the Company shall have fully
performed all of its obligations under that certain Registration Rights
Agreement dated as of December 12, 2001, among the Company and Jefferies &
Company, Inc. and Deutsche Banc Alex. Brown Inc. (the "Initial Purchasers"),
(ii) will have irrevocably sold, assigned and transferred to the Company, all
right, title and interest in, to and under all of the Old Notes tendered for
exchange hereby, and (iii) hereby appoints U.S. Bank National Association (the
"Exchange Agent") as the true and lawful agent and attorney-in-fact (with full
knowledge that the Exchange Agent also acts as agent of the Company) of such
holder of Old Notes with respect to such Old Notes, with full power of
substitution, to (x) deliver certificates representing such Old Notes, or
transfer ownership of such Old Notes on the account books maintained by The
Depository Trust Company (the "Depositary") (together, in any such case, with
all accompanying evidences of transfer and authenticity), to the Company, (y)
present and deliver such Old Notes for transfer on the books of the Company, and
(z) receive all benefits and otherwise exercise all rights and incidents of
ownership with respect to such Old Notes, all in accordance with the terms of
the Exchange Offer. The power of attorney granted in this paragraph shall be
deemed to be irrevocable and coupled with an interest.

         The undersigned hereby represents and warrants that (i) the undersigned
has full power and authority to tender, exchange, assign and transfer the Old
Notes, and (ii) when such Old Notes are accepted for exchange by the Company,
the Company will acquire good and marketable title thereto, free and clear of
all liens, restrictions, charges and encumbrances and not subject to any adverse
claims. The undersigned will, upon receipt, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the exchange, assignment and transfer of the Old Notes
tendered for exchange hereby.

         The undersigned hereby further represents to the Company that (i) the
New Notes to be acquired pursuant to the Exchange Offer will be acquired in the
ordinary course of business of the person acquiring the New Notes, whether or
not such person is the undersigned, (ii) neither the undersigned nor any person
receiving any New Notes directly or indirectly from the undersigned pursuant to
the Exchange Offer (if not a broker-dealer referred to in the last sentence of
this paragraph) is engaging or intends to engage in a distribution of the New
Notes and none of them have any arrangement or understanding with any person to
participate in a distribution of the New Notes, (iii) the undersigned and each
person receiving any New Notes directly or indirectly from the undersigned
pursuant to the Exchange Offer acknowledge and agree that any person
participating in the Exchange Offer for the purpose of distributing the New
Notes (x) must comply with the registration and prospectus delivery requirements
of the Securities Act of 1933, as amended (the "Securities Act"), in connection
with a secondary resale transaction of the New Notes acquired by such person and
(y) cannot rely on the position of the staff of the Securities and Exchange
Commission (the "Commission") set forth in the Exxon Capital Holdings
Corporation no-action letter (available May 13, 1988) or similar letters, (iv)
the undersigned and each person receiving any New Notes directly or indirectly
from the undersigned pursuant to the Exchange Offer understand that a secondary
resale transaction described in clause (iii) above should be covered by an
effective registration statement containing the selling security holder
information required by Item 507 of Regulation S-K of the Commission and (v)
neither the undersigned nor any person receiving any New Notes directly or
indirectly from the undersigned pursuant to the Exchange Offer is an "affiliate"
of the Company, as defined under Rule 405 under the Securities Act or, if the
undersigned is an "affiliate" of the Company, that the undersigned will comply
with the registration and prospectus delivery requirements of the Securities Act
applicable to the undersigned. If the undersigned is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making or other trading activities, it


                                       6



acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes received in
respect of such Old Notes pursuant to the Exchange Offer; however, by so
acknowledging and by delivering a prospectus, the undersigned will not be deemed
to admit that it is an "underwriter" within the meaning of the Securities Act.

         The undersigned acknowledges that, (i) for purposes of the Exchange
Offer, the Company will be deemed to have accepted for exchange, and to have
exchanged, validly tendered Old Notes, if, as and when the Company gives oral or
written notice thereof to the Exchange Agent. Tenders of Old Notes for exchange
may be withdrawn at any time prior to the Expiration Date, and (ii) any Old
Notes tendered by the undersigned and not accepted for exchange will be returned
to the undersigned at the address set forth above unless otherwise indicated in
the box above entitled "Special Delivery Instructions."

         The undersigned acknowledges that the Company's acceptance of Old Notes
validly tendered for exchange pursuant to any one of the procedures described in
the section of the Prospectus entitled "The Exchange Offer" and in the
instructions hereto will constitute a binding agreement among the undersigned
and the Company upon the terms and subject to the conditions of the Exchange
Offer.

         Unless otherwise indicated in the box entitled "Special Issuance
Instructions," please return any Old Notes not tendered for exchange in the
name(s) of the undersigned. Similarly, unless otherwise indicated in the box
entitled "Special Delivery Instructions," please mail any certificates for Old
Notes not tendered or exchanged (and accompanying documents, as appropriate) to
the undersigned at the address shown below the undersigned's signature(s). In
the event that either "Special Issuance Instructions" or "Special Delivery
Instructions" are completed, please issue the certificates representing the New
Notes issued in exchange for the Old Notes accepted for exchange in the name(s)
of, and return any Old Notes not tendered for exchange or not exchanged to, the
person(s) so indicated. The undersigned recognizes that the Company has no
obligation pursuant to the "Special Issuance Instructions" and "Special Delivery
Instructions" to transfer any Old Notes from the name of the holder of Old
Note(s) thereof if the Company does not accept for exchange any of the Old Notes
so tendered for exchange or if such transfer would not be in compliance with any
transfer restrictions applicable to such Old Note(s).

         In order to validly tender Old Notes for exchange, holders of Old Notes
must complete, execute and deliver this Letter of Transmittal or an agent's
message.

         Except as stated in the Prospectus, all authority herein conferred or
agreed to be conferred shall survive the death or incapacity of the undersigned,
and any obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned. Except as
otherwise stated in the Prospectus, this tender for exchange of Old Notes is
irrevocable.


                                       7



- --------------------------------------------------------------------------------
                                    SIGN HERE


- --------------------------------------------------------------------------------
                           (Signature(s) of Owner(s))

Date:                 , 2002
     -----------------

         Must be signed by the registered holder(s) of Old Notes exactly as
name(s) appear(s) on certificate(s) representing the Old Notes or on a security
position listing or by person(s) authorized to become registered Old Note
holder(s) by certificates and documents transmitted herewith. If signature is by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, please
provide the following information. (See Instruction 6).

Name(s):
        ------------------------------------------------------------------------

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

- --------------------------------------------------------------------------------
                                 (Please Print)

Capacity (full title):
                      ----------------------------------------------------------

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

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


Address:
        ------------------------------------------------------------------------

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

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


                               (Include Zip Code)

Area Code and Telephone No: (      )
                           -----------------------------------------------------
Tax Identification or Social Security No:
                                         ---------------------------------------
                                           Please complete Substitute Form W-9


                            GUARANTEE OF SIGNATURE(S)
         (Signature(s) must be guaranteed if required by Instruction 1)

Authorized Signature:
                     -----------------------------------------------------------
Dated:
      --------------------------------------------------------------------------
Name and Title:
               -----------------------------------------------------------------
                                 (Please Print)

Name of Firm:
             -------------------------------------------------------------------

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


                                       8



                                  INSTRUCTIONS

         Forming Part of the Terms and Conditions of the Exchange Offer

         1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by an institution
which is an "eligible guarantor institution" within the meaning of Rule 17Ad-15
under the Securities Exchange Act of 1934, as amended, and is a member of one of
the following recognized Signature Guarantee Programs (an "Eligible
Institution"):

                  a. The Securities Transfer Agents Medallion Program (STAMP)
                  b. The New York Stock Exchange Medallion Signature Program
                     (MSP)
                  c. The Stock Exchange Medallion Program (SEMP)

Signatures on this Letter of Transmittal need not be guaranteed (i) if this
Letter of Transmittal is signed by the registered holder(s) of the Old Notes
tendered herewith and such registered holder(s) have not completed the box
entitled "Special Issuance Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (ii) if such Old Notes are
tendered for the account of an Eligible Institution. IN ALL OTHER CASES, ALL
SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.

         2. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES; GUARANTEED
DELIVERY PROCEDURES. This Letter of Transmittal is to be completed by holders of
Old Notes (i) if certificates are to be forwarded herewith or (ii) if tenders
are to be made pursuant to the procedures for tender by book-entry transfer or
guaranteed delivery set forth in the section of the Prospectus entitled "The
Exchange Offer--Guaranteed Delivery Procedures." Certificates for all physically
tendered Old Notes or any confirmation of a book-entry transfer (a "Book-Entry
Confirmation"), as well as a properly completed and duly executed copy of this
Letter of Transmittal or facsimile hereof, and any other documents required by
this Letter of Transmittal, must be received by the Exchange Agent at its
address set forth on the cover of this Letter of Transmittal prior to the
Expiration Date. Holders of Old Notes who elect to tender Old Notes and (i)
whose Old Notes are not immediately available, (ii) who cannot deliver the
Letter of Transmittal, Old Notes or other required documents to the Exchange
Agent prior to the Expiration Date or (iii) who are unable to complete the
procedure for book-entry transfer on a timely basis, may have such tender
effected if: (a) such tender is made by or through an Eligible Institution, (b)
prior to the Expiration Date, the Exchange Agent has received from such Eligible
Institution a properly completed and duly executed Letter of Transmittal (or a
facsimile thereof) and Notice of Guaranteed Delivery substantially in the form
provided by the Company (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder of such Old Notes, the
certificate number(s) of such Old Notes and the principal amount of Old Notes
tendered for exchange, stating that tender is being made thereby and
guaranteeing that, within three New York Stock Exchange trading days after the
date of execution of the Notice of Guaranteed Delivery, this Letter of
Transmittal (or a manually executed facsimile thereof), properly completed and
duly executed, the certificates representing such Old Notes (or a Book-Entry
Confirmation), in proper form for transfer, and any other documents required by
this Letter of Transmittal, will be deposited by such Eligible Institution with
the Exchange Agent, and (c) a properly completed and duly executed Letter of
Transmittal (or a manually executed facsimile thereof) with certificates for all
tendered Old Notes, or a Book-Entry Confirmation, and any other documents
required by this Letter of Transmittal are received by the Exchange Agent within
three New York Stock Exchange trading days after the date of execution of the
Notice of Guaranteed Delivery.

         THE METHOD OF DELIVERY OF OLD NOTES, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE TENDERING HOLDER OF
OLD NOTES. EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED OR CONFIRMED BY THE EXCHANGE AGENT. IF DELIVERY IS
BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. NEITHER THIS LETTER OF TRANSMITTAL NOR ANY OLD NOTES SHOULD BE SENT
TO THE COMPANY.

         No alternative, conditional or contingent tenders will be accepted. All
tendering holders of Old Notes, by execution of this Letter of Transmittal (or
facsimile hereof, if applicable), waive any right to receive notice of the
acceptance of their Old Notes for exchange.


                                       9



         3. INADEQUATE SPACE. If the space provided in the box entitled
"Description of Old Notes" above is inadequate, the certificate numbers and
principal amounts of the Old Notes being tendered should be listed on a separate
signed schedule affixed hereto.

         4. WITHDRAWALS. A tender of Old Notes may be withdrawn at any time
prior to the Expiration Date by delivery of a written or an ATOP electronic
transmission notice of withdrawal to the Exchange Agent at the address set forth
on the cover of this Letter of Transmittal. To be effective, a notice of
withdrawal of Old Notes must (i) specify the name of the person who tendered the
Old Notes to be withdrawn (the "Depositor"), (ii) identify the Old Notes to be
withdrawn (including the certificate number or numbers and aggregate principal
amount of such Old Notes), (iii) be signed by the holder of Old Notes in the
same manner as the original signature on the Letter of Transmittal by which such
Old Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee under the
Indenture register the transfer of such Old Notes into the name of the person
withdrawing the tender, (iv) specify the name in which any such Old Notes are to
be registered, if different from that of the Depositor, and (v) be received by
the Exchange Agent prior to the Expiration Date. Withdrawals of tenders of Old
Notes may not be rescinded, and any Old Notes withdrawn will thereafter be
deemed not validly tendered for purposes of the Exchange Offer, and no New Notes
will be issued with respect thereto unless the Old Notes so withdrawn are
validly retendered. Properly withdrawn Old Notes may be retendered by following
one of the procedures described in the section of the Prospectus entitled "The
Exchange Offer -- Procedures for Tendering Old Notes" at any time prior to the
Expiration Date.

         5. PARTIAL TENDERS. (Not applicable to holders of Old Notes who tender
Old Notes by book-entry transfer). Tenders of Old Notes will be accepted only in
integral multiples of $1,000 principal amount. If a tender for exchange is to be
made with respect to less than the entire principal amount of any Old Notes,
fill in the principal amount of Old Notes which are tendered for exchange in
column (4) of the box entitled "Description of Old Notes" on page 3, as more
fully described in the footnotes thereto. In case of a partial tender for
exchange, new certificate(s), in fully registered form, for the remainder of the
principal amount of the Old Notes, will be sent to the holders of Old Notes
unless otherwise indicated in the appropriate box on this Letter of Transmittal
as promptly as practicable after the expiration or termination of the Exchange
Offer.

         6. SIGNATURES ON THIS LETTER OF TRANSMITTAL, POWERS OF ATTORNEY AND
ENDORSEMENTS.

         (a) The signature(s) of the holder of Old Notes on this Letter of
Transmittal must correspond with the name(s) as written on the face of the Old
Notes without alteration, enlargement or any change whatsoever.

         (b) If tendered Old Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.

         (c) If any tendered Old Notes are registered in different names on
several certificates, it will be necessary to complete, sign and submit as many
separate copies of this Letter of Transmittal and any necessary or required
documents as there are different registrations.

         (d) When this Letter of Transmittal is signed by the holder of the Old
Notes listed and transmitted hereby, no endorsements of Old Notes or separate
powers of attorney are required. If, however, Old Notes not tendered or not
accepted are to be issued or returned in the name of a person other than the
holder of Old Notes, then the Old Notes transmitted hereby must be endorsed or
accompanied by appropriate powers of attorney in a form satisfactory to the
Company, in either case signed exactly as the name(s) of the holder of Old Notes
appear(s) on the Old Notes. Signatures on such Old Notes or powers of attorney
must be guaranteed by an Eligible Institution (unless signed by an Eligible
Institution).

         (e) If this Letter of Transmittal or Old Notes or powers of attorney
are signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Company of their authority so to act must be submitted.

         (f) If this Letter of Transmittal is signed by a person other than the
registered holder of Old Notes listed, the Old Notes must be endorsed or
accompanied by appropriate powers of attorney, in either case signed


                                       10



exactly as the name(s) of the registered holder of Old Notes appear(s) on the
certificates. Signatures on such Old Notes or powers of attorney must be
guaranteed by an Eligible Institution (unless signed by an Eligible
Institution).

         7. TRANSFER TAXES. Except as set forth in this Instruction 7, the
Company will pay all transfer taxes, if any, applicable to the transfer and
exchange of Old Notes pursuant to the Exchange Offer. If issuance of New Notes
is to be made to, or Old Notes not tendered for exchange are to be issued or
returned in the name of, any person other than the registered holder of the Old
Notes tendered, or if a transfer tax is imposed for any reason other than the
exchange of Old Notes pursuant to the Exchange Offer, and satisfactory evidence
of payment of such taxes or exemptions from taxes therefrom is not submitted
with this Letter of Transmittal, the amount of any transfer taxes payable on
account of any such transfer will be imposed on and payable by the tendering
holder of Old Notes prior to the issuance of the New Notes.

         8. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. If the New Notes, or if
any Old Notes not tendered for exchange, are to be issued or sent to someone
other than the holder of Old Notes or to an address other than that shown above,
the appropriate boxes on this Letter of Transmittal should be completed. Holders
of Old Notes tendering Old Notes by book-entry transfer may request that Old
Notes not accepted be credited to such account maintained at the Depositary as
such holder of Old Notes may designate.

         9. IRREGULARITIES. All questions as to the form of documents and the
validity, eligibility (including time of receipt), acceptance and withdrawal of
Old Notes will be determined by the Company, in its sole discretion, whose
determination shall be final and binding. The Company reserves the absolute
right to reject any or all tenders for exchange of any particular Old Notes that
are not in proper form, or the acceptance of which would, in the opinion of the
Company (or its counsel), be unlawful. The Company reserves the absolute right
to waive any defect, irregularity or condition of tender for exchange with
regard to any particular Old Notes. The Company's interpretation of the terms
of, and conditions to, the Exchange Offer (including the instructions herein)
will be final and binding. Unless waived, any defects or irregularities in
connection with the Exchange Offer must be cured within such time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notice of any defects or irregularities in Old
Notes tendered for exchange, nor shall any of them incur any liability for
failure to give such notice. A tender of Old Notes will not be deemed to have
been made until all defects and irregularities with respect to such tender have
been cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in this Letter of Transmittal, as soon as practicable
following the Expiration Date.

         10. WAIVER OF CONDITION. The Company reserves the absolute right to
waive, amend or modify any of the specified conditions described under "The
Exchange Offer -- Expiration Date; Extensions; Amendments" in the Prospectus in
the case of any Old Notes tendered (except as otherwise provided in the
Prospectus).

         11. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. If a holder of Old
Notes desires to tender Old Notes pursuant to the Exchange Offer, but any of
such Old Notes has been mutilated, lost, stolen or destroyed, such holder of Old
Notes should contact the Trustee at the address set forth on the cover of this
Letter of Transmittal for further instructions.

         12. REQUESTS FOR INFORMATION OR ADDITIONAL COPIES. Requests for
information or for additional copies of the Prospectus and this Letter of
Transmittal may be directed to the Exchange Agent at the address or telephone
number set forth on the cover of this Letter of Transmittal.

         IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE THEREOF, IF
APPLICABLE) TOGETHER WITH CERTIFICATES, OR CONFIRMATION OF BOOK-ENTRY TRANSFER
OR THE NOTICE OF GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS MUST BE
RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.


                                       11



                            IMPORTANT TAX INFORMATION

         Under current federal income tax law, a holder of Old Notes whose
tendered Old Notes are accepted for exchange may be subject to backup
withholding unless the holder provides the Company (as payor), through the
Exchange Agent, with either (i) such holder's correct taxpayer identification
number ("TIN") on Substitute Form W-9 attached hereto, certifying that the TIN
provided on Substitute Form W-9 is correct (or that such holder of Old Notes is
awaiting a TIN) and that (A) the holder of Old Notes has not been notified by
the Internal Revenue Service that he or she is subject to backup withholding as
a result of a failure to report all interest or dividends or (B) the Internal
Revenue Service has notified the holder of Old Notes that he or she is no longer
subject to backup withholding, or (ii) an adequate basis for exemption from
backup withholding. If such holder of Old Notes is an individual, the TIN is
such holder's social security number. If the Exchange Agent is not provided with
the correct TIN, the holder of Old Notes may be subject to certain penalties
imposed by the Internal Revenue Service.

         Certain holders of Old Notes (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
reporting requirements with respect to interest payments. Exempt holders of Old
Notes should indicate their exempt status on Substitute Form W-9. A foreign
individual may qualify as an exempt recipient by submitting to the Exchange
Agent a properly completed Internal Revenue Service Form W-8BEN, Form W-8ECI or
Form W-8IMY, as applicable (the terms of which the Exchange Agent will provide
upon request), signed under penalty of perjury, attesting to the holder's exempt
status. See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 (the "Guidelines") for additional instructions.

         If backup withholding applies, the Company is required to withhold 30%
of any payment made to the holder of Old Notes or other payee. Backup
withholding is not an additional federal income tax. Rather, the federal income
tax liability of persons subject to backup withholding will be reduced by the
amount of tax withheld. If withholding results in an overpayment of taxes, a
refund may be obtained from the Internal Revenue Service.

         The holder of Old Notes is required to give the Exchange Agent the TIN
(e.g., social security number or employer identification number) of the record
owner of the Old Notes. If the Old Notes are held in more than one name or are
not held in the name of the actual owner, consult the enclosed Guidelines for
additional guidance regarding which number to report.


                                       12



                                                                          
- --------------------------------------------------------------------------------------------------------------------
                                            PAYER'S NAME: U.S. Bank National Association
- --------------------------------------------------------------------------------------------------------------------
SUBSTITUTE                     Part 1 - PLEASE PROVIDE YOUR TIN IN THE BOX
                               AT RIGHT AND CERTIFY BY SIGNING AND DATING       ------------------------------
                               BELOW                                             Social Security Number

                                                                                 OR

                                                                                ------------------------------
                                                                                Employer Identification Number
                              ------------------------------------------------- ------------------------------------
FORM W-9                       Part 2 -                                         Part 3 -
                               Certification Under Penalties of Perjury, I
                               certify that:

                               (1)  The number shown on this form is my          Awaiting TIN    [ ]
                                    correct taxpayer identification number
                                    (or I am waiting for a number to be issued
                                    to me); and

                               (2)  I am not subject to backup withholding
                                    either because I have not been notified by
                                    the Internal Revenue Service (the "IRS")
                                    that I am subject to backup withholding as a
                                    result of a failure to report all interest
                                    or dividends, or the IRS has notified me
                                    that I am no longer subject to backup
                                    withholding.

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

Department of the Treasury      Certificate instructions - You must cross out item (2) in Part 2 above if you have
Internal Revenue Service        been notified by the IRS that you are subject to backup withholding because of
                                underreporting interest or dividends on your tax return. However, if after being
Payer's Request for Taxpayer    notified by the IRS that you are subject to backup withholding you received another
Identification Number (TIN)     notification from the IRS stating that you are no longer subject to backup
                                withholding, do not cross out item (2).

                                SIGNATURE                                          DATE
                                         -----------------------------------------     --------------------
                                NAME
                                    -----------------------------------------------------------------------
                                ADDRESS
                                       --------------------------------------------------------------------
                                CITY                         STATE                ZIP CODE
                                    ------------------------      ---------------         -----------------
- -------------------------------------------------------------------------------------------------------------------



NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
      OF 30% OF ANY PAYMENT MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
      REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
      IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.

                   YOU MUST COMPLETE THE FOLLOWING CERTIFICATE
                  IF YOU CHECK THE BOX IN PART 3 OF SUBSTITUTE
                                    FORM W-9

- --------------------------------------------------------------------------------
                  PAYER'S NAME: U.S. BANK NATIONAL ASSOCIATION
- --------------------------------------------------------------------------------
                             CERTIFICATE OF AWAITING
                         TAXPAYER IDENTIFICATION NUMBER

       I certify under penalties of perjury that a taxpayer identification
number has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or (b)
I intend to mail or deliver such an application in the near future. I understand
that if I do not provide a taxpayer identification number with sixty (60) days,
30% of all reportable payments made to me thereafter will be withheld until I
provide such a number.



- ----------------------------------------                -----------------------
               Signature                                         Date
- --------------------------------------------------------------------------------

FOR ANY QUESTIONS REGARDING THIS LETTER OF TRANSMITTAL OR FOR ANY ADDITIONAL
INFORMATION, YOU MAY CONTACT THE EXCHANGE AGENT BY TELEPHONE AT (800) 934-6802
OR BY FACSIMILE AT (651) 244-1537.


                                       13

EX-99.2

                                                                    EXHIBIT 99.2

                          NOTICE OF GUARANTEED DELIVERY

                                 WITH RESPECT TO

                     10 1/2% SERIES A SENIOR NOTES DUE 2008
                               CUSIP NO. 75040KAA7
                              CUSIP NO. 750401KAB5
                               CUSIP NO. U7492WAA4

                                       OF

                                RADIOLOGIX, INC.

         This form must be used by a holder of 10 1/2% Series A Senior Notes due
2008 (the "Old Notes") of Radiologix, Inc., a Delaware corporation (the
"Company"), who wishes to tender Old Notes to the Exchange Agent in exchange for
10 1/2% Series B Senior Notes due 2008 (the "New Notes"), which have been
registered under the Securities Act of 1933, as amended, pursuant to the
guaranteed delivery procedures described in the "The Exchange Offer --
Guaranteed Delivery Procedures" of the Prospectus, dated ____________, 2002 (the
"Prospectus"), and in Instruction 2 to the related Letter of Transmittal. Any
holder who wishes to tender Old Notes pursuant to such guaranteed delivery
procedures must ensure that the Exchange Agent receives this Notice of
Guaranteed Delivery prior to the Expiration Date of the Exchange Offer.
Capitalized terms not defined herein have the meanings ascribed to them in the
Prospectus or the Letter of Transmittal.

- --------------------------------------------------------------------------------
            THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT
       5:00 P.M., NEW YORK CITY TIME, ON _________, 2002 (THE "EXPIRATION
             DATE") UNLESS THE EXCHANGE OFFER IS EXTENDED, IN WHICH
         CASE THE TERM "EXPIRATION DATE" SHALL MEAN THE LATEST TIME AND
           DATE TO WHICH THE EXCHANGE OFFER IS EXTENDED. TENDERS MAY
             BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
- --------------------------------------------------------------------------------

                       To: U.S. BANK NATIONAL ASSOCIATION
                             (the "Exchange Agent")

                                                         
By Overnight Courier or Hand Delivery:                      By Registered or Certified Mail:
- -------------------------------------                       -------------------------------
U.S. Bank National Association                              U.S. Bank National Association
180 East Fifth Street                                       180 East Fifth Street
St. Paul, Minnesota 55101                                   St. Paul, Minnesota 55101
Attention: Specialized Finance Department                   Attention: Specialized Finance Department
Corporate Trust Services                                    Corporate Trust Services

By Facsimile (eligible institutions only):                  Confirm by Telephone:
- -----------------------------------------                   --------------------
(651) 244-1537                                              (800) 934-6802



DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS
NOTICE OF GUARANTEED DELIVERY AND IN THE LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS NOTICE OF GUARANTEED DELIVERY AND THE LETTER OF
TRANSMITTAL ARE COMPLETED.

         This form is not to be used to guarantee signatures. If a signature on
the Letter of Transmittal is required to be guaranteed by an "Eligible
Institution" under the instructions thereto, such signature guarantee must
appear in the applicable space provided in the signature box on the Letter of
Transmittal.


                                       1



LADIES AND GENTLEMEN:

         The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount of
Old Notes set forth below pursuant to the guaranteed delivery procedures set
forth in the Prospectus and in Instruction 2 of the Letter of Transmittal.

         The undersigned understands that tenders of Old Notes will be accepted
only in authorized denominations. The undersigned understands that tenders of
Old Notes pursuant to the Exchange Offer may not be withdrawn after the
Expiration Date. Tenders of Old Notes may be withdrawn at any time prior to the
Expiration Date or if the Exchange Offer is terminated or as otherwise provided
in the Prospectus.

         All authority herein conferred or agreed to be conferred by this Notice
of Guaranteed Delivery shall survive the death or incapacity of the undersigned
and every obligation of the undersigned under this Notice of Guaranteed Delivery
shall be binding upon the heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives of the undersigned.

         The undersigned hereby tenders the Old Notes listed below:



- -------------------------------------------------------- ------------------------------ ----------------------------
   Certificate Number(s) (if known) of Old Notes or
 if Old Notes will be delivered by book-entry transfer        Aggregate Principal           Aggregate Principal
  at the Depository Trust Company, insert Account No.         Amount Represented              Amount Tendered
- -------------------------------------------------------- ------------------------------ ----------------------------
                                                                                  
- -------------------------------------------------------- ------------------------------ ----------------------------

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

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

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


- --------------------------------------------------------------------------------
                            PLEASE SIGN AND COMPLETE

Signatures of Registered Holder(s) or
Authorized Signatory:                       Date:        , 2002
                      ------------------         --------

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

Name of Registered Holder(s):               Address:
                             -----------            ----------------------------

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

                                            Area Code and Telephone No.:
                                                                        ------
- -------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
         This Notice of Guaranteed Delivery must be signed by the holder(s)
exactly as the name(s) appear(s) on certificates for Old Notes or on a security
position listing as the owner of Old Notes, or by person(s) authorized to become
holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information.

                      Please print name(s) and address(es)

Name(s):
        ------------------------------------------------------------------------

- --------------------------------------------------------------------------------
Capacity (full title):
                      ----------------------------------------------------------
Address(es):
            --------------------------------------------------------------------

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

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


                                       2


- --------------------------------------------------------------------------------
                                    GUARANTEE
                    (Not to be used for signature guarantee)

         The undersigned, a firm which is a member of a recognized signature
guarantee medallion program and is an "eligible guarantor institution" within
the meaning of Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, hereby guarantees deposit with the Exchange Agent of the Letter of
Transmittal (or facsimile thereof), together with the Old Notes tendered hereby
in proper form for transfer (or confirmation of the book-entry transfer of such
Old Notes into the Exchange Agent's account at the Depository Trust Company
pursuant to the procedures described in the Prospectus under the caption "The
Exchange Offer -- Guaranteed Delivery Procedures" and in the Letter of
Transmittal) and any other required documents, all by 5:00 p.m., New York City
time, on the third New York Stock Exchange trading day following the date of
execution of this Notice of Guaranteed Delivery.

Name of Firm:
             -------------------------         ---------------------------------
Address:                                              Authorized Signature
        ------------------------------
                                               Name:
- --------------------------------------              ----------------------------
Area Code and Telephone No.:                   Title:
                            ----------               ---------------------------
                                               Date:                      , 2002
                                                    ----------------------
- --------------------------------------------------------------------------------

            DO NOT SEND OLD NOTES WITH THIS FORM. ACTUAL SURRENDER OF
             OLD NOTES MUST BE MADE PURSUANT TO, AND BE ACCOMPANIED
                     BY, AN EXECUTED LETTER OF TRANSMITTAL.


                                       3



                 INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY

       1. Delivery of this Notice of Guaranteed Delivery. A properly completed
and duly executed copy of this Notice of Guaranteed Delivery and any other
documents required by this Notice of Guaranteed Delivery must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date. The
method of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assure timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.

       2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Old Notes
referred to herein, the signature must correspond with the name(s) written on
the face of the Old Notes without alteration, enlargement, or any change
whatsoever. If this Notice of Guaranteed Delivery is signed by a participant of
the Book-Entry Transfer Facility whose name appears on a security position
listing as the owner of Old Notes, the signature must correspond with the name
shown on the security position listing as the owner of the Old Notes.

       If this Notice of Guaranteed Delivery is signed by a person other than
the registered holder(s) of any Old Notes listed or a participant of the
Book-Entry Transfer Facility, this Notice of Guaranteed Delivery must be
accompanied by appropriate bond powers, signed as the name of the registered
holder(s) appears on the Old Notes or signed as the name of the participant
shown on the Book-Entry Transfer Facility's security position listing.

       If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Notice of Guaranteed Delivery evidence
satisfactory to the Company and the Guarantor of such person's authority to so
act.

       3. Requests for Assistance or Additional Copies. Questions and requests
for assistance and requests for additional copies of the Prospectus may be
directed to the Exchange Agent at the address specified in the Prospectus.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.


                                       4

EX-99.3

                                                                    EXHIBIT 99.3

                                RADIOLOGIX, INC.

                             OFFER TO EXCHANGE UP TO

               $160,000,000 10 1/2% SERIES A SENIOR NOTES DUE 2008

                                       FOR

               $160,000,000 10 1/2% SERIES B SENIOR NOTES DUE 2008
           THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933


To Our Clients:

         We are enclosing herewith (i) a Prospectus dated _______________, 2002
of Radiologix, Inc. (the "Company"), (ii) a related Letter of Transmittal (which
together constitute the "Exchange Offer") relating to the offer by the Company
to exchange up to $160,000,000 aggregate principal amount of its 10 1/2% Series
B Senior Notes due 2008 (the "New Notes"), which have been registered under the
Securities Act of 1933, as amended (the "Securities Act"), for $160,000,000
aggregate principal amount of its outstanding 10 1/2% Series A Senior Notes due
2008 (the "Old Notes"), upon the terms and subject to the conditions set forth
in the Exchange Offer and (iii) a Letter of Instruction to Registered Holder
from Beneficial Owner (the "Instruction Letter")

         PLEASE NOTE THAT THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON ____________, 2002 UNLESS EXTENDED BY THE COMPANY IN ITS SOLE
DISCRETION. THE EXCHANGE OFFER IS NOT CONDITIONED UPON ANY MINIMUM NUMBER OF OLD
NOTES BEING TENDERED.

         We are the holder of record of Old Notes for your account. A tender of
such Old Notes can be made only by us as the record holder pursuant to your
instructions. The Letter of Transmittal is furnished to you for your information
only and cannot be used by you to tender Old Notes held by us for your account.

         We request instructions as to whether you wish to tender any or all of
the Old Notes held by us for your account pursuant to the terms and conditions
of the Exchange Offer. We also request that you confirm that we may make on your
behalf the representations and warranties contained in the Letter of
Transmittal. In this regard, please complete the enclosed Instruction Letter and
return it to us as soon as practicable.

         Pursuant to the Letter of Transmittal, each holder of Old Notes (a
"Holder") will represent to the Company that (i) the New Notes to be acquired
pursuant to the Exchange Offer will be acquired in the ordinary course of
business of the person acquiring the New Notes, whether or not such person is
the Holder, (ii) neither the Holder nor any person receiving any New Notes
directly or indirectly from the Holder pursuant to the Exchange Offer (if not a
broker-dealer referred to in the last sentence of this paragraph) is engaging or
intends to engage in the distribution of the New Notes and none of them have any
arrangement or understanding with any person to participate in the distribution
of the New Notes, (iii) the Holder and each person receiving any New Notes
directly or indirectly from the Holder pursuant to the Exchange Offer
acknowledge and agree that any person participating in the Exchange Offer for
the purpose of distributing the New Notes (x) must comply with the registration
and prospectus delivery requirements of the Securities Act, in connection with a
secondary resale transaction of the New Notes acquired by such person and (y)
cannot rely on the position of the staff of the Securities and Exchange
Commission (the "Commission") set forth in the Exxon Capital Holdings
Corporation no-action letter (available May 13, 1988) or similar letters, (iv)
the Holder and each person receiving any New Notes directly or indirectly from
the Holder pursuant to the Exchange Offer understand that a secondary resale
transaction described in clause (iii) above should be covered by an effective
registration statement containing the selling security holder information
required by Item 507 of Regulation S-K of the Commission and (v) neither the
Holder nor any person receiving any New Notes directly or indirectly from the
Holder pursuant to the Exchange Offer is an "affiliate" of the Company, as
defined under Rule 405 under the Securities Act or, if the Holder is an
"affiliate" of the Company, that the Holder will comply with the registration
and prospectus delivery requirements of the Securities Act applicable to the
Holder. If


                                       1



the Holder is a broker-dealer that will receive New Notes for its own account in
exchange for Old Notes that were acquired as a result of market making or other
trading activities, it acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Notes received in respect of such Old Notes pursuant to the Exchange Offer;
however, by so acknowledging and by delivering a prospectus, the Holder will not
be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act.

                                              Very truly yours,



                                       2

EX-99.4

                                                                    EXHIBIT 99.4

                                RADIOLOGIX, INC.

                             OFFER TO EXCHANGE UP TO

               $160,000,000 10 1/2% SERIES A SENIOR NOTES DUE 2008

                                       FOR

               $160,000,000 10 1/2% SERIES B SENIOR NOTES DUE 2008
           THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933


To Registered Holders:

         We are enclosing herewith the material listed below relating to the
offer (the "Exchange Offer") by Radiologix, Inc. (the "Company") to exchange up
to $160,000,000 aggregate principal amount of its 10 1/2% Series B Senior Notes
due 2008 (the "New Notes"), which have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), for $160,000,000 aggregate principal
amount of its outstanding 10 1/2% Series A Senior Notes due 2008 (the "Old
Notes"), upon the terms and subject to the conditions set forth in the
Prospectus dated ____________, 2002 and the related Letter of Transmittal.

         Enclosed herewith are copies of the following documents:

                  1.       Prospectus dated ______________, 2002;

                  2.       Letter of Transmittal;

                  3.       Notice of Guaranteed Delivery;

                  4.       Instruction to Registered Holder from Beneficial
                           Owner; and

                  5.       Letter to Clients, which may be sent to your clients
                           for whose account you hold Old Notes in your name or
                           in the name of your nominee, to accompany the
                           instruction form referred to above, for obtaining
                           such client's instruction with regard to the Exchange
                           Offer.

         WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE
EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ____________,
2002 UNLESS EXTENDED BY THE COMPANY IN ITS SOLE DISCRETION.

         The Exchange Offer is not conditioned upon any minimum number of Old
Notes being tendered.

         Pursuant to the Letter of Transmittal, each holder of Old Notes (a
"Holder") will represent to the Company that (i) the New Notes to be acquired
pursuant to the Exchange Offer will be acquired in the ordinary course of
business of the person acquiring the New Notes, whether or not such person is
the Holder, (ii) neither the Holder nor any person receiving any New Notes
directly or indirectly from the Holder pursuant to the Exchange Offer (if not a
broker-dealer referred to in the last sentence of this paragraph) is engaging or
intends to engage in a distribution of the New Notes and none of them have any
arrangement or understanding with any person to participate in a distribution of
the New Notes, (iii) the Holder and each person receiving any New Notes directly
or indirectly from the Holder pursuant to the Exchange Offer acknowledge and
agree that any person participating in the Exchange Offer for the purpose of
distributing the New Notes (x) must comply with the registration and prospectus
delivery requirements of the Securities Act, in connection with a secondary
resale transaction of the New Notes acquired by such person and (y) cannot rely
on the position of the staff of the Securities and Exchange Commission (the
"Commission") set forth in the Exxon Capital Holdings Corporation no-action
letter (available May 13, 1988) or similar letters, (iv) the Holder and each
person receiving any New Notes pursuant to the Exchange Offer understand

                                       1


that a secondary resale transaction described in clause (iii) above should be
covered by an effective registration statement containing the selling security
holder information required by Item 507 of Regulation S-K of the Commission and
(v) neither the Holder nor any person receiving any New Notes directly or
indirectly from the Holder pursuant to the Exchange Offer is an "affiliate" of
the Company, as defined under Rule 405 under the Securities Act or, if the
undersigned is an "affiliate" of the Company, that the undersigned will comply
with the registration and prospectus delivery requirements of the Securities Act
applicable to the undersigned. If the Holder is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes that were
acquired as a result of market-making or other trading activities, it
acknowledges that it will deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes received in
respect of such Old Notes pursuant to the Exchange Offer; however, by so
acknowledging and by delivering a prospectus, the Holder will not be deemed to
admit that it is an "underwriter" within the meaning of the Securities Act.

         The enclosed Instruction to Registered Holder from Beneficial Owner
contains an authorization by beneficial owner of Old Notes held by you to make
the foregoing representations and warranties on behalf of such beneficial owner.

         The Company will not pay any fee or commission to any broker or dealer
or to any other persons (other than the exchange agent for the Exchange Offer)
in connection with the solicitation of tenders of Old Notes pursuant to the
Exchange Offer. The Company will pay all transfer taxes, if any, applicable to
the exchange of Old Notes pursuant to the Exchange Offer, on the transfer of Old
Notes to it, except as otherwise provided in Instruction 7 of the enclosed
Letter of Transmittal.

         Any inquiries you may have with respect to the Exchange Offer may be
addressed to, and additional copies of the enclosed materials may be obtained
from the Exchange Agent at:

                         U.S. Bank National Association
                              180 East Fifth Street
                            St. Paul, Minnesota 55101
                    Attention: Specialized Finance Department
                            Corporate Trust Services
                          By Facsimile: (651) 244-1537
                          By Telephone: (800) 934-6802

                                               Very truly yours,



                                               Radiologix, Inc.


NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR
ANY PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF EITHER
OF THEM IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THE DOCUMENTS ENCLOSED
HEREWITH AND THE STATEMENTS CONTAINED HEREIN.

                                       2

EX-99.5

                                                                    EXHIBIT 99.5

                        INSTRUCTION TO REGISTERED HOLDER
                              FROM BENEFICIAL OWNER
                                       OF
                     10 1/2% SERIES A SENIOR NOTES DUE 2008
                                       OF
                                RADIOLOGIX, INC.

To Registered Holder:

         The undersigned hereby acknowledges receipt of the Prospectus dated
____________, 2002 (the "Prospectus") of Radiologix, Inc. (the "Company"), and
accompanying Letter of Transmittal (the "Letter of Transmittal") that together
constitute the Company's offer (the "Exchange Offer") to exchange $1,000
principal amount of 10 1/2% Series B Senior Notes due 2008 (the "New Notes") of
the Company for each $1,000 principal amount of outstanding 10 1/2% Series A
Senior Notes due 2008 (the "Old Notes") of the Company. Capitalized terms used
but not defined have the meanings ascribed to them in the Prospectus.

         This will instruct you, the registered holder, as to the action to be
taken by you relating to the Exchange Offer with respect to the Old Notes held
by you for the account of the undersigned.

         The aggregate face amount of the Old Notes held by you for the account
of the undersigned is (fill in amount): $__________________

         With respect to the Exchange Offer, the undersigned hereby instructs
you (check one of the following boxes):

         [ ] To TENDER the following Old Notes held by you for the account of
the undersigned (insert principal amount of Old Notes to be tendered (if any)):

         $_________________ of Old Notes.*

                                       or

         [ ] NOT to TENDER any Old Notes held by you for the account of the
undersigned.

         * New Notes and the untendered portion of Old Notes must be in minimum
denominations of integral multiples of $1,000.


                                       1




         If the undersigned instructs you to tender Old Notes held by you for
the account of the undersigned, it is understood that you are authorized to make
on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) the
New Notes to be acquired pursuant to the Exchange Offer will be acquired in the
ordinary course of business of the person acquiring the New Notes, whether or
not such person is the undersigned, (ii) neither the undersigned nor any person
receiving any New Notes directly or indirectly from the undersigned pursuant to
the Exchange Offer (if not a broker-dealer referred to in the last sentence of
this paragraph) is engaging or intends to engage in the distribution of the New
Notes and none of them have any arrangement or understanding with any person to
participate in the distribution of the New Notes, (iii) the undersigned and each
person receiving any New Notes directly or indirectly from the undersigned
pursuant to the Exchange Offer acknowledge and agree that any person
participating in the Exchange Offer for the purpose of distributing the New
Notes (x) must comply with the registration and prospectus delivery requirements
of the Securities Act, in connection with a secondary resale transaction of the
New Notes acquired by such person and (y) cannot rely on the position of the
staff of the Securities and Exchange Commission (the "Commission") set forth in
the Exxon Capital Holdings Corporation no-action letter (available May 13, 1988)
or similar letters, (iv) the undersigned and each person receiving any New Notes
directly or indirectly from the undersigned pursuant to the Exchange Offer
understand that a secondary resale transaction described in clause (iii) above
should be covered by an effective registration statement containing the selling
security holder information required by Item 507 of Regulation S-K of the
Commission and (v) neither the undersigned nor any person receiving any New
Notes directly or indirectly from the undersigned pursuant to the Exchange Offer
is an "affiliate" of the Company, as defined under Rule 405 under the Securities
Act or, if the undersigned is an "affiliate" of the Company, that the
undersigned will comply with the registration and prospectus delivery
requirements of the Securities Act applicable to the undersigned. If the
undersigned is a broker-dealer that will receive New Notes for its own account
in exchange for Old Notes that were acquired as a result of market making or
other trading activities, it acknowledges that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Notes received in respect of such Old Notes pursuant to the Exchange
Offer; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.


                                    SIGN HERE

Name of beneficial owner(s) (please print)
                                           -------------------------------------

Signature(s):
              ------------------------------------------------------------------

Address:
         -----------------------------------------------------------------------

Telephone Number:
                  --------------------------------------------------------------

Taxpayer identification or Social Security Number:
                                                   -----------------------------

Date:
      --------------------------------------------------------------------------

                                       2

EX-99.6

                                                                    EXHIBIT 99.6


                                ___________, 2002



U.S. Bank, N.A.
180 East Fifth Street
St. Paul, Minnesota  55101
Attention:  Specialized Finance Department
Corporate Trust Services

Ladies and Gentlemen:

                  Radiologix, Inc., a Delaware corporation (the "Company"),
proposes to make an offer (the "Exchange Offer") to exchange up to $160,000,000
of its 10 1/2% Series A Senior Notes due 2008 (the "Old Notes") for up to
$160,000,000 of its 10 1/2% Series B Senior Notes due 2008 (the "New Notes").
The terms and conditions of the Exchange Offer as currently contemplated are set
forth in a prospectus, dated ____________, 2002 (the "Prospectus"), proposed to
be distributed to all record holders of the Old Notes. The Old Notes and the New
Notes are collectively referred to herein as the "Notes".

                  The Company hereby appoints U.S. Bank, N.A. to act as exchange
agent (the "Exchange Agent") in connection with the Exchange Offer. References
hereinafter to "you" shall refer to The Bank of New York.

                  The Exchange Offer is expected to be commenced by the Company
on or about ______________, 2002. The Letter of Transmittal accompanying the
Prospectus (or in the case of book-entry securities, the Automated Tender Offer
Program ("ATOP") of the Book-Entry Transfer Facility (as defined below)) is to
be used by the holders of the Old Notes to accept the Exchange Offer and
contains instructions with respect to the delivery of certificates for Old Notes
tendered in connection therewith.

                  The Exchange Offer shall expire at 5:00 p.m., New York City
time, on _________________, 2002 or on such subsequent date or time to which the
Company may extend the Exchange Offer (the "Expiration Date"). Subject to the
terms and conditions set forth in the Prospectus, the Company expressly reserves
the right to extend the Exchange Offer from time to time and may extend the
Exchange Offer by giving oral (promptly confirmed in writing) or written notice
to you before 9:00 a.m., New York City time, on the business day following the
previously scheduled Expiration Date.

                  The Company expressly reserves the right to amend or terminate
the Exchange Offer, and not to accept for exchange any Old Notes not theretofore
accepted for exchange, upon the occurrence of any of the conditions of the
Exchange Offer specified in Prospectus under the caption "The Exchange Offer -
Expiration Date; Extensions; Amendments". The Company will give oral (promptly
confirmed in writing)




or written notice of any amendment, termination or nonacceptance to you as
promptly as practicable.

                  In carrying out your duties as Exchange Agent, you are to act
in accordance with the following instructions:

                  1. You will perform such duties and only such duties as are
specifically set forth in the section of the Prospectus captioned "The Exchange
Offer" or as specifically set forth herein; provided, however, that in no way
will your general duty to act in good faith be discharged by the foregoing.

                  2. You will establish a book-entry account with respect to the
Old Notes at The Depository Trust Company (the "Book-Entry Transfer Facility")
for purposes of the Exchange Offer within two business days after the date of
the Prospectus, and any financial institution that is a participant in the
Book-Entry Transfer Facility's systems may make book-entry delivery of the Old
Notes by causing the Book-Entry Transfer Facility to transfer such Old Notes
into your account in accordance with the Book-Entry Transfer Facility's
procedure for such transfer.

                  3. You are to examine each of the Letters of Transmittal and
certificates for Old Notes (or confirmation of book-entry transfer into your
account at the Book-Entry Transfer Facility) and any other documents delivered
or mailed to you by or for holders of the Old Notes to ascertain whether: (i)
the Letters of Transmittal and any such other documents are duly executed and
properly completed in accordance with instructions set forth therein; and (ii)
the Old Notes have otherwise been properly tendered. In each case where the
Letter of Transmittal or any other document has been improperly completed or
executed or any of the certificates for Old Notes are not in proper form for
transfer or some other irregularity in connection with the acceptance of the
Exchange Offer exists, you will endeavor to inform the presenters of the need
for fulfillment of all requirements and to take any other action as may be
reasonably necessary or advisable to cause such irregularity to be corrected.

                  4. With the approval of the Chief Executive Officer,
President, or any Executive Vice President of the Company (such approval, if
given orally, to be promptly confirmed in writing) or any other party designated
in writing, by such an officer, you are authorized to waive any irregularities
in connection with any tender of Old Notes pursuant to the Exchange Offer.

                  5. Tenders of Old Notes may be made only as set forth in the
Letter of Transmittal and in the section of the Prospectus captioned "The
Exchange Offer - Procedures for Tendering Old Notes", and Old Notes shall be
considered properly tendered to you only when tendered in accordance with the
procedures set forth therein.

                  Notwithstanding the provisions of this Section 5, Old Notes
which the Chief Executive Officer, President, or any Executive Vice President of
the Company



                                      -2-


shall approve as having been properly tendered shall be considered to be
properly tendered (such approval, if given orally, shall be promptly confirmed
in writing).

                  6. You shall advise the Company with respect to any Old Notes
received subsequent to the Expiration Date and accept its instructions with
respect to disposition of such Old Notes.

                  7. You shall accept tenders:

                           (a) in cases where the Old Notes are registered in
two or more names only if signed by all named holders;

                           (b) in cases where the signing person (as indicated
on the Letter of Transmittal) is acting in a fiduciary or a representative
capacity only when proper evidence of his or her authority so to act is
submitted; and

                           (c) from persons other than the registered holder of
Old Notes, provided that customary transfer requirements, including payment of
any applicable transfer taxes, are fulfilled.

                  You shall accept partial tenders of Old Notes where so
indicated and as permitted in the Letter of Transmittal and deliver certificates
for Old Notes to the registrar for split-up and return any untendered Old Notes
to the holder (or such other person as may be designated in the Letter of
Transmittal) as promptly as practicable after expiration or termination of the
Exchange Offer.

                  8. Upon satisfaction or waiver of all of the conditions to the
Exchange Offer, the Company will notify you (such notice, if given orally, to be
promptly confirmed in writing) of its acceptance, promptly after the Expiration
Date, of all Old Notes properly tendered and you, on behalf of the Company, will
exchange such Old Notes for New Notes and cause such Old Notes to be cancelled
and delivered to the Company. Delivery of New Notes will be made on behalf of
the Company by you at the rate of $1,000 principal amount of New Notes for each
$1,000 principal amount of the corresponding series of Old Notes tendered
promptly after notice (such notice if given orally, to be promptly confirmed in
writing) of acceptance of said Old Notes by the Company; provided, however, that
in all cases, Old Notes tendered pursuant to the Exchange Offer will be
exchanged only after timely receipt by you of certificates for such Old Notes
(or confirmation of book-entry transfer into your account at the Book-Entry
Transfer Facility), a properly completed and duly executed Letter of Transmittal
(or manually signed facsimile thereof) with any required signature guarantees
and any other required documents. You shall issue New Notes only in
denominations of $1,000 or any integral multiple thereof.

                  9. Tenders pursuant to the Exchange Offer are irrevocable,
except that, subject to the terms and upon the conditions set forth in the
Prospectus and the Letter of



                                      -3-


Transmittal, Old Notes tendered pursuant to the Exchange Offer may be withdrawn
at any time prior to the Expiration Date.

                  10. The Company shall not be required to exchange any Old
Notes tendered if any of the conditions set forth in the Exchange Offer are not
met. Notice of any decision by the Company not to exchange any Old Notes
tendered shall be given (if given orally, to be promptly confirmed in writing)
by the Company to you.

                  11. If, pursuant to the Exchange Offer, the Company does not
accept for exchange all or part of the Old Notes tendered because of an invalid
tender, the occurrence of certain other events set forth in the Prospectus under
the captions "The Exchange Offer - Terms of the Exchange Offer" or "The Exchange
Offer - Expiration Date; Extensions; Amendments" or otherwise, you shall as soon
as practicable after the expiration or termination of the Exchange Offer return
those certificates for unaccepted Old Notes (or effect appropriate book-entry
transfer), together with any related required documents and the Letters of
Transmittal relating thereto that are in your possession, to the persons who
deposited them.

                  12. All certificates for reissued Old Notes, unaccepted Old
Notes or for New Notes shall be forwarded by first-class mail.

                  13. You are not authorized to pay or offer to pay any
concessions, commissions or solicitation fees to any broker, dealer, bank or
other persons or to engage or utilize any person to solicit tenders.

                  14. As Exchange Agent hereunder you:

                           (a) shall not be liable for any action or omission to
act unless the same constitutes your own gross negligence, willful misconduct or
bad faith, and in no event shall you or the Company be liable to a
securityholder, the Company or you, as the case may be, or any third party for
special, indirect or consequential damages, or lost profits, arising in
connection with this Agreement;

                           (b) shall have no duties or obligations with respect
to the subject matter of this Agreement other than those specifically set forth
herein or as may be subsequently agreed to in writing between you and the
Company;

                           (c) will be regarded as making no representations and
having no responsibilities as to the validity, sufficiency, value or genuineness
of any of the certificates or the Old Notes represented thereby deposited with
you pursuant to the Exchange Offer, and will not be required to and will make no
representation as to the validity, value or genuineness of the Exchange Offer;



                                      -4-


                           (d) shall not be obligated to take any legal action
hereunder which might in your judgment involve any expense or liability, unless
you shall have been furnished with indemnity satisfactory to you;

                           (e) may conclusively rely on and shall be protected
in acting in reliance upon any certificate, instrument, opinion, notice, letter,
telegram or other document or security delivered to you and believed by you to
be genuine and to have been signed or presented by the proper person or persons;

                           (f) may act upon any tender, statement, request,
document, agreement, certificate or other instrument whatsoever not only as to
its due execution and validity and effectiveness of its provisions, but also as
to the truth and accuracy of any information contained therein, which you shall
in good faith believe to be genuine or to have been signed or presented by the
proper person or persons;

                           (g) may conclusively rely on and shall be protected
in acting upon written or oral instructions from any authorized officer of the
Company;

                           (h) may consult with counsel of your selection with
respect to any questions relating to your duties and responsibilities and the
advice or opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be taken by
you hereunder in good faith and in accordance with the advice or opinion of such
counsel; and

                           (i) shall not advise any person tendering Old Notes
pursuant to the Exchange Offer as to the wisdom of making such tender or as to
the market value or decline or appreciation in market value of any Old Notes.

                  15. You shall take such action as may from time to time be
requested by the Company (and such other action as you may deem appropriate) to
furnish copies of the Prospectus, Letter of Transmittal and the Notice of
Guaranteed Delivery (as defined in the Prospectus) or such other forms as may be
approved from time to time by the Company, to all persons requesting such
documents and to accept and comply with telephone requests for information
relating to the Exchange Offer, provided that such information shall relate only
to the procedures for accepting (or withdrawing from) the Exchange Offer. The
Company will furnish you with copies of such documents on your request. All
other requests for information relating to the Exchange Offer shall be directed
to the Company, Attention: Investor Relations.

                  16. You shall advise by facsimile transmission Sami S. Abbasi,
Chief Financial Officer of the Company, Paul M. Jolas, General Counsel and
Secretary of the Company (both at the facsimile number (214) 303-2777), and
William R. Hays III, Esq., Haynes and Boone, LLP (at facsimile number (214)
200-0467) and such other person or persons as the Company may request, daily
(and more frequently during the week immediately preceding the Expiration Date
if requested) up to and including the



                                      -5-


Expiration Date, as to the number of Old Notes which have been tendered pursuant
to the Exchange Offer and the items received by you pursuant to this Agreement,
separately reporting and giving cumulative totals as to items properly received
and items improperly received. In addition, you will also inform, and cooperate
in making available to, the Company or any such other person or persons as the
Company may request upon oral request made from time to time prior to the
Expiration Date of such other information as they may reasonably request. Such
cooperation shall include, without limitation, the granting by you to the
Company and such person as the Company may request of access to those persons on
your staff who are responsible for receiving tenders, in order to ensure that
immediately prior to the Expiration Date the Company shall have received
information in sufficient detail to enable it to decide whether to extend the
Exchange Offer. You shall prepare a final list of all persons whose tenders were
accepted, the aggregate principal amount of Old Notes tendered, the aggregate
principal amount of Old Notes accepted and deliver said list to the Company.

                  17. Letters of Transmittal and Notices of Guaranteed Delivery
shall be stamped by you as to the date and, after the expiration of the Exchange
Offer, the time, of receipt thereof and shall be preserved by you for a period
of time at least equal to the period of time you preserve other records
pertaining to the transfer of securities. You shall dispose of unused Letters of
Transmittal and other surplus materials by returning them to the Company.

                  18. For services rendered as Exchange Agent hereunder, you
shall be entitled to such compensation as set forth on Schedule I attached
hereto. The provisions of this section shall survive the termination of this
Agreement.

                  19. You hereby acknowledge receipt of the Prospectus and the
Letter of Transmittal. Any inconsistency between this Agreement, on the one
hand, and the Prospectus and the Letter of Transmittal (as they may be amended
from time to time), on the other hand, shall be resolved in favor of the latter
two documents, except with respect to your duties, liabilities and
indemnification as Exchange Agent.

                  20. The Company covenants and agrees to fully indemnify and
hold you harmless against any and all loss, liability, cost or expense,
including attorneys' fees and expenses, incurred without gross negligence or
willful misconduct on your part, arising out of or in connection with any act,
omission, delay or refusal made by you in reliance upon any signature,
endorsement, assignment, certificate, order, request, notice, instruction or
other instrument or document believed by you to be valid, genuine and sufficient
and in accepting any tender or effecting any transfer of Old Notes believed by
you in good faith to be authorized, and in delaying or refusing in good faith to
accept any tenders or effect any transfer of Old Notes. In each case, the
Company shall be notified by you, by letter or facsimile transmission, of the
written assertion of a claim against you or of any other action commenced
against you, promptly after you shall have received any such written assertion
or shall have been served with a summons in connection



                                      -6-


therewith. The Company shall be entitled to participate at its own expense in
the defense of any such claim or other action and, if the Company so elects, the
Company shall assume the defense of any suit brought to enforce any such claim.
In the event that the Company shall assume the defense of any such suit, the
Company shall not be liable for the fees and expenses of any additional counsel
thereafter retained by you, so long as the Company shall retain counsel
reasonably satisfactory to you to defend such suit, and so long as you have not
determined, in your reasonable judgment after consultation with independent
counsel, that a conflict of interest exists between you and the Company. The
provisions of this section shall survive the termination of this Agreement.

                  21. You shall arrange to comply with all requirements under
the tax laws of the United States, including those relating to missing Tax
Identification Numbers, and shall file any appropriate reports with the Internal
Revenue Service.

                  22. You shall deliver or cause to be delivered, in a timely
manner to each governmental authority to which any transfer taxes are payable in
respect of the exchange of Old Notes, the Company's check in the amount of all
transfer taxes so payable; provided, however, that you shall promptly reimburse
the Company for amounts refunded to you in respect of your payment of any such
transfer taxes, at such time as such refund is received by you.

                  23. This Agreement and your appointment as Exchange Agent
hereunder shall be construed and enforced in accordance with the laws of the
State of New York applicable to agreements made and to be performed entirely
within such state, and without regard to conflicts of law principles, and shall
inure to the benefit of, and the obligations created hereby shall be binding
upon, the successors and assigns of each of the parties hereto.

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

                  25. In case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

                  26. This Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part, except
by a written instrument signed by a duly authorized representative of the party
to be charged. This Agreement may not be modified orally.

                  27. Unless otherwise provided herein, all notices, requests
and other communications to any party hereunder shall be in writing (including
facsimile or similar writing) and shall be given to such party, addressed to it,
at its address or telecopy number set forth below:



                                      -7-


                  If to the Company:

                           Radiologix, Inc.
                           3600 JP Morgan Chase Tower
                           2200 Ross Avenue
                           Dallas, Texas 75201
                           Fort Worth, Texas  76102

                           Facsimile: (214) 303-2777
                           Attention: Paul M. Jolas
                                      General Counsel and Secretary


                           Copy to:     William R. Hays, III
                                        Haynes and Boone, LLP
                                        901 Main Street, Suite 3100
                                        Dallas, Texas 75202

                                        Facsimile: (214) 200-0467

                  If to the Exchange Agent:

                           U.S. Bank, N.A
                           180 East Fifth Street
                           St. Paul, Minnesota  55101

                           Facsimile: (651) 244-1537
                           Attention: Specialized Finance Department
                           Corporate  Trust Services

                  28. Unless terminated earlier by the parties hereto, this
Agreement shall terminate 90 days following the Expiration Date. Notwithstanding
the foregoing, Sections 18 and 20 shall survive the termination of this
Agreement until the expiration of the applicable statute of limitations. Upon
any termination of this Agreement, you shall promptly deliver to the Company any
certificates for Notes, funds or property then held by you as Exchange Agent
under this Agreement.

                  29. This Agreement shall be binding and effective as of the
date hereof.



                                      -8-




                  Please acknowledge receipt of this Agreement and confirm the
arrangements herein provided by signing and returning the enclosed copy.


                                            Radiologix, Inc.


                                            By:
                                               ---------------------------------
                                               Name:
                                               Title:




Accepted as of the date
first above written:

U.S. BANK, N.A., as Exchange Agent


By:
   ---------------------------------
   Name:
   Title:



                                      -9-




                                   SCHEDULE I
                         COMPENSATION OF EXCHANGE AGENT: